Delhi District Court
Mr. Mukesh Goel vs North Delhi Municipal Corporation on 22 February, 2024
CNR No. DLCT010069362022
IN THE COURT OF MS. ILLA RAWAT
DISTRICT JUDGE (COMMERCIAL COURT)-03,
CENTRAL, TIS HAZARI COURTS, DELHI
CS (COMM) No. 1142/2022
In the matter of :-
Mukesh Goel
Proprietor of:
M/s Pushpa Builders
Office at: D-28, Ashoka Road,
Adarsh Nagar, Delhi-110033
Email: [email protected] ......Plaintiff
Versus
Municipal Corporation of Delhi
Through its Commissioner,
Office at:- Dr. SPM Civic Centre
4th Floor, Pt. JLN Marg,
P.S. Kamla Market,
New Delhi-110002.
Email: [email protected] .......Defendant
Date of Institution : 25.04.2022
Date on which Judgment reserved : 22.02.2024
Date on which judgment pronounced : 22.02.2024
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 1 of 37
SUIT FOR RECOVERY
JUDGMENT
1. Vide this judgment I shall dispose off the suit for Permanent Injunction and Recovery of Rs.1,46,48,147/- along with interest @ 14% per annum, filed by plaintiff against the defendant.
2. Briefly stated facts of the case as averred in the plaint are that the plaintiff is sole proprietor of M/s Pushpa Builders which is registered Civil Contractor and has been undertaking civil construction work for defendant Corporation as well as other Government departments. The plaintiff was awarded work of 'Construction of North DMC Primary School, Janta Vihar in Mukandpur Area in Civil Line Zone. SH: construction of boundary wall, fire tank and miscellaneous works' vide work order no. EE(Pr.) CLZ/SYS/2019-20/16 dated 03.01.2020. The contractual amount of this work was Rs.1,29,51,602/- only. The date of start of work was 03.01.2020 and it was to be completed by 02.07.2020.
3. It is further averred that the plaintiff mobilized all its resources, manpower etc. required for execution of work but due to onset of Covid-19 pandemic and lockdown declared by Central Government from 23.03.2020, no construction work could be undertaken till May/June, 2020 when permission for construction activities was granted. It is alleged that defendant instead of CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 2 of 37 approving the extension of time due to force majeure and extending the date of completion in proportion to period of delay, preferred to issue provision extension of time till 02.09.2020 vide letter dated 29.06.2020 by reserving its rights to claim liquidated damages in terms of Clause 2 of GCC. The plaintiff was forced to stop work for reasons beyond his control which included pandemic, pollution, labour shortage, non-supply of layout of boundary wall, delay in supply of earth filling etc. and duly informed defendant about it vide his letters dated 26.07.2020 and 31.07.2020.
4. It is further averred that the defendant again granted provision extension of time to plaintiff upto 02.11.2020 vide letter dated 01.09.2020. The plaintiff also submitted representation in the office of defendant on 21.09.2020 regarding hindrances he was facing and sought directions as well as supply of drawings and layout plans. The said letter was replied to by Executive Engineer of defendant on 21.10.2020 whereby directions were issued to plaintiff to abide with directions given by NGT regarding pollution. The defendant again granted provisional extension of time to plaintiff upto 02.01.2021 vide letter dated 27.10.2020. Thereafter, the Executive Engineer of defendant sent a letter dated 12.11.2020 alleging plaintiff of slow progress in work with ulterior motive. The hindrances pointed out by plaintiff viz. providing of drawings and layout plans and approving extension of time were disregarded while invoking punitive clause of GCC.
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 3 of 375. It is further averred that the plaintiff submitted representation dated 26.11.2020 in the office of defendant which was received vide diary no.1552 wherein he reiterated his demands and also requested release of the passed 1st RA bill for a sum of Rs.43,62,232/- alongwith interest @ 14% p.a. w.e.f. 23.03.2020 till date of actual payment and 2 nd RA bill for a sum of Rs.18,15,446/- alongwith interest @ 14% p.a. w.e.f. 31.08.2020 till date of actual payment. The defendant thereafter granted provisional extension of time upto 02.03.2021 vide letter dated 01.01.2021. The defendant also issued notice of slow progress on 14.01.2021. The letter was issued without providing the layout plan, approving the extension of time and removing hindrances. The plaintiff was supplied drawing of boundary wall only on 15.01.2021. He then submitted letter dated 03.02.2021 requesting for release of passed bill amount of 1st and 2nd RA bills as well as 3rd RA bill for a sum of Rs.7,53,902/- alongwith interest @ 14% p.a. w.e.f. 27.11.2020. The 4th RA bill for a sum of Rs.29,87,626/- was also passed on 31.03.2021. The bill amount of 1st to 4th RA bills was not released to plaintiff despite repeated requests.
6. It is further averred that the plaintiff was granted further provisional extension upto 02.05.2021 vide letter dated 26.02.2021. Certain defects in the work executed by plaintiff were also pointed out vide letter dated 12.03.2021 by defendant. The defendant again granted plaintiff extension of time upto 02.07.2021 vide letter dated 28.04.2021. In the meantime, Government of Delhi declared lockdown due to Covid-19 from 19.04.2021 to 04.06.2021 while allowing constructions activities CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 4 of 37 only. Though plaintiff communicated to defendant that without supply of layout plan, drawings and completion of filling work at the site, the work of boundary wall could not be proceeded with further, no steps were taken by defendant in this regard. There was also dispute regarding the area of execution work with the revenue department which remained unresolved.
7. It is further averred that the plaintiff submitted letter dated 29.06.2021 vide diary no.289 requesting defendant to release payment of due amounts with interest which was approx. more than Rs.1 crore but with no avail. The plaintiff was again granted provisional extension of time upto 02.07.2021, however, defendant reserved its right to recover liquidated damages under Clause 2 of GCC which was totally in contradiction with the terms of the provisions of the clauses. In the meantime, concerned Superintendent Engineer issued show cause notice under Clause 2 of GCC bearing no. D/119/SE/CLZ/2020-21 dated 30.06.2021 which was replied to by plaintiff on 07.07.2021 thereby explaining the reasons for delay in execution of the work and also requesting the release of passed bill amount. The concerned Executive Engineer then sent a letter dated 09.08.2021 in response to plaintiff's letter dated 07.07.2021.
8. It is further averred that the plaintiff submitted reply dated 24.08.2021 vide diary no. 669 explaining reasons for delay in execution of work and also reiterated the hindrances faced by him in execution of work and failure by defendant to release the passed running bills amount. As there was no response from CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 5 of 37 defendant, plaintiff sent a legal notice dated 25.08.2021 U/s 478 of DMC Act which was not replied to by defendant despite receipt. Vide his letter dated 25.10.2021 plaintiff informed the defendant that balance work had been commenced in full speed and would be finished as early as possible in the public interest. The defendant granted plaintiff provisional extension of time upto 02.01.2022 vide letter dated 30.11.2021, upto 02.02.2022 vide letter dated 31.12.2021, upto 02.03.2022 vide letter dated 28.01.2022 and upto 02.04.2022 vide letter dated 25.02.2022.
9. It is further averred that the plaintiff completed work on 06.01.2022 which was recorded in the measurement book. Despite plaintiff having completed the work, defendant withheld the amount of the passed bills under the garb of non-availability of funds in particular head of account and that too on queue basis. The plaintiff has given details of amount due and payable to him by the defendant in para 19 of the plaint.
10. Though some amount was paid to plaintiff after receipt of the legal notice, certain amounts were withheld by defendants regarding which plaintiff has detailed in para 20 to 25 of the plaint. It is alleged that a Superintendent Engineer of defendant issued show cause notice under Clause 2 of GCC on 30.06.2021 which was replied to by plaintiff on 07.07.2021. After the plaintiff sent legal notice on 25.08.2021, defendant released a sum of Rs.20 lakhs only. Instead of approving the extension of time on basis of hindrances submitted by plaintiff and recording it in hindrance register under Clause 5 of GCC read with Section 29 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 6 of 37 of CPWD Work Manual, defendant preferred to grant provisional extension of time to plaintiff for completion of work. The plaintiff apprehends that officials of defendant have done so with ulterior intent as they intent to invoke punitive clause 2, 3 and 29 of GCC as and when plaintiff initiates legal steps for recovery of amount legally payable to him. Hence, plaintiff filed instant suit for recovery of Rs.1,46,48,147/- alongwith interest. He also prayed for decree of permanent injunction to restrain defendant, its officers, agents, representatives etc. from taking any coercive action against plaintiff furtherance to show cause notice under Clause 2 of GCC bearing no. D/119/SE/CLZ/2020-21 dated 30.06.2021 or any other clause of the agreement with respect to work in question.
11. Summons of suit were issued to defendant. The defendant was duly served on 05.05.2022 and put in appearance before the Court, through its counsel, on 04.11.2022. The written statement was filed on behalf of defendant on 09.09.2022 alongwith application for condonation of delay in filing written statement. Since the written statement was filed beyond stipulated period of 120 days, since the date of service, the application for condonation of delay in filing written statement was dismissed and the written statement was struck off the record and matter was listed for disposal of plaintiff's application U/o XXXIX Rule 1&2 CPC.
12. Vide order dated 14.03.2023, the application under Order XXXIX Rule 1 and 2 r/w Section 151 CPC filed on behalf CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 7 of 37 of plaintiff was allowed and defendant, its officers, agents, representatives, etc. were restrained from enforcing the show cause notice under Clause 2 of GCC bearing no.
D/119/SE/CLZ/2020-21 dated 30.06.2021 or from taking any coercive action(s) against plaintiff furtherance to show cause notice under Clause 2 of GCC bearing no. D/119/SE/CLZ/2020- 21 dated 30.06.2021 or any other clause of the agreement with respect to work in question during the pendency of the present case.
13. The plaintiff had already filed the replication reiterating the averments made in the plaint and denying the contra averments made in the written statement. Plaintiff also filed affidavit of admission/denial of documents of defendant. Since written statement filed by defendant was struck off the record vide order dated 04.11.2022, having been filed beyond the stipulated period of 120 days from the date of service of defendant, the replication filed by plaintiff was no longer necessary. It was, however, kept on record.
14. From the pleadings of parties, following issues were framed:-
1) Whether the suit of the plaintiff is premature for want of filing of bills/final bills? (OPD)
2) Whether plaintiff is not entitled to claim the suit amount as he himself failed to complete the awarded work within stipulated time and also failed to apply for extension of time for completion of CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 8 of 37 work? (OPD)
3) Whether the plaintiff is entitled to decree of permanent injunction, as prayed for in prayer clause (a) of the plaint? (OPP)
4) Whether the plaintiff is entitled for decree of recovery of Rs.1,46,48,147/- against the defendant, as prayed for?(OPP)
5) Whether plaintiff is entitled for interest. If yes, at what rate and for which period? (OPP)
6) Relief.
15. In order to prove its case, plaintiff has examined himself as PW1. He has reiterated the facts averred in the plaint in his affidavit Ex.PW-1/A and relied upon following documents:-
S.No. Details of documents Exhibit
1. Photocopy of Work order dated 03.01.2020. Ex.PW-l/1
2. Letter of defendant dated 29.06.2020 Ex.PW1/2
3. Letter dated 26.07.2020 written by plaintiff Ex.PW1/3
4. Letter dated 31.07.2020 alongwith office Ex.PW1/4
memorandum dated 13.05.2020
5. Letter of defendant dated 01.09.2020 Ex.PW1/5
6. Letter dated 21.09.2020 written by plaintiff Ex.PW1/6
7. Letter of defendant dated 21.10.2020 Ex.PW1/7
8. Letters of defendant dated 27.10.2020 and Ex.PW1/8 &
12.11.2020 Ex.PW1/9
respectively
9. Letter dated 26.11.2020 written by plaintiff Ex.PW1/10
10. The letters of defendant dated 01.01.2021 and Ex.PW1/11 &
14.01.2021 Ex.PW1/12
respectively
11. The letter dated 03.02.2021 written by plaintiff Ex.PW1/13
12. The letters of defendant dated 26.02.2021, Ex.PW1/14 to
12.03.2021 and 28.04.2021 Ex.PW1/16
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 9 of 37
respectively
13. The letter dated 29.06.2021 written by plaintiff Ex.PW1/17
14. The show cause notice dated 30.06.2021 Ex.PW1/18
15. Reply of show cause notice dated 07.07.2021 Ex.PW1/19
16. Reply of defendant dated 09.08.2021 Ex.PW1/20
17. Letter dated 24.08.2021 written by plaintiff Ex.PW1/21
18. The legal notice dated 25.08.2021 Ex.PW1/22
19. Letter dated 25.10.2021 written by plaintiff Ex.PW1/23
20. Letters of defendant dated 30.11.2021, Ex.PW1/24 to
31.12.2021, 28.01.2022 and 25.02.2022 Ex.PW1/27
respectively
21. Copy of 1st RA bill Ex.PW1/28
22. Copy of 2nd RA bill Ex.PW1/29
23. Copy of 3rd RA bill Ex.PW1/30
24. Copy of 4th RA bill Ex.PW1/31
25. Photocopy of measurement book Ex.PW1/32
16. During his cross-examination, PW1/plaintiff deposed that he had been working as contractor with MCD since the year 1995. He had the filed the present case in respect of Work Order No.16 dated 03.01.2020. He was unable to recall if he had gone through the terms and conditions mentioned in the agreement signed by him with the MCD after assignment of the work order. He further deposed that he had informed MCD verbally only when he started work at the site. He also deposed that as per his knowledge there was no requirement of contractor giving a work schedule to MCD regarding the manner in which work pertaining to work order was to be completed at the site within stipulated time. He had not given any such schedule to MCD in respect of instant work order before he commenced work at the site since there was no such requirement.
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 10 of 3717. The PW1/plaintiff further deposed that he completed work at the site on 06.01.2022. After completing the work, he had written a letter to MCD to take possession of the site but was unable to recall date of said letter. After refreshing his memory from the court file, the PW1 deposed that no such letter had been filed on Court record.
18. The PW1/plaintiff admitted that work pertaining to work order no.16 could not be completed within stipulated time. He had written letter to MCD informing them of reasons why work could not be completed within time but had not sought extension from the department for completion of the work. He deposed that there was delay in completion of work which was as per record. He admitted that as per work order, work was to be completed by 02.07.2020 and that he completed the same by 06.01.2022 after delay of about 1½ years.
19. The PW1/plaintiff further deposed that he was granted provisional extension of time by MCD and hence he continued to complete the work even after the stipulated date of completion of work got over. In response to specific question, PW1 admitted that his quoted rate for the work order in present case was 38.99% below the tender amount of the work. He had obtained the copy of Ex.PW1/28 to Ex.PW1/32 from the department by making personal request to the officials of department. He did not challenge the grant of provisional extension of time by the department or refuse to proceed with the work at any point of time. He had not filed any document on CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 11 of 37 record from which the damages suffered by him (PW1) due to delay in completion of work could be ascertained.
20. During his further cross-examination, PW1 denied that he was not entitled to recover the amount, as claimed in the plaint, from the department as he had failed to submit original bill on his letter head as per Clause 7 and 9 of GCC. He further denied the suggestion that he is not entitled to recover any amount from defendant as he had not applied for extension of time for completion of work.
21. No other witness was examined on behalf of plaintiff.
22. Since the defence of defendant was struck off the record vide order dated 04.11.2022, matter was listed for final arguments.
23. Arguments were addressed by Sh.A.K. Trivedi, counsel for plaintiff as well as Sh.Sanjeet Malik, counsel for defendant who reiterated averments made in plaint and written statement respectively in support of their arguments. Written submissions and judgments were also filed on behalf of plaintiff on 19.09.2023.
24. Counsel for plaintiff has contended that the plaintiff had mobilized all its resources, manpower etc. required for execution of the work and started the work, however, due to Covid-19 pandemic, lockdown was declared from 23.03.2020 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 12 of 37 which was lifted in May/June, 2020 due to which several labourers went to their native place and did not return back due to which there was problem in execution of work. The plaintiff had submitted various representations in the office of defendant and intimated the officials of defendant regarding the hindrances faced by him and also communicated to defendant that without supply of layout plan, drawings and completion of filling work at the site, the work of boundary wall could not be proceeded with further, however, no steps were taken by defendant in this regard. There was also dispute regarding the area of execution work with the revenue department which remained unresolved. The defendant, instead of approving the extension of time in proportion to the period of delay, granted provision extension of time from time to time only with motive to issue show cause notice under Clause 2 of GCC.
25. It is further contented that officials of defendant supplied the drawing of boundary wall only on 15.01.2021. Further, instead of discharging of reciprocal premises and releasing the passed bill amount in terms of clause 7 of GCC, the concerned Suptd. Engineer of defendant department issued show cause notice under clause 2 of GCC dated 30.06.2021 which was replied by the plaintiff on 07.07.2021 thereby explaining the reasons for delay in execution of work and also requesting for releasing amount of the passed bill. The plaintiff also replied to letter dated 09.08.2021 sent by defendant vide its letter dated 24.08.2021 vide diary no.669 reiterating that despite reminders officials of defendant had not removed hindrances pointed out by CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 13 of 37 plaintiff through previous representations and had further failed to released running bill amounts though said bills had already been passed. Even after the plaintiff sent the legal notice dated 25.08.2021, defendant had paid a meager sum of Rs.20 lakhs on 07.10.2021.
26. It is further contended that the plaintiff sent a letter dated 25.10.2021 to defendant intimating that the balance work was started will full speed and would be completed at the earliest and did complete the work by 19.12.2021. This is also reflected from the record maintained in the measurement book. The defendant released Rs.15 lakh on 04.04.2022 against 1st RA bill and thereafter the defendant failed to released any amount against the passed RA bills and final bill forcing plaintiff to file the present suit.
He has relied upon following judgments in support of his contention:-
(i) Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (Dead) by LRs vs. State of Maharastra, MANU/SC/0031/1979;
(ii) Welspun Speciality Solutions Ltd. & Ors. vs. Oil and Natural Gas Corporation Ltd. & Ors. MANU/SC/1059/2021.
(iii) Harcharan Dass Gupta Constructions Pvt. Ltd. vs. MCD, MANU/DE/4011/2018;
(iv) North Delhi Municipal Corporation vs. IJM Corporation Berhad, MANU/DE/1441/2022
(v) McDermott International Inc. vs. Burn Standard Co. Ltd. & Ors. MANU/SC/8177/2006 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 14 of 37
(vi) Union of India vs. Rama Construction Company, MANU/DE/1186/2022 It is thus prayed that suit of plaintiff be decreed as per prayers made in the prayer clause of the plaint.
27. On the other hand, counsel for defendant has contended that the first lockdown on account of Covid was enforced from 22.03.2020 to the month of May/June 2020. He has referred to Office Memorandum No.F-18/4/2020-PPD dated 13.05.2020 issued by Deputy Secretary, Govt. of India, Ministry of Finance, Department of Expenditure, Procurement Policy Division with the subject "Force Majeure Clause" (FMC). The Clause 4 thereof was as under:-
"It is recognized the in view of the restrictions placed on the movement of goods, services and manpower on account of the lock down situation prevailing overseas and in the country in terms of the guidelines issued by the MHA under DM Act 2005 and the respective States and UT Governments, it may not be possible for the parties to the contract to fulfil contractual obligations. In respect of Public-Private Partnership (PPP) concession contracts, a period of the contract may have become unremunerative. Therefore, after fulfilling due procedure and wherever applicable, parties to contract, may invoke FMC for all constructions/works contracts, goods and services contracts and PPP contracts with Government agencies and in such event, date of completion of contractual obligations which had to be completed on or after 20.02.2020 shall stand extended for a period not less than 3 months and not more than 6 months without imposition of any cost or penalty on the contractor/concessionaire. Concession period in PPP contracts ending on or after 20.02.2020 shall be extended by not less than 3 and not more than 6 months. The period of extension (between 3 and 6 months) may be decided based on specific circumstances of the case and the period for which performance was affected by the force majeure events."CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 15 of 37
28. He has further referred to point 5 of the notification which prescribed that it is further clarified that invocation of FMC does not absolves all non performance of the party to the contract but only in respect of such non performance as is attributable to a lock down situation of restrictions imposed under any act or executive order of Government/s on account of Covid- 19 global pandemic. It may be noted that, subject to above stated all contractual obligations shall revive on completion of the period.
29. Based on above points of notification dated 13.05.2020, it is contended that the Force Majeure Clause was applicable to both the parties to the suit. The plaintiff never applied for approval of extension of time as required under Clause 5 of the contract agreement, however, to keep the contract alive and to uphold the integrity of the contract, the defendant issued provision extension of time as per GCC. The plaintiff could apply for consideration of approval of extension of time before or upon completion of work as required under CPWD Manual and as per the terms and conditions of GCC but failed to do so. The defendant supplied earth for filling of open school compound and the same was in the form of inert material generated after processing the Municipal Solid Waste at Sanitary Waste Fill (SLF) site at Bhalaswa Dairy, however, due to restrictions imposed during lock down, the supply of earth/inert material was also affected and the same was beyond the control of defendant. The defendant completed supply of earth/inert material in the month of October 2020. The plaintiff had intimated to defendant vide letter CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 16 of 37 dated 26.07.2020 that due to shortage of labour and hike in price of labour and material, it was unable to complete the work. Despite having admitted so, it is stated that the plaintiff is liable for all the delays and for non completing the work within time.
30. In response to allegation that defendant failed to provide drawings for boundary wall, it is stated that the site of school under contract was part of open land which was in proximity to Bhalaswa lake. During rainy season it was difficult to demarcate and identify the exact layout of the boundary wall. The drawing of layout of boundary wall was provided to the plaintiff in the month of January 2021 after verification from the drawings of Town Planning Department of Municipal Corporation of Delhi as well as total station survey done at the site. It is alleged that apart from the work of boundary wall, the plaintiff failed to take up and complete other stipulated works like fixing door shutters and sanitary fittings, putting window panels and other finishing items within stipulated time. It is further admitted that defendant had sent a letter dated 21.10.2020 to plaintiff to follow Dust Control Measure in accordance with directions issued by NGT vide O.A.21/2014 to mitigate air and dust pollution. It is alleged that during regular site visits it was noticed by the officials of MCD that the progress of work at site is very slow and that plaintiff failed to achieve the progress as per clause 5 of the contract agreement. The defendant issued provisional extension of time to keep the contract alive and to uphold the integrity of the contract, however, the same was without prejudice to its right to recover liquidated damages in accordance with relevant clauses of CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 17 of 37 GCC. Reference has also been made to letter no. D/763/EE(Pr.)CLZ/2020-21/AE dated 12.03.2021 whereby various deficiencies in the work undertaken by plaintiff was pointed out with directions to rectify the shortcomings and also to explain the reason for the said deficiencies/lapses. It is also contended the work of filling of open compound by earth was completed in the month of October 2020 and the drawing of boundary wall was also received by plaintiff on 15.01.2021 despite which plaintiff could not complete the work at the site.
Based on these contentions, it is prayed that suit of plaintiff be dismissed.
31. I have heard learned counsels for parties and my findings on aforesaid issues is as under:-
ISSUE NO.1:-
Whether the suit of the plaintiff is premature for want of filing of bills/final bills? (OPD)
32. Onus of proving this issue was on defendant. As observed in foregoing paragraphs, the written statement filed by defendant was struck off the record as it had been filed after stipulated period of 120 days from the date of service of the defendant.
Even otherwise, the plea taken by defendant that suit of plaintiff is premature for want of filing of bills/final bill is not sustainable. According to the defendant it was obligatory upon the plaintiff to submit bill(s) on his letterhead which he failed to submit and hence the suit is premature. As regards passed bills, CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 18 of 37 Ex.PW1/28 to Ex.PW1/31, it is stated that same are internal notings of the office of defendant which cannot be relied upon to decree the suit in favour of the plaintiff.
33. The Hon'ble Delhi High Court in case of Surgical Electronics Vs. Union of India 60 (1995) DLT 359 held that internal notings are only the expression of view during the decision making process and cannot be treated as final binding and enforceable decision. Further, the Hon'ble Supreme Court in case of Anil Sethi Auto Service Station Vs. DDA (2009) 1 SCC 180 held that notings in departmental file do not have sanction of law to be an effective order which is only an expression of view point or opinion of an officer to be used for internal use and consideration of other officials of the department and helps in arriving at final decision. Such type of internal notings are not meant for outside exposure. When such internal noting is approved by the final decision making authority and the order is communicated to concerned party whose rights are affected, then only the same can be considered.
34. The passed bills, Ex.PW1/28 to Ex.PW1/31, in question, have been approved by JE, AE as well as Executive Engineer, who is authorized by Commissioner to verify and check the bills. Entries in bills are based upon measurement book which contains details and particulars of work done on day to day basis that are cross checked by the officials of defendant Corporation after physical verification at the site. In this regard, counsel for plaintiff has already clarified that the passed bills, Ex.PW1/28 to Ex.PW1/31, for payments have been prepared by the officials of CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 19 of 37 defendant and the same have been accepted by the plaintiff.
35. Admittedly, passed bills, Ex.PW1/28 to Ex.PW1/31, bear signatures of plaintiff on it. Thus it stands established that plaintiff/PW1 accepted bills, Ex.PW1/28 to Ex.PW1/31, prepared by officials of defendant. In these circumstances, bills, Ex.PW1/28 to Ex.PW1/31, cannot be termed as a mere internal noting for its contents were fully brought to the knowledge of plaintiff when entries therein were got confirmed from him and his signatures were obtained on bills, Ex.PW1/28 to Ex.PW1/31. Even otherwise, plaintiff is entitled to obtain copy of bills, Ex.PW1/28 to Ex.PW1/31, from the office of defendant under RTI Act if he so desires and thus defendant cannot claim any privilege in respect of such alleged internal notings. I am supported in my view by judgment of Hon'ble Delhi High Court in case of Flemingo Duty Free Shop Pvt. Ltd. Vs. Union of India & Ors. 2012 SCC OnLine DEL 5590.
36. The counsel for defendant has relied upon judgment in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar, RFA No. 430/2017 decided on 22.03.2018 to content that it was mandatory for plaintiff to submit bill(s) on his own letterhead and hence bills, Ex.PW1/28 to Ex.PW1/31, as prepared by officials of defendant cannot be treated as proper compliance of the decision passed by Hon'ble High Court. Since plaintiff had failed to submit bill(s) in accordance with judgment in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (supra), the suit of plaintiff is liable to be dismissed being premature.
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 20 of 3737. From careful perusal of the judgment in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (supra), it is apparent that it does not mandate that plaintiff has to submit bill(s) only on his letterhead and in his handwriting for consideration by defendant. The signatures of plaintiff on bills, Ex.PW1/28 to Ex.PW1/31, is sufficient to hold that bills in question were submitted by him. Mere fact that particulars of bills were filled up by some officials of defendant in order to help and assist the plaintiff in its preparation and presentation is by itself not sufficient to reject the same. Rather signatures/ acceptance of plaintiff on the bills give rise to presumption that these were submitted by plaintiff himself and the fact that approval was given by officials of defendant on the same leads to inference that there is proper compliance of decision of Hon'ble High Court in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (supra). It is noteworthy that in the cited decision, number of other directions were also given to defendant corporation such as photography, videography, maintaining of digital record etc. which have not been complied with by the officials of defendant after lapse of considerable time since passing of the judgment. Thus it does not lie with the defendants to blame plaintiff for alleged non-compliance of the directions of the Hon'ble High Court when defendant corporation itself has avoided to do so in respect of directions issued to it and its officials. Equity demands that only one party cannot be penalized for not adhering to the guidelines because the party who seeks equity must do equity also. Accordingly, bills, Ex.PW1/28 to CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 21 of 37 Ex.PW1/31, are deemed to have been submitted by plaintiff in terms of directions given in the cited case and the suit of the plaintiff is not premature on this account as alleged by defendant. The plaintiff cannot be faulted when the officials of defendant themselves helped the plaintiff in preparation of the bills in question.
This issue is accordingly decided in favour of plaintiff and against the defendant.
ISSUE NO.2:-
Whether plaintiff is not entitled to claim the suit amount as he himself failed to complete the awarded work within stipulated time and also failed to apply for extension of time for completion of work? (OPD)
38. The onus of proving this issue was on defendant, however, since the written statement filed by defendant has already been struck off the record this issue does not survive. Moreover, as contended by counsel for defendant benefit of Force Majeure Clause would be available to plaintiff as well as defendant. Further, despite lengthy cross-examination of PW1, the defendant has failed to prove that the plaintiff alone was responsible for delay in completion of the work. The defendant was also responsible for delay in execution of the work at site. Further there were such extenuating circumstances prevailing countrywide, at that time, over which neither plaintiff nor defendant had any control and hence responsibility for delay cannot be shifted upon plaintiff alone. Although counsel for CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 22 of 37 defendant has contended that time was the essence of contract signed between plaintiff and defendant in respect of work order no.EE(Pr.)CLZ/SYS/2019-20/16 dated 03.01.2020, Ex.PW-1/1, from the reading of said agreement as well as surrounding circumstances, such a conclusion cannot be drawn. Merely having a explicit clause for completion of work in the contract is not sufficient to make time the essence of the contract. The contract in question was spread over a span of time, which had to be extended from time to time on account of extenuating circumstances. It is an admitted case of defendant that it had issued provisional extension of time to keep the contract alive and to uphold the integrity of contract, thus the fact that defendant provided extensions clearly point out that defendant itself intended to uphold the integrity of contract instead of repudiating the same. This is also the nutshell of the judgments (supra) relied upon by counsel for plaintiff. Accordingly, issue no.2 is decided in favour of plaintiff.
ISSUE NO.4:-
Whether the plaintiff is entitled for decree of recovery of Rs.1,46,48,147/- against the defendant, as prayed for?(OPP)
39. The onus of proving this issue was on plaintiff who is aggrieved by non-payment of his dues by the officials of defendant. From the evidence adduced on record by plaintiff, it is seen that defendant had granted extension of time to plaintiff to complete work vide following communications:-
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 23 of 37S.No. Date of Extension granted Exhibited as communication upto
1. 29.06.2020 02.09.2020 PW-1/2
2. 01.09.2020 02.11.2020 PW-1/5
3. 27.10.2020 02.01.2021 PW-1/8
4. 01.01.2021 02.03.2021 PW-1/11
5. 26.02.2021 02.05.2021 PW-1/14
6. 28.04.2021 02.07.2021 PW-1/16
7. 30.11.2021 02.01.2022 Ex.PW1/24
8. 31.12.2021 02.02.2022 to Ex.PW1/27 respectively
9. 28.01.2022 02.03.2022
10. 25.02.2022 02.04.2022 The work was completed on 06.01.2022.
40. Besides granting extension of time, defendant also gave following communication to the plaintiff:-
S.No. Date of Subject Exhibited as
communication
1. 21.10.2020 to abide with directions given by PW-1/7
NGT regarding pollution.
2. 12.11.2020 Regarding slow progress in work PW-1/9
3. 14.01.2021 Notice of slow progress PW-1/12
4. 12.03.2021 Defects pointed out in the work PW-1/15
executed by plaintiff by defendant.
5. 30.06.2021 Show cause notice issued to plaintiff PW-1/18
under Clause 2 of GCC bearing
no.D/119/SE/CLZ/2020-21
6. 09.08.2021 Issued in response to plaintiff's PW-1/20
letter/reply dated 07.07.2021
41. From the evidence adduced on record by plaintiff, it is also seen that the plaintiff wrote following letters to the defendant:-
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 24 of 37 S. Date of Subject Exhibited as
No. letter
1. 26.07.2020 Request to supply layout plan of boundary PW-1/3
wall and supply of earth for filling etc.
2. 31.07.2020 Request to supply layout plan of boundary PW-1/4
wall and supply of earth for filling etc.
3. 21.09.2020 Regarding hinderances faced by plaintiff PW-1/6
and seeking directions as well as supply of
drawings and layout plans
4. 26.11.2020 Representation reiterating his demands and PW-1/10
request for release of payment of 1st and 2nd RA bills.
5. 03.02.2021 Requesting for release of passed bill PW-1/13 amount of passed bills.
6. 29.06.2021 Requesting for release of payment PW-1/17
7. 07.07.2021 Plaintiff sent reply to show cause notice PW-1/19 dated 30.06.2021
8. 24.08.2021 Explained reasons for delay in execution of PW-1/21 work (In response to letter dated 09.08.2021 sent by defendant)
9. 25.08.2021 Legal Notice U/s 478 of DMC Act PW-1/22
10. 25.10.2021 Plaintiff informed defendant that balance PW-1/23 work had been commenced in full speed and requested to release balance payment.
42. The documents placed on record by plaintiff clearly bring out that there was delay in execution of work due to following reasons:-
(i) Due to onset of Covid-19 pandemic and ensuing directions during first lockdown, the work could not be carried out at the site from 22.03.2020 to the month of May/June 2020.
(ii) As a consequence of lockdown declared by the Government, majority of labourer returned back to their native place resulting in shortage of labour and escalation in cost of material.CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 25 of 37
(iii) The work order in question contained stipulation that expenditure by contractor should not exceed beyond Rs.1,29,51,602/-. The measurement book bearing no.1647 prepared by the officials/JE of defendant no.1 reflects that contractor had already exhausted the permissible limit before the work at site could actually be completed. Thus without sanction of further expenditure, plaintiff could not have resumed work at the site.
(iv) The defendant vide letter dated 21.10.2020, Ex.PW1/7, directed plaintiff to abide by directions given by NGT vide OA 21/2014 to mitigate air and dust pollution which also slowed down the work at site.
(v) The plaintiff repeatedly made request for supply of layout plan of boundary wall. The layout plan was supplied by defendant only in January, 2021 after verification of the drawing of Town Planning Department of Municipal Corporation of Delhi as well as survey done at the site.
(vi) The plaintiff repeatedly requested defendant to supply earth for filling. The defendant obtained earth for filling of the open school compound in the form of insert material generated after processing the Municipal Solid Waste at Sanitary Waste Fill (SLF) site at Bhalaswa Dairy. The movement of earth/inert material was effected due to restriction imposed during lockdown and hence defendant completed supply of earth/inert material in the month of October 2020.
(vii) The plaintiff diligently intimated to defendant vide their letter dated 26.07.2020, Ex.PW1/3, that due to shortage of CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 26 of 37 labour and hike in price of labour and material, it was unable to complete the work. The conditions prevailing in the country with the onset of Covid-19 pandemic and consequent lockdown imposed by the Government were well known to all the Governmental/Non-Governmental agencies, organizations, institutes, individuals etc.
(viii)Another lockdown was imposed by State Govt. of Delhi from 19.04.2021 to 04.06.2021. Although constructions activities were permitted, the acute shortage of labour and material as also transportation of material to the site remained affected and some normalcy could be resumed during the fag end of year 2021. Consequently, the plaintiff completed the work at site on 19.12.2021, as per recordings in the measurement book and/or by 06.01.2022 as has been admitted by the parties.
(ix) The plaintiff invested considerable resources, both human and material, incurred expenses and spent time in completion of work order despite which the payment of work done by him pursuant to work order assigned to him by the defendant remained pending.
(x) The plaintiff endeavored to complete the work at site despite all odds and issuance of show cause notice bearing no.D/119/SE/CLZ/2020-21 dated 30.06.2021 under Clause 2 of GCC.
43. Considering the delay in supply of drawing of layout of boundary wall as also delay in providing inert material/earth for filling of open school compound, the officials of defendant cannot CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 27 of 37 shirk from their responsibility and blame plaintiff alone for the delay in execution of the work at the site. Further the contention that plaintiff could have proceeded to complete other work of fittings and fixtures in the main building, even if it could not proceed with the work of construction/creating of boundary wall, is fallacious keeping in mind that there was no provision for safety and security of such fittings and fixtures at site in absence of a boundary wall. When the availability of labour to complete the construction work itself was in short supply due to Covid-19 pandemic, it is difficult to comprehend that either the contractor and/or officials of defendant would have been able to arrange for extra persons to guard the site as well as fittings and fixtures therein, in absence of a boundary wall.
44. In the present case, it is not disputed that defendant had issued work order bearing no.EE(Pr.)CLZ/SYS/2019-2020/16 dated 03.01.2020, Ex.PW1/1, to plaintiff. The plaintiff completed work under the work order and the officials of defendant, including the concerned Executive Engineer, have already prepared and passed the bills with respect to the work order.
45. From the testimony of PW1 and the documents proved on record by PW1/plaintiff, it is brought out that the 1st RA bill was passed on 23.0.2020 for Rs.43,62,232/-, the 2 nd RA Bill was passed on 31.08.2020 for Rs.18,15,446/- (Ex.PW1/29), 3rd RA Bill was passed on 27.11.2020 for Rs.7,53,902/- (Ex.PW1/30), 4th RA bill was passed on 31.03.2021 for Rs.29,87,626/- (Ex.PW1/31). Further, the final bill was passed for CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 28 of 37 Rs.25,77,535/- as per measurement of execution of work recorded in measurement book no.1647, Ex.PW1/32.
Further, it is also brought out that defendant had made a part payment of Rs.20 lakhs on 07.10.2021 and Rs.15 lakhs on 04.04.2022 against 1st RA bill, Ex.PW1/28.
46. Admittedly, the defendant is not disputing that the amount reflected from passed bills, Ex.PW1/28 to Ex.PW1/31 and that of final bill recorded in measurement book, Ex.PW1/32, is liable to be paid by it to the plaintiff. The only objection raised by defendant is that plaintiff has failed to submit interim and/or final bills as per agreement and terms and conditions contained in GCC, more particularly Clause 7 and 9 of GCC and Clause 4 of the Work Order.
Since while deciding issue no.1, it has been observed that the passed 1st to 4th & final bills, Ex.PW1/28 to Ex.PW1/32 are deemed to have been submitted by plaintiff, it is held that plaintiff is entitled to recover the following principal amount towards passed bills from the defendant:-
S.No. Particulars Amount (Rs.) Amount sanctioned by defendant after deductions
1. 1st RA Bill 8,62,232/- 6,32,499/-
[43,62,232-35,00,000] [41,32,499-35,00,000]
2. 2nd RA Bill 18,15,446/- 15,43,126/-
rd
3. 3 RA Bill 7,53,902/- 6,40,817/-
th
4. 4 RA Bill 29,87,626/- 25,39,483/-
5. Final Bill 25,77,535/- 25,77,535/-
TOTAL 79,33,460/-CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 29 of 37
47. However, coming the claim of Rs.38,49,504/-
towards damages/overhead expenses, it is seen from perusal of record that no evidence has been led by plaintiff in this regard. Further, the plaintiff has also not give any computation of these damages in the legal notice U/s 478 of DMC Act, dated 25.08.2021, Ex.PW1/22, nor has he given a separate computation of claimed damages in the plaint. There is no document placed on record by plaintiff in support of claim of Rs.38,49,504/- towards damages/overhead expenses.
48. In para 23 of the plaint, the plaintiff has given computation of claimed damage for prolongation of contract in extended period w.e.f. 03.07.2020 to 19.12.2021 i.e. 535 days @ 10% of the amount of expected execution of work i.e. contractual amount i.e. Rs.1,29,51,602/- divided by the contractual period i.e. 180 days comes to Rs.71,953 multiply by the extended period i.e. 535 days = Rs.3,84,95,039/-.
49. The PW1/plaintiff admitted during his cross- examination that he has not filed any document on record from which the damages suffered by him due to delay in completion of work can be ascertained. Hence, it is held that plaintiff is not entitled to claim any amount towards damages/overhead expenses from the defendant.
50. Coming to issue of refund of security deposit/earnest money, the defendants have taken a plea that plaintiff is not CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 30 of 37 entitled to refund for security for want of compliance of Clauses 17 and 45 of GCC. In this regard, the Hon'ble High Court of Delhi in case of Rajnish Yadav, Proprietor of M/s Bharat Construction Co. (supra) has observed as under:-
25. .......... There is no dispute that the security deposit is refundable to the appellant/ plaintiff and the same could be withheld only to secure MCD against any claims due to non-
performance of the statutory obligations on the part of the appellant/plaintiff. There is no material to indicate that the appellant/plaintiff has not cleared its due towards labour or any other statutory levy. A considerable amount of time has lapsed since the contract was complete. Admittedly, no claim has been made against MCD on account of any acts of commission or omission on the part of the appellant/plaintiff. Denying the appellant's/plaintiff's claim in this context would amount to permitting MCD to appropriate the security amount. Admittedly, there are no grounds for MCD to appropriate the security deposit. Thus, the same is required to be refunded to the appellant/plaintiff.
51. In the instant case also, nothing has been placed on record by defendant to bring out that plaintiff has failed to clear dues towards labour or any other statutory levy. Admittedly, no claim has been made against defendant/MCD on account of any acts of commission or omission on the part of plaintiff and thus in these facts and circumstances as well as in view of the observations made in the judgment of Rajnish Yadav, Proprietor of M/s Bharat Construction Co. (supra), plaintiff is also entitled to refund of the security/earnest money i.e. Rs.8,70,560/-. [11623+181545+75390+298763+303239] In these facts and circumstances, the plaintiff is held entitled to recover a sum of Rs.79,33,460/- towards the bill CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 31 of 37 amounts alongwith security/earnest money of Rs.8,70,560/-. The defendant is entitled to standards deductions as reflected from the amount computed on each bill, Ex.PW1/28 to Ex.PW1/32.
This issue is accordingly decided in favour of the plaintiff and against the defendant.
ISSUE NO.3:-
Whether the plaintiff is entitled to decree of permanent injunction, as prayed for in prayer clause (a) of the plaint? (OPP)
52. The onus of proving this issue was on plaintiff. During the pendency of the suit, the defendant was restrained vide order dated 10.01.2023 from enforcing show cause notice bearing no.D/119/SE/CLZ/2020-21 dated 30.06.2021 under Clause 2 of GCC. The said order was confirmed further on 14.03.2023 when plaintiff's application U/o XXXIX Rule 1&2 r/w Section 151 CPC was allowed.
53. As already observed while deciding issues no.2 and 4 that the plaintiff alone cannot be blamed for the delay in execution of the work at the site, considering the delay on the part of the officials of defendant in supply of drawing of layout of boundary wall and inert material/earth for filling of open school compound as also other extenuating circumstances like the hindrances cause by Covid-19 pandemic. Accordingly, plaintiff is held entitled to decree of the Permanent injunction as prayed for in prayer clause
(a) of the plaint.
This issue is decided in favour of the plaintiff and against the defendant.
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 32 of 37ISSUE NO.5:-
Whether plaintiff is entitled for interest. If yes, at what rate and for which period? (OPP)
54. Learned counsel appearing for the defendant states that as per Clause 7 of the agreement, defendant is not liable to pay interest. On the other hand, learned counsel appearing for the plaintiff urges that since the defendant failed to make payment within nine months after passing of the bills, the defendant is liable to pay interest @ 14% p.a. on the passed bills net amount for the delayed payment.
55. In North Delhi Municipal Corporation & Anr. vs. Sanjeev Kumar (RFA-430/2017) & CM Nos. 15925-26 of 2017, DOD: 22.3.2018), Hon'ble High Court dealt with the issues relating to clause-7, 9, 17 & 45 of the General Conditions of Contract extensively by framing the following questions:
(i) Whether payment of the principal amount can be delayed 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/refunds and if so, for which period?
56. After dealing with all the issues extensively, Hon'ble Court summarized the conclusions and findings in para 77 to 81 and same are reproduced as under:
77. The General Conditions of Contract i.e., clauses 7 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 33 of 37 and 9 which are admittedly part of the work orders issued by both the NrDMC 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. Section 46 of the Contract Act and the explanation thereto is clear that "what is a reasonable time is a question of fact 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 25 read 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 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 34 of 37 read or interpreted in a manner so as to instill reasonableness in them.
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 be held 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 CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 35 of 37 Conditions of Contract. Interest would be payable on delayed payments.
(emphasis supplied)
57. Since by not making the payment in time, the defendant deprived the plaintiff to utilize the amount, thus defendant is liable to compensate the plaintiff by paying interest on the due amount. The interest amount of 14% p.a. claimed by plaintiff also appears to be on higher side as in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar, RFA No. 430/2017 decided on 22.03.2018, interest amount of 8% p.a. only was awarded on delayed payment. Accordingly, the plaintiff would be entitled to simple interest @ 8% per annum from the date of filing of the suit till the realization of the decreetal amount.
R E L I E F:-
58. In view of the findings on foregoing issues, the present suit is decreed as under :-
(a) A decree of the Permanent injunction is passed in favour of the plaintiff and against the defendant thereby restraining the defendant, its officers, agents, representatives, etc. from taking any coercive action against plaintiff furtherance to show cause notice under Clause 2 of GCC bearing no. D/119/SE/CLZ/2020-21 dated 30.06.2021 or any other clause of the agreement with respect to work in question.
(b) A decree of recovery of Rs.88,04,020/-
[79,33,460+870,560] (Rupees Eighty Eight Lakhs Four CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 36 of 37 Thousand and Twenty only) is passed in favour of the plaintiff and against the defendant, with simple interest @ 8% per annum on the principal amount of Rs.79,33,460/- from the date of filing of the suit i.e. 22.04.2022 till realization of the decreetal amount.
(c) The defendant will further pay the full costs of the suit and additionally Rs.1,000/- spent by the plaintiff in DLSA for invoking pre-institution mediation.
Decree sheet be prepared accordingly.
File be consigned to record room after due
Digitally
compliance. signed by
ILLA RAWAT
ILLA Date:
Announced in the open Court
RAWAT 2024.02.22
16:51:32
on 22nd Day of February, 2024 +0530
(ILLA RAWAT)
District Judge (Commercial Court)-03
Central, Tis Hazari Courts, Delhi
CS (COMM) No. 1142/2022 Mukesh Goel Vs. Municipal Corporation of Delhi Page 37 of 37