Delhi District Court
Sahibjeet Singh Bagga vs Municipal Corporation Of Delhi Through ... on 30 July, 2025
DLCT010162282024
IN THE COURT OF SH. VIDYA PRAKASH
DISTRICT JUDGE (COMMERCIAL COURT)-01
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
CNR NO.: DLCT010162282024
CS (COMM)/1131/2024
IN THE MATTER OF:-
Sh. Sahibjeet Singh Bagga
Sole Proprietor of M/s Sahibjeet Singh Bagga
Resident & Office at 61/10, Ramjas Road
Karol Bagh, New Delhi-110 005
...... PLAINTIFF
VERSUS
Municipal Corporation of Delhi
Through Its Commissioner
Civic Centre, Minto Road
New Delhi-110002
...... DEFENDANT
Date of Institution of Suit [e-filing] : 12-10-2024
Date of Registration : 15-10-2024
Date of Reserving Judgment : 18-07-2025
Date of Pronouncement of Judgment : 30-07-2025
JUDGMENT
1. Vide this judgment, I shall dispose off the present suit for recovery of ₹9,33,105/- along with interest and costs, filed by plaintiff against the defendant.
BRIEF FACTS OF THE CASE:
2. The case of the plaintiff, as culled out from the plaint and the documents filed therewith, is as under:-
CS (COMM)/1131/2024 Page 1 of 512.1 Plaintiff is stated to be a contractor and sole proprietor of M/s Sahibjeet Singh Bagga and has been executing various works of the defendant corporation for last so many years, and is claimed to be registered with the defendant.
2.2 Defendant/ Municipal Corporation of Delhi, which is shown to a body corporate of State of Delhi, established and governed under the DMC Act, had awarded the work contracts in dispute to the plaintiff.
2.3 It is stated that upon fulfilling all requisite pre-work order conditions to the satisfaction of defendant, the plaintiff was awarded the following four work orders by the defendant, for nature of works as mentioned therein:-
2.3.1 EE (M-SZ-I) (EE IV)/ SYS/2019-2020/128 dated 05.11.2019 for contractual amount of ₹4,27,477/- [hereinafter referred to as W.O. No.128];
2.3.2 EE (M-SZ-I) (EE IV)/ SYS/2019-2020/367 dated 11.03.2020 for contractual amount of ₹4,20,436/- [hereinafter referred to as W.O. No.367];
2.3.3 EE (M-SZ-I) (EE IV)/ SYS/2019-2020/336 dated 26.12.2019 for contractual amount of ₹6,78,143/- [hereinafter referred to as W.O. No.336]; and CS (COMM)/1131/2024 Page 2 of 51 2.3.4 EE (M-SZ-I) (EE IV)/ SYS/2019-2020/334 dated 26.12.2019 for contractual amount of ₹7,88,941/- [hereinafter referred to as W.O. No.334];
2.4 Accordingly, the plaintiff entered into separate agreements with the defendant in respect of the aforesaid work orders.
2.5 It is also claimed that the plaintiff had also deposited earnest money of ₹14,850/- at the time of submission of tender, as also security deposit of ₹27,894/- after the award of tender, totaling ₹42,744/- in respect of W.O. No.128; earnest money of ₹9,900/- and security deposit of ₹32,103/-, thereby totaling to ₹42,013/- [wrongly mentioned as ₹42,003/-] in respect of W.O. No.337; earnest money of ₹15,100/- and security deposit of ₹52,714/-, thereby totaling to ₹67,814/- in respect of W.O. No. 336; and earnest money of ₹17,450/- and security deposit of ₹61,444/-, thereby totaling to ₹78,894/- in respect of W.O. No.334.
2.6 It is also stated that the work was required to be completed within 2 months in respect of said W.O. Nos. 128 and 337, whereas, 3 months in respect to said other two work orders. As per separate agreements, the SDOS and the SDOC were 14-11-2019 and 13-01-2020 respectively in respect of W.O. No.128; and 20-03-2020 and 19-05-2020 respectively in respect of W.O.No.367; and CS (COMM)/1131/2024 Page 3 of 51 05-01-2020 and 04-04-2020 respectively in respect of W.O. Nos. 336 and 334.
2.7 It is also stated that there was delay in handing over site(s) to the plaintiff and the plaintiff started the work(s) and completed the same to the satisfaction of the Corporation,and also that extension of time was granted by department without levy of penalty as the delay was not on the part of the plaintiff.
The same is the situation in respect of all the said work orders.
2.8 It is the case of the plaintiff that he executed and completed the said work orders to the satisfaction of defendant, and without any negative remarks; and thereafter, the Engineer of the Corporation prepared and passed 1st RA Bills on 27.10.2020 for ₹4,27,447/-; on 03.09.2021 for ₹4,20,031/-; on 06.10.2022 for ₹6,78,143/-; and 30.11.2021 for ₹7,88,941 in respect of aforesaid W.O Nos.128, 367, 336 and 334, respectively.
2.9 It is further the case of the plaintiff that in respect of W.O. No.128, although, the defendant passed 1 st RA Bill on 27-10-2020 for gross value of ₹4,27,447/- i.e. contractual amount, yet, the Corporation illegally withheld and deducted an amount of ₹10,000/-, thereby reducing the gross value of the bill to ₹4,17,447/-; security deposit inclusive of earnest money amounting to ₹42,744/- and after making other statutory deduction, the defendant CS (COMM)/1131/2024 Page 4 of 51 passed the bill for an amount of ₹3,70,469/-, however, the defendant made payment of ₹3,24,025/- only on 10-12-2020, thereby leaving a balance of ₹46,444/- and therefore, an amount of ₹99,188/- [₹42,744/-+₹46,444/-+₹10,000/-] is claimed to be due, payable and outstanding against the said work order.
2.10 Similarly, in respect of W.O. No.367, it is stated that although the defendant passed 1st RA Bill on 03-09-2021 for gross value of ₹4,20,031/- i.e. contractual amount, yet, the corporation withheld illegally an amount of ₹20,000/-, thereby reducing the gross value of the bill to ₹4,00,031/-; security deposit inclusive of earnest money amounting to ₹42,003/- and after making other statutory deduction, the defendant passed the bill for an amount of ₹3,46,927/-, however, the defendant made payment of ₹2,28,896/- only on 20-09-2021, thereby leaving a balance of ₹1,18,031/- and therefore, an amount of ₹1,80,034/- [₹42,003/-+ ₹11,8031/-+₹20,000/-] is claimed to be due, payable and outstanding against the said work order.
2.11 Likewise, in respect of W.O. No.336 it is stated that although the defendant passed 1st RA Bill on 06-10-2022 for gross value of ₹6,78,143/- i.e. contractual amount, yet, the Corporation illegally withheld an amount of ₹6,000/-, thereby reducing the gross value of the bill to ₹6,72,143/-; security deposit inclusive of earnest money amounting to CS (COMM)/1131/2024 Page 5 of 51 ₹67,814/- and after making other statutory deductions, the defendant passed the bill for an amount of ₹5,85,523/-, however, the defendant made payment of ₹2,90,380/- only on 31-10-2022, thereby leaving a balance of ₹2,95,143/- and therefore, an amount of ₹3,68,957/- [₹67,814/- + ₹2,95,143/- + ₹6,000/-] is claimed to be due, payable and outstanding against the said work order.
2.12 In respect of W.O. No.334, it is stated that the Corporation passed 1st RA Bill on 30-11-2021 for gross value of ₹7,88,941/- i.e. contractual amount, however, the Corporation illegally withheld an amount of ₹5,000/-, thereby reducing the gross value of the bill to ₹7,83,941/-; security deposit inclusive of earnest money amounting to ₹67,814/- and after making other statutory deductions, the defendant passed the bill for an amount of ₹6,83,051/-. It is stated that against the said work order, the defendant had made payment of ₹3,35,110/- and ₹3,52,941/- on 13-12-2021 and 130-03-2024 respectively. It is also stated that thereafter, the Corporation prepared and passed 2 nd Final Bill on 26-07-2023 and made payment of ₹5,000/- to the plaintiff. Therefore, an amount of ₹78,894/- towards security deposit inclusive of earnest money is claimed to be due, payable and outstanding against the said work order.
2.13 It is the further case of the plaintiff that despite passing of the above mentioned bills, the CS (COMM)/1131/2024 Page 6 of 51 corresponding payments were neither disbursed to the plaintiff, nor was the plaintiff informed of any reason for withholding the said payments.
2.14 Thus, it is stated that in respect of aforesaid work orders, an amount of ₹2,31,455/- is payable qua security deposit inclusive of earnest money and another amount of ₹4,95,618/- towards the passed bills amount/ illegally withheld amount as mentioned above and thus, the plaintiff has claimed a total amount of ₹7,27,073/- towards principal.
2.15 It is further stated that the plaintiff is a contractor and thus, has been deprived of the use and investment of his due amount and thus, it is stated that the Corporation is also liable to pay interest @ 12% per annum on the aforesaid amount of ₹7,27,073/-, from the date of passing of the respective bills and on the security-cum-earnest money, after expiry of 1 year from the date of completion till the date of payment. The plaintiff has calculated the same in Para no.19 of the plaint, which is as under:-
i Interest @ 12% from ₹15,697/-
10-09-2021 till 30-09-2024 on ₹42,744/- (1117 days) (security amount due under WO No.128) ii Interest @ 12% from ₹26,536//-
01-11-2020 till 30-09-2024 on ₹56,444/- (1430 days) (bill + CS (COMM)/1131/2024 Page 7 of 51 withheld amount due under WO No. 128) iii Interest @12% from 19-7-2022 ₹11,116/-
till 30-09-2024 on ₹42003/-
(805 days) (Security amount due under WO No. 367) iv Interest @ 12% from ₹50,958/-
04-09-2021 till 30-09-2024 on ₹1,38,021/- (1123 days) (bill + withheld amount due under WO No.367) v Interest @ 12% from ₹11,615/-
29-04-2023 till 30-09-2024 on ₹6,78,814/- (521 days) (security amount due under WO No.336 vi Interest @ 12% from ₹71,383/-
11-10-2022 till 30-09-2024 on ₹3,01,143/- (721 days) (bill + withheld amount due under WO No.336) vii Interest @12% from ₹18,727/-
10-10-2022 till 30-09-2024 on ₹78,894/- (722 days) (security amount due under WO No.334) TOTAL ₹2,06,032/-
CS (COMM)/1131/2024 Page 8 of 512.16 Thus, the plaintiff has claimed ₹2,06,032/- towards interest and ₹7,27,073/- towards principal, totaling to ₹9,33,105/-.
2.17 It is stated that the plaintiff got served legal notice dated 22-01-2024, sent on 24-1-2024 to the defendant through Speed Post and in spite of receipt of said notice, the defendant did not make any payment.
2.18 In terms of S. 12A of the Commercial Courts Act, 2015, the plaintiff is shown to have moved an application for pre-institution mediation on 09-04-2024 before Delhi State Legal Service Authority [DSLSA], Central, THC, Delhi, but to no avail and thus, Non-Starter Report dated 07-08-2024 was issued by said DSLSA.
2.19 Under these facts and circumstances of the case, the present suit came to be filed for recovery of ₹9,33,105/- along with pendent-lite and future interest @ 12% per annum on the amount of ₹7,27,073/- from 01-02-2024 till the date of payment.
3. On being served with the summons of the suit, the defendant put its appearance through counsel and also filed written statement contesting the suit.
4. In written statement, the defendant has taken certain preliminary objections, inter-alia stating therein that:-
CS (COMM)/1131/2024 Page 9 of 514.1 The suit is barred by limitation, as the plaintiff/contractor has filed the suit seeking recovery against work order nos. 128, 367, 336 and 334 dated 05-11-2019, 11-03-2020 and 26-12-2019 and hence, the present suit is liable to be dismissed on this ground alone.
4.2 The plaintiff has not approached the Court with clean hands and has concealed that there is material breach of agreement between the parties, as per General Conditions of Contract (GCC). While referring to Clause nos. 7 and 9 of GCC, it is stated that the aforesaid work orders and said GCC make it fundamentally clear that payment of bills shall be made strictly on Queue basis i.e. first the past liabilities will be cleared and after that, the release of payment for passed bills, will be in order of the demand received at HQ under particular head of account, as also no interest shall be payable to the contractor in case of delay in payment on account of non-availability of funds in the particular head of accounts of MCD.
4.3 The defendant has relied upon and referred to Clause 45 of the terms and conditions of the agreements regarding release of security deposit, which provides that security deposit of the work shall not be refunded till the contractor produces a clearance certificate from the Labour Office and as also to Clause 17 of GCC, which specially stated that security amount can be paid only after clearance CS (COMM)/1131/2024 Page 10 of 51 of the final bill. However, it is stated that the plaintiff has not submitted the relevant documents/bills, which are sine qua non for release of payment.
4.4 The present suit is barred under Order II Rule 3 CPC, as the plaintiff cannot join two or more cause of action in a single suit.
5. Similarly, by way of 'reply on merits', the defendant has controverted and denied the averments made in corresponding paras of the plaint and has prayed for dismissal of the suit. It is categorically stated that time is the essence of the contract and despite that there is the delay, which is wholly attributable to the plaintiff in completion of the work against said work orders. Further, it is stated that the plaintiff has accepted full and final payments against said orders without any protests and hence, defendant has no obligation of outstanding debt towards the plaintiff against said orders.
6. The plaintiff filed replication, thereby controverting and denying the averments made in the written statement, while reaffirming the averments made in the plaint.
ISSUES:
7. From pleadings of the parties, the following issues were framed, vide order dated 10-01-2025, passed by Ld. Predecessor of this Court:-
i. Whether the suit is barred by limitation?
OPD CS (COMM)/1131/2024 Page 11 of 51 ii. Whether the plaintiff is entitled to decree for recovery of principal amount of ₹4,95,618/- towards passed bill/ illegally withheld amount qua all work done? OPP iii. Whether the plaintiff is entitled for decree of release of security amount / earnest money of ₹2,31,455/-? OPP iv . Whether the plaintiff is entitled to interest on the said amount, if so at what rate and for which period? OPP v Relief.
EVIDENCE LED BY THE PARTIES:
8. It may be noted here that in support of his case, the plaintiff has examined himself as PW1 and closed his evidence on 31-01-2025. Likewise, the defendant has also examined only one witness namely Sh. Purshottam Meena, Assistant Engineer as DW1, towards DE and closed evidence on 28-04-2025.
Plaintiff's Evidence
9. Plaintiff /PW1 led his chief examination by way of affidavit (Ex.PW1/1) and deposed on the lines of averments made in the plaint. He has also relied upon/proved the following documents:-
Srl no. Document/Particulars Exhibit(s)
1. Copy of plaintiff's registration Ex.PW1/1 certificate (OSR) CS (COMM)/1131/2024 Page 12 of 51 Srl no. Document/Particulars Exhibit(s)
2. Copy of work order No. 128 dated Ex.PW1/2 05.11.2019
3. Copy of letter dated 21.06.2021 Ex.PW1/3 issued by defendant qua extension of time
4. Copy of 1st running bill dated Ex.PW1/4 27.10.2020 qua work order No. 128
5. Copy of letter dated 19.11.2020 Mark-A issue by concerned MLA of area
6. Copy of letter dated 06.12.2023 Ex.PW1/5 issued by the plaintiff
7. Copy of work order No. 367 dated Ex.PW1/6 11.03.2020
8. Copy of letter dt. 27.08.2021 Ex.PW1/7 issued by defendant qua extension of time
9. Copy of 1st running bill dated Ex.PW1/8 03.09.2021 qua work order No. 367
10. Copy of letter dated 06.12.2023 Ex.PW1/9 issued by the plaintiff
11. Copy of work order No. 336 dated Ex.PW1/10 26.12.2019 CS (COMM)/1131/2024 Page 13 of 51 Srl no. Document/Particulars Exhibit(s)
12. Copy of letter issued by defendant Ex.PW1/11 qua extension of time
13. Copy of 1st running bill dated Ex.PW1/12 06.10.2022 qua work order No. 336
14. Copy of letter dated 03.06.2023 Mark-B issue by concerned MLA of area
15. Copy of letter dated 06.12.2023 Ex.PW1/13 issued by the plaintiff
16. Copy of work order No. 334 dated Ex.PW1/14 26.12.2019
17. Copy of 1st running bill dated Ex.PW1/15 30.11.2021 and second final bill & dated 26.07.2023 qua work order Ex.PW1/16 No. 334
18. Copy of letter dated 03.06.2023 Mark-C issue by concerned MLA of area
19. Copy of letter dated 06.12.2023 Ex.PW1/17 issued by the plaintiff
20. Copy of legal notice dated Ex.PW1/18 22.01.2024 along with its speed (Colly) post receipt
21. Non-starter dated 07.08.2024 Ex.PW1/19 CS (COMM)/1131/2024 Page 14 of 51
10. PW1 has been cross-examined at length by the defendant.
However, the same is not being mentioned herein and shall be considered in subsequent paras of this judgment, while rendering findings on the issues.
Defendant's Evidence
11. DW1 namely Sh. Purshottam Meena, AE, also led his examination in chief by way of affidavit (Ex.DW1/A) and additional affidavit (Ex.DW1/B) and deposed on the lines of averments made in the written statement. He has also relied upon/proved the following documents:-
Srl Document/Particulars Exhibit(s) no
1. Copy of Office dated 15-07-2022 Ex.DW1/1 regarding his authorization (OSR) 2. Copy of GCC Ex.DW1/2
3. Copy of General Rule & Direction Ex.DW1/3
4. Calculation Sheet Ex.DW1/4
12. DW1 has also been cross-examined at length by the plaintiff. However, the same is not being mentioned herein and shall be considered in subsequent paras of this judgment, while rendering findings on the issues.
13. I have already heard Sh. Vikas Sharma, Advocate on behalf of the plaintiff and Sh. Karan Arora, Advocate on behalf of the defendant. I have also gone through the material available on record, including the pleadings of the parties, evidence, oral as well as documentary, CS (COMM)/1131/2024 Page 15 of 51 led by both the sides, as available on record. I have also duly considered the submissions made on behalf of the parties, including the written submissions filed by both the sides, as also the authorities cited at the Bar.
14. During the course of submission on 18-07-2025, the plaintiff had made statement to the effect that during pendency of the present suit, he has already received security amount of ₹27,894/- on 08-07-2025 and also earnest money of ₹14,850/- on 23-06-2025, through online transfers, from the defendant/MCD, against work order No.128 dated 05-11-2019.
15. My issue-wise findings are as under:-
ISSUE NO.1
16. Firstly, I shall take up the issue no.1, which is reproduced here as under:-
Issue no. (i) -Whether the suit is barred by limitation? OPD
17. The onus to prove aforesaid issue was placed upon the defendant. In order to discharge the burden, the defendant has examined Sh. Purshotam Meena, AE as DW1 only, as already noted above.
18. After referring to the pleadings of the parties and the documents brought on record, Ld. Counsel of defendant vehemently argued that since all the work orders in question relate to the year 2019 and 2020 and the present suit has been filed on or after 24-09-2024, same is barred CS (COMM)/1131/2024 Page 16 of 51 by limitation. He, therefore, urged that this issue should be decided in favour of defendant and against the plaintiff.
19. Per contra, Ld. Counsel of plaintiff argued that the defendant has failed to lead any cogent evidence during trial, on the basis of which, it can be said that either of the claims raised by plaintiff under different heads by way of present suit, is barred by limitation. He contended that in view of judgment of Hon'ble Apex Court in Suo Motu Writ Petition (Civil) No. 03/2020, the relevant period from 15-03-2020 till 28-02-2022 is to be excluded while computing the period of limitation. He further contended that relevant period during which the plaintiff had exhausted remedy of pre-institution mediation, is also required to be excluded in terms of S. 12 A of the Commercial Courts Act, 2015. He, therefore, urged that the defendant has failed to prove this issue and thus, it may be decided against the defendant and in favour of the plaintiff.
20. As already noted above, the plaintiff has filed the present suit seeking recovery of principal amount/ unpaid amount, refund of security deposit/earnest money deposited and interest amount in respect of four work order nos. 128 dated 05-11-2019 [Ex.PW1/2]; 367 dated 11-3-2020 [Ex.PW1/6]; 336 dated 26-12-2019 [Ex.PW1/10]; dated 334 dated 26-12-2019 [Ex.PW1/14]. Indisputably, the cause of action to recover the amounts against the said work orders under different heads would arose only after expiry of six/nine months as the case may be, in terms of Clause CS (COMM)/1131/2024 Page 17 of 51 9 of General Conditions of Contract (GCC) after the passing of final bills by defendant / MCD. It is a matter of record that the plaintiff had completed the entire work against the said work orders Ex.PW1/2, Ex.PW1/6, Ex.PW1/10, and Ex.PW1/14 on 10-09-2020, 19-07-2021, 29-04-2022 and 10-10-2021 respectively. However, there is nothing on record to show as to the date(s) of passing of the final bills qua the work orders in question.
21. Be that as it may, Hon'ble Apex Court in the case titled as Suo Motu [supra] has directed for grant of extension of the period of limitation from time to time on account of Covid-19 pandemic, and vide latest order dated 10-1-2022, inter alia, directed that period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation and where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01-3-2022 and in the event, the actual balance period of limitation remaining, with effect from 01-3-2022 is greater than 90 days, then such longer period shall apply. It is apposite here to reproduce relevant Para of the said judgment, which reads as under:-
"xxx I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general CS (COMM)/1131/2024 Page 18 of 51 or special laws in respect of all judicial or quasi - judicial proceedings.
II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.
III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.
IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.
xxx"
22. Thus, the period from 15-03-2020 till 28-02-2022 is to be excluded while computing the period of limitation. Apart from above, the plaintiff had also exhausted remedy of pre-institution mediation in terms of S. 12A of the Commercial Courts Act, 2015. In this regard, PW1 has proved Non-Starter Report dated 07-08-2024 as Ex.PW1/19. A bare perusal of the said document would show that the pre-institution mediation petition was filed by plaintiff on 19-04-2024 and Non-Starter Report was issued on account of failure of pre-institution mediation on 07-08-2024.Hence, the relevant period from 19-04-2024 till 07-08-2024 is also required to be excluded in view of S. 12A of the Commercial Courts Act, 2015.
CS (COMM)/1131/2024 Page 19 of 5123. Thus, while computing the period of limitation from respective dates on which cause of action arose to the plaintiff for filing the present suit qua each work order in question (supra), after excluding the period in terms of Suo- Motu decision of Hon'ble Apex Court, as also the period exhausted during pre-institution mediation, the present suit is found to be well within the prescribed period of limitation as the suit has been e-filed on 12-10-2024. Hence, it is held that the present suit is within the period of limitation.
24. Accordingly, the issue no.1 stands decided against the defendant and in favour of the plaintiff.
ISSUE NO.2 & 325. Now, I shall take up the issue nos.2 and 3, as they are interconnected and can be decided together. They are reproduced hereunder:-
Issue no. (ii) -Whether the plaintiff is entitled to decree for recovery of principal amount of ₹4,95,618/- towards passed bill/ illegally withheld amount qua all work done? OPP AND Issue no. (iii) -Whether the plaintiff is entitled for decree of release of security amount / earnest money of ₹2,31,455/-? OPP
26. Initial burden to prove both these issues was placed upon the plaintiff. In order to discharge such burden, the CS (COMM)/1131/2024 Page 20 of 51 plaintiff has examined only himself as PW1, and has deposed on the lines of averments made in the plaint during chief-examination by way of affidavit in evidence and has proved relevant documents including work orders, communications exchange between the parties etc., details whereof have already been mentioned in preceding paras of this judgment.
27. During his cross-examination, he admitted that he had accepted RA Bills without raising any objection and also did not raise any objection regarding deduction of amount in RA Bills with MCD before institution of the present suit. However, he denied the suggestion that he did not submit final bills qua work orders in question with MCD and volunteered that final bills were part of letters, all dated 06-12-2023, which are Ex.PW1/5, Ex.PW1/9 and Ex.PW1/13. Thereafter, said final bills were separately exhibited as Ex.PW1/5A, Ex.PW1/9A and Ex.PW1/13A respectively for the purpose of better identification. He denied the suggestions that Ex.PW1/5A, Ex.PW1/9A and Ex.PW1/13A are not final bills as were required to be submitted in the format provided in Clause-7 & 9 of GCC. He admitted that he neither submitted labour clearance certificate with MCD, nor he applied for the same with Labour Commissioner, however, he volunteered that there was no labour complaint and that is why, same was not required. He denied the suggestion that labour clearance certificate was required for release of security amount as per Clause 45 of GCC.
CS (COMM)/1131/2024 Page 21 of 5128. On the other hand, DW1 Sh. Purshottam Meena deposed during his chief-examination by way of affidavit in evidence and additional affidavit in evidence, Ex.DW1/A and DW1/B respectively that the plaintiff committed material breach of the agreements, as per GCC, by not submitting certain documents and not completing certain formalities. He further deposed that final bills were not submitted by plaintiff in prescribed format as per Clause Nos. 7 and 9 of GCC and general rules and directions, Ex.DW1/2 and Ex.DW1/3 and therefore, the defendant was justified in not releasing the payments against the work orders in questions to the plaintiff. He further testified that payments qua work order no.334 dated 26-12-2019 of ₹3,35,110/- and ₹3,52,941/- had already been released to the plaintiff on 13-12-2021 and 12-02-2021, respectively. He further testified that in view of policy for payment bearing No.CA/F&G/2015/D-145 dated 05-11-2015, payments were to be made to the contractor as per first come first served seniority basis and that too subject to availability of funds. He denied that even after bills are passed and processed for payments, many statutory requirements such as EPF, ESI, Labour Cess, etc. of the employees engaged by the contractor, which are contractor's obligations, remained unattended, for which notices had been received from the respective departments and this issue necessitated forming of a Committee to make policy of payment to the contractor. He deposed that the plaintiff had not submitted labour clearance certificate with the defendant,which is required for release of security amount, as per Clause 45 of GCC CS (COMM)/1131/2024 Page 22 of 51 and there was delay in completion of work, which was attributable to the plaintiff. Further, he has accepted full and final bills of ₹3,24,025/-, as per letter dated 06-12-2023 (Ex.PW1/13) without any protest and thus, the defendant is under no obligation to pay any outstanding debt to the plaintiff. In his additional affidavit in evidence Ex.DW1/B, he has exhibited the Calculation Sheet, containing the relevant details regarding work orders in question, payments released, balance amount to be paid, deductions made under different heads and the remarks mentioning the reasons of non-payment as ExDW1/4.
29. During his cross-examination, DW1 admitted that the plaintiff had completed the entire work under the work orders in question. No labour complaint was received by the department. He further stated that entitlement of plaintiff to the suit amount i.e. ₹7,27,073/- against all the work orders is a matter of record (emphasis provided).
Plaintiff's Arguments
30. After referring to the testimonies of the witnesses examined during the trial, Ld. Counsel of plaintiff has argued that the completion of work qua all four work orders in questions by the plaintiff to the entire satisfaction of defendant/ MCD is duly admitted by the defendant/ MCD and thus, there is no reason as to why the defendant had deducted certain amounts while passing final bills or in not releasing the entire amount, as also in not refunding security deposit/ earnest money deposited qua said work orders in questions. He further submitted that the defence CS (COMM)/1131/2024 Page 23 of 51 raised by the defendant regarding non submission of final bills by the plaintiff or non submission of Labour Clearance Certificate for release of Security Deposit/ Earnest Money deposited is not valid in the eyes of law. He further submitted that the defendant has failed to file any document showing that no labour complaint was received by the defendant, or that there was any defect in the works completed by the plaintiff against the work orders in question. Further, he submitted that the defendant was duty bound to refund the security deposit/ earnest money after expiry of 12 months from the date of completion of work orders in question, in view of Clauses 17 and 45 of GCC.
31. In support of aforesaid submissions, he also placed reliance upon the following judgments of coordinate benches, which were upheld by Hon'ble Delhi High Court:-
31.1 'M/s Barahi Construction v. NDMC & Anr.' bearing CS(COMM)/683/2020, decided on 07-01-2021 by Ld. District Judge (Commercial Court) -05, Central District, Tis Hazari Courts, Delhi, which was upheld by Hon'ble Delhi High Court in case titled as 'NDMC v. M/s Barahi Construction' bearing RFA (COMM.)/6/2021, decided on 15.03.2021; and 31.2 'Transline Technologies Pvt. Ltd. v. MCD' bearing CS (COMM)/1526/2019, decided on 11-12-2023 by Ld. District Judge (Commercial Court) -12, Central District, Tis Hazari Courts, Delhi, which was upheld CS (COMM)/1131/2024 Page 24 of 51 by Hon'ble Delhi High Court in case titled as 'MCD v. Transline Technologies Pvt. Ltd.' bearing RFA (COMM.)/414/2024, decided on 01.10.2024.
32. In addition thereto, Ld. Counsel of plaintiff has also relied upon the following decisions:-
32.1 'MCD v. M/s S. N. Malhotra & Sons' reported as 2016 IV AD (Delhi) 122; and 32.2 'Mr. Rajnish Yadav Proprietor of M/s Bharat Construction Co. v. The North Delhi Municipal Corporation' bearing RFA (OS)(COMM)/1/2021 decided on 10-01-2023.
Defendant's arguments
33. On the other hand, Ld. Counsel of defendant vehemently argued that since the plaintiff himself committed breach of relevant clauses of GCC by not submitting the final bills in prescribed format, as also did not submit labour clearance certificate, the plaintiff is not entitled to suit amount as claimed. For the said purpose, he relied upon relevant portions of cross-examination of PW1. He also drew attention of the Court to relevant Clause Nos. 7, 9, 17 and 45 of GCC. Although, he also referred to one additional document in the form of tabulated chart and copies of certain documents annexed therewith, however, same need not be considered by this Court since all these documents were never filed by defendant either along with written statement, or even till conclusion of their evidence during trial. Indisputably, the said document came to be filed by CS (COMM)/1131/2024 Page 25 of 51 defendant on 30-05-2024, when the case was at the stage of final arguments and that too without seeking any leave of the Court and thus, filing of such document, in the opinion of the Court, is non-est in the eyes of law. Hence, said documents are directed to be taken off the record.
34. In support of his submissions, Ld. Counsel of defendant/ MCD has also relied upon decision of Hon'ble Delhi High Court in the case of 'Bindra Builders v. DDA & Anr.' reported as 2012 SCC OnLine Del 3975.
Analysis & Findings
35. Before dealing with the rival submissions made on behalf of both the sides, it would be apposite to refer to the relevant clauses of GCC viz. Clause Nos. 7, 9, 17 and 45, for the purpose of deciding the dispute/ issue in hand. Same are reproduced here as under:-
CLAUSE 7 Payment on No payment shall be made for work, estimated to Intermediate cost Rs. One lac or less till after the whole of the Certificate work shall have been completed and certificate of to be completion given. For works estimated to cost Regarded as over Rs. One lac, the interim or running account Advances bills shall be submitted by the contractor for the work executed on the bass of such recorded measurements on the format of the Department in triplicate on or before the date of every month fixed for the same by the Engineer-in-Charge. The contractor shall not be entitled to be paid any such interim payment if the gross work done together with net payment/adjustment of advances for material collected, if any, since the last such payment is less than the amount specified in Schedule 'F', in which case the interim bill shall be prepared on the appointed date of the month after the requisite progress is achieved. Engineer-in-Charge shall arrange to have the bill verified by taking or causing to be taken, where CS (COMM)/1131/2024 Page 26 of 51 necessary, the requisite measurements of the work. In the event of the failure of the contractor to submit the bills, Engineer-in-Charge shall prepare or cause to be prepared such bills in which event no claims whatsoever due to delays on payment including that of interest shall be payable to the contractor. Payment on account of amount admissible shall be made by the Engineer-in-Charge certifying the sum to which the contractor is considered entitled by way of interim payment at such rates as decided by the Engineer-in-Charge. The amount admissible shall be paid by 30th working day after the day of presentation of the bill by the Contractor to the Engineer-in-Charge or his Asstt. Engineer together with the account of the material issued by the department, dismantled materials, if any. In the case of works outside the headquarters of the or Engineer-in-Charge, the period of ten working days will be extended to fifteen working days. In case of delay in payment of intermediate bills after 45 days of submission of bill by the contractor provided the bill submitted by the contractor found to be in order. The payment of passed bills will be subject to availability of funds in particular head of account from time to time in SDMC.
Payment of bills shall be made strictly on Queue basis i.e. first the past liabilities will be cleared and after that the release of payment for passed bills be in order of the demand received at HQ under particular head of accounts. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of funds in the particular head of account of SDMC. All such interim payments shall be regarded as payment by way of advances against final payment only and shall not preclude the requiring of bad, unsound and imperfect or unskilled work to be rejected, removed, taken away and reconstructed or re-erected. Any certificate given by the Engineer-in-Charge relating to the work done or materials delivered forming part of such payment, may be modified or corrected by any subsequent such certificate(s) or by the final certificate and shall not by itself be conclusive evidence that any work or materials to which it relates is/are in accordance with the contract and specifications. Any such interim payment, or any part thereof shall not in any respect conclude, determine or affect in any way powers of the CS (COMM)/1131/2024 Page 27 of 51 Engineer-in-Charge under the contract or any of such payments be treated as final settlement and adjustment of accounts or in any way vary or affect the contract.
Pending consideration of extension of date of completion, interim payments shall continue to be made as herein provided without prejudice to the right of the department to take action under the terms of this contract for delay in the completion of work, if the extension of date of completion is not granted by the competent authority. The Engineer-in-Charge in his sole discretion on the basis of a certificate from the Asstt. Engineer to the effect that the work has been completed up to the level in question make interim advance payments without detailed measurements for work done (other than foundations, items to be covered under finishing items) up to lintel level (including sunshade etc.) and slab level, for each floor working out at 75% of the assessed value. The advance payments so allowed shall be adjusted in the subsequent interim bill to be submitted by the contractor within 10 days of the interim payment. Payments in In case of composite tenders, running payment for composite the major component shall be made by EE of Contracts major discipline to the main contractor. Running payment for minor component shall be made by the Engineer-in-Charge of the discipline of minor component directly to the main contractor. In case main contractor fails to make the payment to the contractor associated by him within 15 days of receipt of each ruining account payment, then on the written complaint of contractor associated for such minor component, Engineer in charge of minor component shall serve the how cause to the main contractor and if reply of main contractor either not received or found unsatisfactory, ne may make the payment directly to the contractor associated for minor component as per the terms and conditions of the agreement drawn between main contractor and associate contractor fixed by him. Such payment made to the associate contractor shall be recovered by Engineer-in-charge of major or minor component from the next R/A/ Final bill due to main contractor as the case may be.
xxxx CS (COMM)/1131/2024 Page 28 of 51 CLAUSE 9 Payment of The final bill shall be submitted by the contractor Final Bill in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in-Charge whichever is earlier. No further claim shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payments of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer-in-Charge, will, as far as possible be made within the period specified here in under, the period being reckoned from the date of receipt of the bill by the Engineer-in-Charge or his authorized Asstt. Engineer, complete with account of materials issued by the Department and dismantled materials.
(i) If the Tendered value of work is up to Rs.45 lac: 2 months
(ii) If the Tendered value of work is more than 45 and up to Rs.2.5 Crore: 3 months
iii) If the Tendered value of work exceeds Rs.2.5 Crore: 6 months However, the payment of passed bills will depend on availability of funds in particular head of account from time to time in SDMC. Payment of bills shall be made strictly on Queue basis i.e. first the past liabilities will be cleared and after that the release of payment for passed bills will be in order of the demand received at HQ under particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of funds in the particular head of accounts of SDMC.
xxxxx CLAUSE 17 Contractor If the contractor or his working people or servants Liable for shall break, deface, Injure or destroy any part of damages, building in which they may be working, or any defects building, road, road kerb, fence, enclosure, water during pipe, cables, drains, electric or telephone post or maintenance wires, trees, grass or grassland, or cultivated period. ground contiguous to the premises on which the CS (COMM)/1131/2024 Page 29 of 51 work or any part is being executed, or if any damage shall happen to the work while in progress, from any cause whatever or if any defect, shrinkage or other faults appear in the work within twelve months (six months in the case of work costing Rs. Ten lacs and below except road work) after a certificate final or otherwise of its completion shall have been given by the Engineer-in-Charge as aforesaid arising out of defect or improper materials or workmanship the contractor shall upon receipt of a notice in writing on that behalf make the same good at his own expense or in default the Engineer-in-Charge cause the same to be made good by other workmen and deduct the expense from any sums that may be due or at any time thereafter may become due to the contractor, or from his security deposit or the proceeds of sale thereof or of a sufficient portion thereof. The security deposit of the contractor shall not be refunded before the expiry of twelve months (six months in the case of work costing Rs. Ten lacs and below except road work) after the issue of the certificate final or otherwise, of completion of work, or till the final bill has been prepared and passed whichever is later. Provided that in the case of road work, if in the opinion of the Engineer-in-Charge, half of the security deposit is sufficient, to meet all liabilities of the contractor under this contract, half of the security deposit will be refundable after six months and the remaining half after twelve months of the issue of the said certificate of completion or till the final bill has been prepared and passed whichever is later.
In case of Maintenance and Operation works of E&M services, the security deposit deducted from contractors shall be refunded within one month from the date of final payment or within one month from the date of completion of the maintenance contract whichever is earlier. xxxx CLAUSE 45 Release of Release of Security Deposit of the work shall not Security be refunded till the contractor produces a Deposit after clearance deposit after labour certificate from the labour Labour Officer. As soon as the work is virtually clearance complete the contractor clearance shall apply for the clearance certificate to the Labour Officer CS (COMM)/1131/2024 Page 30 of 51 under intimation to the Engineer-in-Charge. The Engineer-in-Charge, on receipt of the said communication, shall write to the Labour Officer to intimate if any complaint is pending against the contractor in respect of the work. If no complaint is pending, on record till after 3 months after completion of the work and/or no communication is received from the Labour Officer to this effect till six months after the date of completion, it will be deemed to have received the clearance certificate and the Security Deposit will be released if otherwise due.
36. From bare perusal of Clause 7 of the GCC, which deals with interim/ running bill, it is evident that where amount of work is Rs. One Lac or less, running / interim bill of each month, before the expiry of date fixed by the Engineer In-charge, is to be submitted by the contractor and if contractor does not submit the bill Engineer In charge can prepare the bill suo motu, which is to be paid to the contractor every month before the date fixed by the Engineer In charge. Further this clause provides that in case contractor does not submit the bill and Engineer In charge prepare running bill suo motu and in that event, interest will not be payable.
37. Clause 9 of GCC, which is applicable at the time of awarding of contract, deals with final bill. Further from perusal of clause 9 of GCC, it is evident that the payment of final bill is to be made by the defendant only after submission of final bill by the contractor within three months of physical completion of work or within one month of the date of final certificate of completion of work furnished by the Engineer In-charge. Hence, from aforesaid clause nos. 7 & 9 GCC, it is evident that the CS (COMM)/1131/2024 Page 31 of 51 plaintiff was required to submit the final bill in triplicate which admittedly plaintiff has not submitted.
38. From the aforesaid clause 17, it is evident that security amount is not to be released to the contractor before 6 month's time in case where award of work is upto Rs.5,00,000/- and 12 month's time where the amount of the awarded work is above Rs.5 lacs and that too after a certificate of completion of work is given by the Engineer-In- Charge or final bill has been passed, which ever is later.
39. Further, Clause 45, which deals with release of Security Deposit of the work, clearly stipulates that same shall not be refunded till the contractor produces labour clearance certificate from the Labour Officer. However, the latter part thereof clearly provides that the Engineer-in-Charge shall write to the Labour Officer to intimate if any complaint is pending against the contractor in respect of the work and if no complaint is pending on record till after 3 months after completion of the work and/or no communication is received from the Labour Officer to this effect till six months after the date of completion, it will be deemed to have received the clearance certificate and the Security Deposit will be released if otherwise due.
40. Now coming back to the facts of the present case.
41. At this juncture, it may be noted that barring letters dated 19-11-2020, 06-12-2023, 03-06-2023 and legal notice dated 22-01-2024, the defendant has admitted all the remaining documents filed by plaintiff along with the CS (COMM)/1131/2024 Page 32 of 51 plaint, in its admission/ denial affidavit filed on record. On the other hand, the plaintiff has admitted copies of GCC as filed by defendant along with written statement, however, he has denied General Rules & Directions appearing at page nos. 132 to 135 of the written statement filed on record.
42. In order to have better appreciation of the facts in the backdrop of the arguments advanced on behalf of both the sides and in the light of material available on record, suit amount claimed by the plaintiff may be shown in tabulated form, as under:-
Sr. W.O Total Illegally Security Amount Paid Amount Amount No. . amount of deducted deposit of bill amount outstandi paid work amount (₹) passed (₹) ng as during order (₹) (₹) claimed pendency (₹) by of the suit plaintiff (₹) (₹) 1 128 4,27,447/- 10,000/- + 42,744/- 3,70,469/- 3,24,025/- 99,188/- 42,744/-[ 46,444/- 14,850/-
paid on 23-06-20 25 and 27,894/-
paid on 08-7-202 5] 2 367 4,20,436/- 20000/- + 42,003/- 3,46,927/- 2,28,896/- 1,80,034/- -
1,18,031/-
3 336 6,78,143/- 6,000+2,95,14 67,814/- 5,85,523/- 2,90,380/- 3,68,957/- -
3/-
4 334 7,88,941/- - 78,894/- - - 78,894/-
TOTAL 7,27,073/-
Thus, after payment of security amount of Rs.42,744/- in respect of W.O. No.128, during the pendency of the suit, now ₹6,843,29/- is due and outstanding towards the work orders in question, as per claim raised by the plaintiff.
43. It is important to note that award of all the four work orders in question in favour of the plaintiff, their respective contractual amounts, their respective dates of completion and actual amounts paid and respective dates of payments by defendant to the plaintiff are not in dispute. It is also not in dispute that the plaintiff had accepted RA Bills without CS (COMM)/1131/2024 Page 33 of 51 raising any objection with MCD and also that the plaintiff did not submit any Labour Clearance Certificate with MCD. In this backdrop, the question, which arises for consideration before this Court is as to whether same amounts to breach of relevant terms and conditions of the contracts entered into between the parties qua the work orders in question. The answer to this question, in the opinion of this Court, is in negative for the following reasons:-
43.1 DW1 has accepted that entitlement of plaintiff to the suit amount i.e. ₹7,27,073/- against all the work orders is a matter of record, meaning thereby, the witness of defendant has not disputed that said amount is due and outstanding against the work orders, which is payable to plaintiff;
43.2 As regards the allegation of breach of clause nos.17 and 45 of GCC for the delay in completion of work allegedly attributable to plaintiff, the defendant / MCD has failed to bring on record any material showing that there was any defect in the works carried out by plaintiff qua the work orders in question at any point of time till date. There is nothing on record to suggest that any such discrepancy in the works carried out by the plaintiff, was ever pointed out or notified to the plaintiff at any point of time till the filing of the suit;
43.3 In so far as the allegation regarding breach of clause nos. 7 and 9 of GCC for non-submission of final CS (COMM)/1131/2024 Page 34 of 51 bills by the plaintiff is concerned, the defendant / MCD has failed to lead any cogent evidence during trial. Moreover, the PW1 has categorically deposed that final bills, which are part of letters dated 06-12-2023 (Ex.PW1/5, Ex.PW1/9 and Ex.PW1/13) and said final bills were also separately exhibited as Ex.PW1/5A, Ex.PW1/9A and Ex.PW1/13A respectively. No further question whatsoever was put to him on behalf of defendant as regards the prescribed format in which final bills were required to be submitted. Further, the sole witness of the defendant has failed to testify as to what were the fundamental deficiencies in the format in which such final bills were submitted by the plaintiff, so as to clothe their department any justification in withholding the payment against the work orders in question;
43.4 MCD has failed to lead any cogent evidence showing that there was any labour complaint qua plaintiff in respect of either of the work orders in question. This issue directly came up for consideration before Hon'ble Delhi High Court in the cited case of M/s S. N. Malhotra & Sons ( supra), wherein similar contention raised on behalf of MCD, stood rejected. The relevant portion of the said decision is extracted here as under:-
"xxxx
4. No doubt, as per, this clause, security deposit can be withheld till the clearance certificate is produced by the contractor from the Labour Officer. However, CS (COMM)/1131/2024 Page 35 of 51 same clause also stipulates that if no complaint is pending on record till after three months after the completion of the work and no communication is received from the Labour Officer till six months after the date of completion, it will be deemed to have received the clearance certificate and the security deposit will be released if otherwise due. It is not the case of the petitioner herein that any complaint was pending or any communication was received from the Labour Office in this behalf. Thus, after the expiry of six months, it would be deemed that clearance certificate is given and, therefore, at that point of time security deposit became refundable and since it was not refunded even thereafter, the contractor could claim interest. It may be noted that while discussing the claim on refund of the security deposit, it is observed by the learned Arbitrator that at the fag end of the arbitration proceedings on 20th January 2005, the petitioner-MCD certified that an amount of Rs.1,25,000/- is payable to the contractor. Thus, it is not the case of the petitioner that security was otherwise not payable. Perusal of the award shows that interest is awarded with effect from 1st October 2002, i.e. after the expiry of six months. Therefore, the approach of the learned Arbitrator in this behalf cannot be faulted with.
xxxx"
43.5 There is no evidence on record led from the side of the defendant, on the basis of which, it can be said that there was any reason or justification on their part to deduct any amount whatsoever from the final bills passed in respect of the work orders in question;
43.6 The defendant is shown to have withheld a total sum of ₹7,27,073/- from these 4 work orders in question without providing any justification thereof. Pertinently, the entire written statement filed by defendant is found to be completely silent on the issue as to how the defendant was justified in CS (COMM)/1131/2024 Page 36 of 51 making the aforesaid deductions, as shown in the above tabulated chart. It is nowhere the case of the defendant that either of the works carried out by the plaintiff was not to their satisfaction, or that the plaintiff had failed to comply with statutory requirements such as EPF, ESI, Labour Cess, etc. in respect of the employees engaged by him. Mere vague plea taken by defendant in the written statement, is not sufficient to justify the deduction of relevant amounts under any of such heads, without giving any necessary details thereof, or filing any supporting document on record. Moreover, neither any question has been put during cross-examination of PW1/ plaintiff on these aspects, nor any reason/ justification is furnished by defendant, while examining its sole witness i.e. DW1 during trial. Hence, this Court is entirely in agreement with the submissions made on behalf of plaintiff that deductions of aforesaid amounts by the defendant from final bills against the work orders in question, is totally unjustifiable and unacceptable in the eyes of law;
43.7 As already noted above, the defendant had made payment of ₹42,744/- towards security deposit inclusive of earnest money, in respect of work order no.128 in question, during pendency of the suit, which would go to show that the conduct of defendant in withholding security deposit amounts beyond the expiry of 12 months from the date of CS (COMM)/1131/2024 Page 37 of 51 completion of the works against each work order in question, was in breach of Clause No.45 of the GCC. Similar plea was raised on behalf of MCD before Division Bench of Hon'ble Delhi High Court in the cited case of Rajnish Yadav ( supra), but was turned down by Hon'ble Delhi High Court, while observing here as under:-
"xxxx
25. This Court is unable to concur with the said decision of the learned Single Judge. 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 dues towards labour or any other statutory levy. A considerable amount of time has lapsed since the contract was completed. 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.
xxxx"
43.8 Further, the defendant itself has mentioned in Calculation Sheet (Ex.DW1/4) that final bill qua work order no.367 dated 11-03-2020 (Ex.PW1/6) has already been passed and demand note thereof has already been sent to UD, GNCT of Delhi. Same would further demonstrate that the plea regarding non-submission of final bills in prescribed format and/or non submission of labour clearance certificate by plaintiff qua the work orders in CS (COMM)/1131/2024 Page 38 of 51 question, does not constitute any justifiable ground to withheld any amount under different heads, as were due and payable by them to the plaintiff.
44. The decision cited on behalf of the defendant/ MCD, is entirely distinguishable from the facts and circumstances of the present suit. In the cited decision, there was an arbitration agreement between the parties and on arising of disputes between the parties, the matter was referred to Ld. Sole Arbitrator, who having passed the arbitral award dated 29-02-2000, against which, objections were filed under old Arbitration Act, 1940. Moreover, the contention raised on behalf of DDA in that case, essentially related to interpretation of Clause 45 of the agreement therein, as also the effect of Clauses 6, 7 and 8 of the Contract on the issue of limitation. Hon'ble Delhi High Court has observed in Para no.20 of the said decision that the relevant question on the issue of limitation will have to be answered with reference to facts of each case and in the light of the Clauses of the Contract in question. Hence, the said decision is of no help to the case of the defendant/ MCD in the present case for the reasons already noted hereinabove and the legal position laid down by Hon'ble Delhi High Court in the above-referred decisions.
45. Thus, in view of foregoing reasons and the discussion made herein above, the Court is of the considered opinion that the plaintiff has succeeded in proving both these issues on the basis of preponderance of probability. Accordingly, the plaintiff is held entitled to recover ₹6,84,329/- after adjusting ₹42,744/-, which has already been paid by CS (COMM)/1131/2024 Page 39 of 51 defendant towards security deposit in respect of work order no.128.
46. Accordingly, the issue nos. 2 and 3 stand decided in these terms.
ISSUE NO.4
47. Now, I shall take up the issue no.4, which is reproduced here as under:-
Issue no. (iv) -Whether the plaintiff is entitled to interest on the said amount, if so at what rate and for which period? OPP
48. The onus to prove aforesaid issues was placed upon the plaintiff. As already noted above, in order to discharge the burden, the plaintiff examined himself as PW1 only.
PLAINTIFF'S ARGUMENTS:
49. Ld. Counsel of plaintiff has submitted that the defendant illegally withheld the payments against the work orders in question and also did not release the security amounts to the plaintiff, despite the fact that the plaintiff had completed all the said four work orders entirely to the satisfaction of defendant, and thus, the plaintiff is entitled to recover interest from them.
50. Although, Ld. Counsel of plaintiff fairly conceded that there is no express contractual arrangement between the parties to pay interest at the rate of 12% per annum, as claimed by the plaintiff, however, he contended that CS (COMM)/1131/2024 Page 40 of 51 interest at the appropriate rate as is deemed reasonable by the Court, may be awarded in favour of the plaintiff.
DEFENDANTS' ARGUMENTS:
51. Per contra, while repelling the aforesaid arguments advanced on behalf of plaintiff and after referring to the relevant portion of cross-examination of PW1, Ld. Counsel of defendant vehemently argued that the plaintiff has failed to discharge the initial burden to prove this issue and thus, he is not entitled to recover any amount towards interest.
52. After referring to the relevant portion of Clause No.9 of GCC, which is an admitted document by both the sides, it has been further argued that there is a clear stipulation agreed between the parties, that no interest shall be payable to the contractor(s) in case of delay in payment, due to non-availability of funds in particular head of accounts of MCD. He, therefore, contended that the plaintiff being bound by the contractual terms and conditions thereof, is estopped from claiming any interest from the defendant, since the delay, if any, in payment of principal amount, as also in releasing the security amount, was primarily on account of non-availability of funds in the particular heads of account of MCD. He, therefore, urged that this issue may be decided against the plaintiff and in favour of the defendant.
ANALYSIS & FINDINGS
53. No doubt, there is an express stipulation in the form of Clause 9 of GCC to the effect that defendant/MCD is not CS (COMM)/1131/2024 Page 41 of 51 liable to pay interest in case of delay in payment(s) on account of non-availability of funds in particular heads of account of MCD, however, the core issue is whether such a stipulation is enforceable under the law. This issue directly came before Hon'ble Delhi High Court in the case titled as 'North Delhi Municipal Corporation V. Sanjeev Kumar', bearing RFA 430/2017 decided on 22-03-2018. In the said case, similar stipulation in the form of Clause No.9 GCC was subject matter for consideration before Hon'ble Delhi High Court and similar arguments were advanced on behalf of appellant/MCD. After considering the said clause and the arguments advanced on behalf of both the sides, Hon'ble Delhi High Court has held as under:-
"...It is therefore, necessary and important that all the steps of the Contract are followed by the Contractors And the Corporations. The following guidelines are being passed:
1. Along with the work order, all the Clauses of the General Conditions of Contract should be attached;
2. On the award of the Work order, periodic inspections of the work being carried out should be done by the Engineer-in-Charge;
3. If possible, photographs of the works at different stages should be taken and maintained on the record;
4. Interim bills should be submitted by the Contractor - duly certifying the work, which has been carried out;
5.Final bills should be submitted by the Contractor -duly certifying the work carried out along with photographs;
6. The Bill should be scrutinized by the Engineer-in-Charge, works should be recorded in the measurement book and thereafter, the bill should be passed;
7. Once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to. Delay in payments would result in Interest being levied;
8. For Refunds of Security deposit and Earnest Money CS (COMM)/1131/2024 Page 42 of 51 deposit, the Contractor should unscrupulously comply with the conditions in Clauses 17 and 45. For refunds to be made, payment of final bill need not be awaited. Once the conditions of Clauses 17 and 45 are complied with and the final bill is passed, refunds ought to be made;
9. In suits relating recovery of Contractor's Dues, all the evidence including the NIT. General Conditions of Contract, periodic inspection reports, Final bill as submitted, Final bill as passed, Measurements carried out, Photographs etc., should be produced and duly exhibited.
10. It infrastructure ought to be created to maintain records of the work orders, inspection reports, final bills, photographs etc., digitally, as it is noticed that the trial court record does not contain all the relevant documents and in several cases, different versions of clauses are relied upon by both sides, bills are not properly understandable and there is no evidence of actual inspections on measurements having been taken.
Maintenance of digital records will make it more transparent and easily accessible for the officials and for production in the Court in case of future litigation. Adherence to the above shall ensure that the works are duly carried out as per the quality standards prescribed and there is proper record of work being done. Once The work is carried out payments ought not to be delayed, inasmuch as delay in payments compromise on availability of quality civil work for the Corporations, who take care of basic amenities for citizens such as roads, pavements, civil works, sewerage lines etc."
54. In batch of matters including the case of ' EDMC Vs Raj Kumar Jain', bearing RFA 397/2017 decided on 22-03-2018, similar issues were also raised, which were discussed at length and after due consideration thereupon, Hon'ble Delhi High Court came to the following conclusion:-
" 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 ₹5 lakhs shall be 6 months and work orders exceeding ₹5 lakhs shall be 9 months from the date when the CS (COMM)/1131/2024 Page 43 of 51 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 fulfillment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments. "
55. The facts of the present case are squarely covered by the above-referred decisions of Hon'ble Delhi High Court. Thus, applying the ratio of law laid down by Hon'ble Delhi High Court in above referred decisions and in view of discussion made hereinabove, this Court is of the CS (COMM)/1131/2024 Page 44 of 51 considered view that the plaintiff is entitled to recover interest for the delayed period beyond the period of six/nine months from the date of passing of final bills in question. The plaintiff is shown to have claimed pre-suit interest @ 12% per annum on the principal amount for the period from 01-11-2020, 04-09-2021 and 11-10-2022 till 30-09-2024 in respect of work order nos.128, 367 and 336, as also interest at the same rate on security deposits in respect of all the four work orders w.e.f. 10-09-2021, 19-7-2022, 29-04-2023 and 10-10-2022 till the date of filing of the suit. The plaintiff has also claimed pendent-lite and future interest @ 12% per annum on the amount of Rs.7,27,073/- from date of filing of the suit till the date of realization of payment.
56. As per guideline No.7 in the case of Sanjeev Kumar(supra) and the decision of Hon'ble High Court in the case of Raj Kumar Jain (Supra), once the Bills are passed, the payment schedule of 6 months and 9 months should be adhered to and delay in payments would result in interest being levied. In the present case, there is no denial of the fact that payments have been delayed beyond the aforesaid period. Accordingly, it is held that the plaintiff is entitled to interest on the principal amount of ₹4,95,618/- [towards the passed unpaid bills amount / illegally withheld amount qua the work orders in question] for the period from expiry of six/nine months, as the case may be, from the date of passing of the respective bills till the date of payment, as per the following details:-
CS (COMM)/1131/2024 Page 45 of 51Sr. Details of work order Date from which interest No. and unpaid principal has been awarded amount 1 Interest on ₹56,444/- from 01-05-2021 till (bill + withheld amount 30-09-2024 [reckoned due under WO No. 128) after expiry of six months from the date of passing of bill i.e. 27-10-2020] 2 Interest on ₹1,38,021/- From 01-03-2022 till (bill + withheld amount 30-09-2024 due under WO No.367) [reckoned after expiry of six months from the date of passing of bill i.e. 03-09-2021] 3 Interest on ₹3,01,143/- from 06-07-2023 till (bill + withheld amount 30-09-2024 due under WO No.336) [reckoned after expiry of nine months from the date of passing of bill i.e. 06-10-2022]
57. As regards interest on the security deposit/earnest money, the plaintiff is held entitled to recover interest thereon for the period beyond the expiry of twelve months from the date of completion of the respective work orders in question, in terms of Clause 45 of GCC, as per the following details:-
CS (COMM)/1131/2024 Page 46 of 51Sr. Details of work order Date from which interest No. has been awarded 1 Interest on ₹42,744/- from 10-09-2021 till (security amount due 30-09-2024 under WO No.128) [reckoned after expiry of 12 months from the date of completion of work i.e. 10-09-2020] 2 Interest on ₹42003/- from 19-7-2022 till (Security amount due 30-09-2024 under WO No. 367) [reckoned after expiry of 12 months from the date of completion of work i.e. 19-07-2021] 3 Interest on ₹6,78,814/- from 29-04-2023 till (security amount due 30-09-2024 under WO No.336 [reckoned after expiry of 12 months from the date of completion of work i.e. 29-04-2022] 4 Interest on ₹78,894/- from 10-10-2022 till (security amount due 30-09-2024 under WO No.334) [reckoned after expiry of 12 months from the date of completion of work i.e. 10-10-2021]
58. This brings me down to the next question as to the rate of interest to be awarded in favour of the plaintiff. The CS (COMM)/1131/2024 Page 47 of 51 plaintiff has claimed the interest @ 12% per annum, but as already mentioned above, nothing has been brought on record by plaintiff indicating that there was any agreement between the parties that he shall be entitled for the interest @ 12% per annum in case the payment is delayed by the defendants.
59. Section 34 CPC clearly provides that where the liability in relation to the sum so adjudged had arisen out of commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate of interest, or where, there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to the commercial transactions.
60. In view of overall facts and circumstances of the case and keeping in view nature of transactions between the parties, the claim of plaintiff to award interest @ 12% per annum, from due date till the date of actual payment, in the opinion of this Court, is excessive and on higher side. Interest of justice would be met by awarding such interest to the plaintiff @ 9% per annum for the above said period, as mentioned in preceding para nos. 56 and 57 of this judgment. Accordingly, pre-suit interest, pendent-lite interest and future interest are awarded @ 9% per annum. It is so ordered accordingly.
61. The plaintiff has also claimed the cost of the suit. Keeping in view the provisions contained in Sections 35 and 35A CPC, it has been established that the defendant failed to CS (COMM)/1131/2024 Page 48 of 51 pay the outstanding dues not only despite service of legal notice, but also, despite service of summons of the suit upon it. Therefore, the said defendant is responsible for the cost of the litigation to the extent of court fee and lawyers fee etc. as per the relevant rules. In my view, the plaintiff is accordingly entitled for the cost of litigation against the defendant/MCD.
62. The issue no. 4 stands decided in the aforesaid terms.
RELIEF:
63. In the light of the aforesaid discussion, Court is of the view that the plaintiff has been able to prove its case on the basis of preponderance of probability. The suit is decreed in favour of the plaintiff and against the defendant/MCD and thus, the following reliefs are granted:-
63.1 The plaintiff is entitled to recover principal amount of ₹4,95,618/- [₹56,444/- + ₹1,38,031/- + ₹3,01,143/-] towards the passed bills amount / illegally withheld amount in respect of work order nos.128, 367, and 336;
63.2 The plaintiff is entitled to recover a sum of ₹1,88,711/- [₹42,003/- + ₹67,814/- + ₹78,894/-] towards security deposits in respect of work order nos.
367, 336 and 334;
63.3 The plaintiff is entitled to recover pre-suit interest @ 9% per annum on principal amount of ₹4,95,618/- [towards the passed bills amount / illegally withheld CS (COMM)/1131/2024 Page 49 of 51 amount in respect of work order nos.128, 367, and 336 ] in terms of para no. 56 of the judgment;
63.4 The plaintiff is entitled to recover pendent lite and future interest @ 9% per annum on principal amount of ₹4,95,618/- [towards the passed bills amount / illegally withheld amount in respect of work order nos.128, 367, and 336] for the date of filing of the suit till date of realization of amount;
63.5 The plaintiff is entitled to recover pre-suit interest @ 9% per annum on security deposits of ₹1,88,711/- in respect of work order nos.367, 336 and 334, in terms of para no. 57 of the judgment;
63.6 The plaintiff is entitled to recover pre-suit interest @ 9% per annum on security deposits of ₹42,744/- in respect of work order no.128, in terms of para no. 57 of the judgment;
63.7 The plaintiff is entitled to recover pendent lite and future interest @ 9% per annum on security deposit amount of ₹1,88,711/- in respect of work order nos. 367, 336 and 334 for the period from the date of filing of the suit till date of realization of payment;
63.8 As regards work order no.128, the plaintiff is entitled to recover pendent lite interest @ 9% per annum on earnest money of ₹14,850/- from the date of filing of the suit till 23-06-2025 i.e. the date of release of payment, and on ₹27,894/- from the date of filing of CS (COMM)/1131/2024 Page 50 of 51 the suit till 08-07-2025 i.e. the date of release of payment; and 63.9 Costs of the proceeding is also awarded in favour of the plaintiff.
64. Decree sheet be prepared accordingly.
65. File be consigned to Record Room, after due compliance.
Digitally signedAnnounced in the open Court VIDYA by VIDYA PRAKASH On 30th Day of July,2025. PRAKASH Date: 2025.07.30 16:04:51 +0530 (VIDYA PRAKASH)
DISTRICT JUDGE (COMMERCIAL COURT)-01 CENTRAL DISTRICT/THC/DELHI CS (COMM)/1131/2024 Page 51 of 51