Delhi District Court
Rathi Udyog Ltd vs Delhi Development Authority on 17 January, 2007
//1//
IN THE COURT OF SH. DAYA PRAKASH :
ADDITIONAL DISTRICT JUDGE : DELHI
Suit no.641/03/98
Rathi Udyog Ltd.
having their Registered Office at:
L-104-105, Lajpat Nagar II
New Delhi-110 024.
...Plaintiff
VERSUS
Delhi Development Authority
INA Market, Vikas Sadan
New Delhi-110 023.
through its Secretary
...Defendant
SUIT FOR RECOVERY OF Rs.11,57,965.65
JUDGMENT
1. By this order I shall dispose of the suit for recovery of Rs.11,57,965.65 filed by the plaintiff Rathi Udyog Limited against the defendant Delhi Development Authority.
2. In the plaint, plaintiff claims itself to be a limited 1/37 //2// Company registered under the Companies Act, 1956 and Sh. K.C. Mishra as its Manager (Marketing) claims himself to be duly authorised by the Board Resolution to sign, verify, file and proceed with the present case on behalf of the plaintiff.
In the plaint it is stated that the defendant is a statutory body who had approached the plaintiff to participate in their enquiry for procurement of CTD Bars of various dias confirming to IS:1786-1985. It is further stated that on the basis of the said inquiry the plaintiff had offered his rates which resulted into placement of Agreement no.20/EE/SD2/FDDA/92-93 for supply of 2000 MT of Tor Steel of different sizes indicated therein and according to which 600 MT of 8mm was to be supplied at Rs.11,644/- and 500MT of 10mm at Rs.1,16,440/- and 500 MT of 12mm at Rs.11,194/- and balance 400 MT of 16mm at Rs.11,231/- per MT. According to the terms and conditions of the contract the payment term was essence of the contract and according to it 98% payment was to be made to the plaintiff within 5 working days on receipt of material the stores and 2/37 //3// submissions of bills and balance 2% was to be made within 15 days of it.
It is further stated that under the term the plaintiff was to execute the order within 2 months of order and the term for time for payment was the essence of the contract. However, the plaintiff had commenced the execution of the order by supplying the stores but in the meantime the plaintiff company which was being run by the family members of the Rathi being sons and grandsons of Smt. Chautha Devi Rathi had expired on 07.04.93, the plaintiff company was closed for 13 days in her honour. The plaintiff company had immediately informed the defendant about this. However, the goods which were already manufactured for the defendant, the plaintiff when wanted to send at defendants site at Janakpuri area it found that the same was declared no entry area and the trucks of the plaintiff were not allowed to enter in the same and therefore plaintiff had vide his letter dt.13-04-1993, had made request to the defendant to allow the same to be delivered at different place than Janakpuri.
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//4// It is further stated that in the meanwhile there was a 100% power cut at the factory of the plaintiff who as such vide his letter dt. 27.04.1993, informed the defendants about the same. However, defendant on 29.04.1993, advised the plaintiff that supply now be made at Azadpur who wrongfully and illegally had advised to the plaintiff that plaintiff were not making supply for last 3 days. The plaintiff again reiterated therefore about the same vide their letter dt.18.05.1993, but defendant acting illegally advised to the plaintiff that out of the agreed quantity only 1425 tonnes so far have been supplied to DDA defendant and the balance be supplied immediately and as such the defendant had kept the contract alive even after the expiry of the alleged date of delivery.
It is further stated that consequently plaintiff had issued further reminders dt.07.06.93 & 09.06.93, regarding the power cut problems faced by the plaintiff in the factory but the defendant acting illegally had informed to the plaintiff that defendant was issuing the show cause notice to the plaintiff under clause 3 of the contract awarded by DDA 4/37 //5// defendant to the plaintiff but same was not so.
It is further stated that besides the breach of the contract on the part of the defendant by failure of making 2% payment and plaintiff vide letter dt.12.07.1993, had replied to the defendant that the contract was subject to force meajure which was wrongly denied by the defendant. Defendant had not paid 2% balance payment of stores supplied contrary to the agreed terms of the contract.
It is stated that plaintiff therefore demanded his 2% payment and to close the contract to enable the plaintiff to receive back his earnest money of Rs.1 lac and security of Rs.3 lacs which is not liable to be refunded till the contract is completed in all respect. However, defendant did not take any action despite several reminders rather vide letter dt.02.12.1996 to close the contract relating to payment of balance to the plaintiff. The said letter was duly replied by the defendant on 31.12.1996.
Accordingly, it is submitted that the plaintiff is entitled for the following sums from the defendant:-
(i) Towards balance 2% as not 4,60,941.42 paid.
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//6//
(ii) Earnest Money 1,00,000.00
(iii) Towards refund of illegally forfeited Bank Guarantee given as security for performance 3,00,000.00
(iv) Towards interest payable due to illegal retention from 1-8-96 till 31-8-98 18% per annum 2,97,024.23 Total 11,57,965.65 It is stated that the defendant has not paid the above sum despite notice dt.04.05.98, of the plaintiff. Hence this suit.
It is stated by the plaintiff in the plaint that cause of action accrues in favour of plaintiff and against the defendant; that this court has jurisdiction to entertain and try this suit and that the suit has been properly valued for the purposes of court fees and jurisdiction. Hence, plaintiff sought the following reliefs:-
1. Pass the decree of Rs.11,57,965.65 with 18% interest per annum from the date of suit pendentelite and future interest till actual realisation in favour possession of plaintiff and against the defendant.
2. Pass the decree of cost in favour of the plaintiff and against the defendant.
3. .........
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//7//
3. Defendant duly served and filed W.S. In the W.S. defendant took several preliminary objections that the suit has not been signed by an authorised person of the plaintiff; that the plaintiff has not stated complete and true facts before this Court; that the suit has not been properly valued for the purposes of court fee; that the plaintiff has placed on record concocted facts and has concealed the material facts and that the plaintiff has filed the present suit with an ulterior and malafide intention of harassing and pressuring the defendant.
In reply on merits it is denied that Sh. K.C. Mishra, the Manager (Marketing) of the Company is competent to file and sign the present suit on behalf of plaintiff company.
It is submitted that the plaintiff entered into an agreement with the defendant on 20.03.1993 for supply of 2500 MT cold twisted parts of various dies confirming to IS:1786-1985. It is further submitted that though time was made an essence of the contract, the plaintiff failed to make good the supplies within the time prescribed under the 7/37 //8// agreement. Under the agreement, the supply was to be commenced from 19.03.1993 but no supply was made by the plaintiff even till 07.04.93 when a letter dt. 07.04.93 was written by the Executive Engineer of defendant requesting the plaintiff to start the supply of steel. It is denied that the plaintiff had commenced the execution of the order before 07.04.93. It is further submitted that the plaintiff had not even commenced the supply of steel even till 07.04.93 when according to the plaintiff, one of their family member expired. The defendant also wrote letters dt.29.04.93, 31.05.93 and 14.07.93 asking the plaintiff to complete the supply of material to the defendant. Despite the plaintiff's request vide letter dt.29.04.93 was acceded, the plaintiff failed to supply the goods to the defendant.
It is further stated that the plaintiff failed to give any authentic proof regarding power cuts, besides during the same time the firm had supplied material to other departments. It is also stated that only in pursuant to the request made by the plaintiff that the time was extended till 30.07.1993 for completion of the work. It is denied that the 8/37 //9// defendant has committed any breach of the terms of the contract. It is submitted that plaintiff is a habitual breacher. It is submitted that under above mentioned circumstances the defendant was forced to rescind the agreement and get the works completed from other agencies, at the risk and cost of the plaintiff. Accordingly, defendant filed the two recovery suits against the plaintiff under agreement no.17/EE/SD2/DDA/92-93 and 9/EE/SD2 /DDA/93-94 for recovery of Rs.42.22 lacs and Rs.34.59 which are now pending for adjudication.
It is further submitted that vide letter dt.02.12.96 a show cause notice was issued to plaintiff as the plaintiff had entered itself liable to pay liquidated damages for delay in performance of the contract under Clause 2 of the agreement and as no reply was received to said show cause notice, the plaintiff vide letter dt.31.12.1996 was informed that the agency is liable to pay a sum of Rs.1,34,425/- by way of compensation/liquidated damages as stipulated in Clause 2 of the agreement. Hence it is stated that since the agency failed to deposit the liquidated 9/37 //10// damages of Rs.1,34,425/- this amount was adjusted out of the dues of the agency lying with the DDA under clause 17 of the agreement. It is denied by the defendant that the defendant could not retain the amount from the plaintiff dues. It is submitted that the retention of money and damages demanded are all in accordance with the terms of the agreement entered into by the plaintiff and the defendant.
Accordingly, defendant prayed that the suit of the plaintiff be dismissed with heavy cost.
4. Subsequently, rejoinder to the W.S. of defendant was filed wherein plaintiff has denied the allegations made in the W.S./Reply and reiterated the averments contained in the plaint.
5. On the basis of the pleadings following issues were framed by the Hon'ble High Court of Delhi on 31.10.2001:-
1. Whether the plaint has been signed and verified and suit has been filed by a duly 10/37 //11// authorised person? If not, its effect. OPP
2. Whether the payment of the amount in question has rightly been with-held by the defendant as per terms of the contract?OPD
3. Whether the amount of Rs.1 lakh on account of earnest money and security amount of Rs. 3 lakhs were liable to forfeiture by the defendant?OPD
4. If issue no.3 is decided in affirmative, whether the plaintiff is entitled to any refund?OPP
5. Whether the plaintiff is entitled to claim interest in respect of the amount due on account of supply of goods and the forfeited amount? If so, at what rate and for what period?OPP
6. What amount, if any, the plaintiff is entitled to recover from the defendant on account of supply of goods?OPP
7. Relief.
6. On behalf of plaintiff Sh. K.C. Mishra, Manager (Marketing) of the plaintiff company duly examined, cross examined and discharged as PW1.
In cross examination PW1 deposed that he has been duly authorised vide resolution dt.25.03.1996 to sign 11/37 //12// and verify the pleadings. PW1 further deposed that the plaintiff company entered into agreement Ex.PW1/D1 with the defendant and the plaintiff accepted the terms and conditions of NIT. The Ex.PW1/D2 is notice in writing tender (NIT). PW1 admitted that time was the essence of the contract. The date of commencement of contract was 19.03.93 and the date of completion was 18.05.95. The first supply was made on 18.04.93. The plaintiff company received letter Ex.PW1/D3 as material was not supplied till 07.04.03. PW1 further deposed that the mother of the Chairman died on 07.04.93 and factory remained closed for 13/14 days. The defendant was duly informed about the closure by way of letters dt.13.04.93 and 27.04.93. PW1 admitted that plaintiff supplying goods to other parties apart from DDA. PW1 admitted that DDA had extended the contract till 30.07.1993 and plaintiff received letter Ex.PW1/D5. PW1 further admitted that plaintiff received Ex.PW1/D6 which was a show cause notice. PW1 also admitted that the penalty had been adjusted against the payments made by the DDA.
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//13//
7. On behalf of defendant Sh. R.N. Mehrortra, Project Manager duly examined, cross examined and discharged as DW1. DW1 in his cross examination deposed that DDA issued a show cause notice on 02.12.1996 which is Ex.PW1/12. DW1 admitted that the earnest money of Rs.1 lac and security of Rs.3 lacs had been paid by the plaintiff and the sum of Rs.4 lacs is still with the DDA. DW1 further admitted that the DDA has to pay Rs.4,43,562/- to the plaintiff towards 2% of the amount retained. DW1 admitted that payment was to be made within 15 days of delivery. DW1 further admitted that the DDA did not make the payment as agreed. DW1 stated it to be incorrect that DDA had committed any breach.
8. Arguments heard. Both plaintiff and defendant filed written arguments. I have seen the same.
9. Advocate of plaintiff cited 98(2002) DLT 573 (DB), AIR 1961 SC 990 (V98 C159), AIR 1976 Rajasthan 13/37 //14// 98, AIR 1997 SC 1324, (1996) 6 SCC 660, AIR 1992 Delhi 343 and 2001 VI AD (Delhi) 506.
10. My findings with respect to the issues are as follows:
REGARDING ISSUE NO.1 Whether the plaint has been signed and verified and suit has been filed by a duly authorised person? If not, its effect. OPP As per advocate of plaintiff issue no.1 be decided in favour of the plaintiff and against the defendant as the suit has been filed through its Manager (Marketing), Sh. K.C. Mishra who was authorised vide Board Resolution dt.25.03.1996 which is Ex.PW1/1. Sh. K.C. Mishra also examined as PW1. The Resolution dt.25.03.1996 has been proved. It is further proved that the minute book has been singed by the Chairman as per the provisions of The Companies Act.
On the otherhand advocate of defendant argued that the minute book does not bears his signatures and thus the suit by Sh. K.C. Mishra nor his deposition is on behalf of 14/37 //15// plaintiff company. Accordingly, it is argued that the issue no.1 be decided against the plaintiff and the suit of the plaintiff be dismissed.
I have seen the file and feel that issue no.1 be decided in favour of the plaintiff on the following grounds:-
firstly, copy of Resolution passed in the meeting of Board of Directors of plaintiff company held on 25.03.1996 by which Sh. K.C. Mishra Manager (Marketing) was authorised by the Company to file the suit and to depose is Ex.PW1/1.
Secondly, Ex.PW1/9 is the Memorandum of Association and Article of Association which authorised the Board of Directors to give authority. At the time of cross examination of PW1 Sh. K.C. Mishra the original minute book was brought and duly proved. It is further proved that the minute book was signed by the Chairman. Merely because the minute book does not bears the signatures of Sh. K.C. Mishra does not go against the plaintiff company. 15/37
//16// In view of above I feel that the plaintiff has proved the issue and it is held that the plaint has been signed and verified and suit has been filed by a duly authorised person. Accordingly, the issue no.1 is decided in favour of the plaintiff and against the defendant.
REGARDING ISSUE NO.2 Whether the payment of the amount in question has rightly been with-held by the defendant as per terms of the contract?OPD On this issue advocate of plaintiff argued that the sole defendant witness has accepted the liability and also delay in payment in the cross examination. It is further argued by advocate of plaintiff that a person who himself committed the breach cannot claim the damages whether liquidated damages or otherwise. Advocate of plaintiff further argued that the onus to prove this issue was on the defendant and defendant failed to file the contract. It is further argued that after filing of WS and after evidence of 16/37 //17// the plaintiff, the alleged attested copy of the agreement was filed without permission of the Court. Hence, the terms of the alleged agreement cannot be looked into at all. Advocate of plaintiff further argued that DW1 in his cross examination has admitted that at the time of acceptance of the material, the imposement of any penalty on delayed supplies was not communicated to the plaintiff. Hence referred to Section 55 of the Contract Act which provides that if no penalty is levied at the time of acceptance of delivery of stores, it cannot be levied subsequently as it is waived and advocate of plaintiff cited AIR 1992 Delhi 343 and 2001 VI AD (Delhi) 506. Advocate of plaintiff further argued that plaintiff has claimed Rs.8,60,941.42. The defendant in the W.S. as well as in the cross examination admitted this amount as with them and same is not paid till date. There is no counter claim by the defendant and accordingly it is argued by the advocate of plaintiff that since defendant has failed to discharge the onus the issue be decided against them.
On the otherhand advocate of defendant argued 17/37 //18// that Ex.PW1/D2 is the Notice Inviting Tender and clause 17 of the agreement empowers the DDA to exercise lien in respect of sums claimed by the Department. As per clause 17 of agreement the Engineer-in-charge has been entitled to withhold not only the security deposit but also any other amount found payable to the claimant in case the security deposit is insufficient to recover the amount claimed found payable to the DDA. It is further argued that admittedly the DDA is entitled to exercise lien over the amounts payable to the plaintiff as the defendant has filed two cases for recovery against the plaintiff in the Hon'ble High Court of Delhi. The pendency of these two recovery cases has been admitted by the witness of the plaintiff in his cross examination. Advocate of defendant further argued that as per clause 2 of the agreement the Department can extend the time for completion of the contract in case the Contractor failed to complete the contract within the stipulated time. However, this is subject to the condition that the Contractor shall be liable to pay liquidated damages to the DDA. Advocate of defendant further argued that 18/37 //19// show cause notice dt.31.12.96 which is Ex.PW1/D6 is an admitted document and no reply was received or sent. Hence, defendant in exercise of the powers under clause 2 of the agreement imposed liquidated damages of Rs.1,34,425/- on the plaintiff and since the plaintiff failed to pay the penalty amount to the defendant, the same was adjusted out of the dues of the plaintiff. Accordingly, it is argued that the defendant has proved the issue and discharge the onus.
I have seen the file and feel that the defendant DDA has failed to discharge the onus on the following grounds:-
Firstly, plaintiff in the plaint claims 2% of the balance amount as not paid by the defendant to the plaintiff and which is Rs.4,60,941.42. As per terms of the contract between the parties 98% of the bill amount shall be paid within 5 days and remaining 2% which is claimed in the present suit shall be paid by the DDA to the plaintiff within 20 days.
DW1 in his cross examination has admitted that 19/37 //20// the DDA has not paid the amount as stipulated in the agreement. It is a fact that 98% of the amount in many instances were not paid within 5 days. There is clear violation of the agreement by DDA.
So far as balance 2% of the total bill is concerned, it is an admitted fact that till to date this amount has not been paid and which as per the agreement was to be paid within 20 days. The contract between the parties completed in July, 1993. This again is violation of agreement by DDA.
Secondly, defendant in the WS, in deposition as well as in arguments heavily relies on clause 17 of the agreement which provides as under:-
"WITHOLDING AND LIEN IN RESPECT OF SUMS CLAIMED;
Whenever any claim or claims for payment of a sum of money arises out of or under the contract against the contractor the Engineer-in- charge of the DDA shall be entitled to withhold and have a lien to retain such sum or sums in whole or in part from the security deposit of the contractor and for the purpose aforesaid the Engineer-in-charge or the DDA shall be entitled to withhold the security deposit and also have 20/37 //21// lien over the same pending. The finalisation or adjudication of any such claim. In the event of the security being insufficient to cover the claim the amount or amounts the Engineer-in-charge or the DDA shall be entitled to hold and have a lien to retain the extent of such claimed amount or amounts referred to above, from any sum or sums found payable or which at any time thereafter may become payable to the contractor under the same contract or any contract with the Engineer-in-charge or DDA pending finalisation of any such.
It is an agreed terms of the contract that the sum so withheld or retain under the lien referred to above by the Engineer-in-charge or DDA will be kept withholding or retain as such by the Engineer-in-charge or DDA till the claim arising of or under the contract is determined by the Arbitrator. If contract is governed by the Arbitration clause .........capacity or otherwise. LIEN IN RESPECT OF CLAIMS IN OTHER CONTRACTS OF CONTRACTOR(S) Any sum of money due and payable to the contractor (including security deposit returnable to him) under the contract may be withheld or retain by way of lien by the Engineer-in-charge or the DDA or any other contracting persons through Engineer-in-charge against any claim of the Engineer-in-charge or DDA or such other person or persons in respect of payment of a sum of money arising out of or under any other contract by the contractor with the Engineer-in- charges or the DDA or with such other person or persons.
It is an agreed term of the contract that the sum 21/37 //22// of money to withheld or retain under this clause by the Engineer-in-charge or the DDA will be kept withheld or retained as such by the Engineer-in-charge or the DDA till his claim arising out of in the same contract or any other contract is either mutually settled or determined by the Arbitrator or by the competent court, on the case may be and that the contractor shall have no claim for interest or damages whatsoever on this account or any other ground in respect of any sum of money withheld or retained under this clause and duly notified as such to the contractor........."
In substance this clause provides that if there is claim of DDA against the plaintiff in any other contract then the outstanding amount including the security deposit can be withhold by the DDA as lien in respect to the sums in other contracts. The essential condition in this clause is that any sum of money due and payable to the contractor may be withheld or retained by way of lien by Engineer-in- charge of the DDA or any other contracting persons through Engineer-in-charge.
Thirdly, I feel that the defendant/DDA though taking shelter under clause 17 has violated the clause 17 themselves. In the WS, in evidence as well as in 22/37 //23// arguments, advocate of defendant has not able to show that any order has been passed by the DDA to withheld the amount as lien in respect of other cases.
Fourthly, it is not shown by the DDA in the WS or in evidence or in the arguments that a decision was taken by the Engineer-in-charge who is competent under clause 17 to withheld the amount and to retain lien in respect to the outstanding amount. In fact DDA or any of its competent officer has not decided yet as to what is the outstanding amount till to date. Sometimes the DDA states that the amount withheld as lien in respect of other cases pending in the Hon'ble Delhi High Court and lastly it is stated by the DDA that plaintiff is not entitled to any amount in the suit. What is the exact amount which has been withheld is neither been clarified by the DDA nor any order to this effect has been passed.
Fifthly, unless and until DDA invoke clause 17 by a competent order no withheld of any amount can be 23/37 //24// made by way of lien by the DDA. Even otherwise the withholding of the amount is done through a competent order the DDA failed to explain that the amount withheld by way of lien is by competent person.
Sixthly, the photocopy of the agreement has been filed which is attested by one Sh.Virender Bhatia. The original has not been filed by the DDA. A document has to be proved by original. If the original is not available or lost then the same can be proved through secondary evidence with prior permission of the Court. It is a fact that no permission has been taken by the DDA to prove the agreement by way of secondary evidence. It is also not proved that whether Sh. Virender Bhatia is competent to attest this agreement. DDA has to prove that Sh. Virender Bhatia is competent to attest this agreement under the law which DDA fails.
Accordingly, the defendant has failed to discharge the onus. The issue no.2 is decided against 24/37 //25// the defendant and it is held that the payment of the amount in question has not rightly been withheld by the defendant as per terms of the contract.
REGARDING ISSUE NO.3 Whether the amount of Rs.1 lakh on account of earnest money and security amount of Rs. 3 lakhs were liable to forfeiture by the defendant?OPD This issue is OPD i.e onus to prove this issue was on the defendant.
Advocate of plaintiff states that the outcome of this issue is subject to issue no.2 and defendant has failed to prove this issue.
Advocate of defendant states that the defendant has successfully proved this issue and hence issue be decided in favour of the defendant.
I have seen the file and feel that the defendant has failed to discharge the onus on the following grounds:-
firstly, vide issue no.1 it has been held by this 25/37 //26// Court that the original document/agreement has not been placed by the DDA and this issue has heavy reference on clause 17 of the agreement between the parties.
Secondly, the clause 17 does not provides the forfeiture of earnest money and security money. It is further a fact that the clause 17 does not refers at all to the earnest money.
The earnest money and the security amount are two different words. The word 'withholding and lien' and the word 'forfeiture' are also two different words. The word 'withholding and lien' refers to the amount belonging to a person. The dictionary meaning of the word 'forfeit' is confiscation and after forfeiture the corpus of the amount vanishes.
There is no agreement between the parties regarding the forfeiture of the earnest money and security deposit.
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//27// Thirdly, if forfeiture has to be done by the DDA who was competent to forfeit the amount, has not been explained. The forfeiture refers to termination of contract due to non-performance or partly non-performance of the contract. There is no pleading nor any order of the DDA to say that the contract of the plaintiff was terminated for non- performance or partly non-performance of the contract.
It is a fact that the DDA has never terminated the contract between the parties for non-performance. Since the contract was never terminated by the defendant for non- performance there is no question of forfeiture of earnest money and security amount by the DDA.
Fourthly, so far as withholding and lien of the amount is concerned the Engineer-in-charge is competent to pass the order regarding the withholding and lien on the outstanding amount. Till to date DDA failed to explain as to what is the outstanding amount of the plaintiff against the DDA. Hence, the exact amount of withholding and lien is vague.
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//28// Fifthly, it is not the case of the DDA nor any fact has been given in the pleadings and in evidence by the DDA that the Engineer-in-charge passed any order of withholding and keeping lien on the outstanding amount of the plaintiff. Without passing the proper order by the competent person and in the present case the Engineer-in- charge no withholding and keeping lien on the outstanding amount can be made by the DDA.
Sixthly, I have perused the pleadings, evidence as well as documents irrespective to the documents as admissible or not showing that the DDA has not passed any order to withhold or keep lien by a competent person i.e. Engineer-in-charge.
Seventhly, though clause 17 provides withholding and keeping lien of the security deposit, however there is no clause with respect to the earnest money. Why the earnest money has not been paid is not 28/37 //29// explained by the DDA.
Eightly, the contract between the parties concluded in July, 1993. No order of withholding or keeping lien of the earnest money and security amount has been passed by the DDA till to date.
In view of above I feel that the defendant DDA has failed to prove the issue. The issue no.3 is decided against the defendant/DDA and it is held that the amount of Rs.1 lakh on account of earnest money and security amount of Rs. 3 lakhs were not liable to forfeiture by the defendant.
REGARDING ISSUE NO.4 If issue no.3 is decided in affirmative, whether the plaintiff is entitled to any refund?OPP This issue has to be taken up if issue no.3 is decided in affirmative. Since the issue is decided in negative, this issue has no relevance now and this issue is 29/37 //30// accordingly disposed.
REGARDING ISSUE NO.5 Whether the plaintiff is entitled to claim interest in respect of the amount due on account of supply of goods and the forfeited amount? If so, at what rate and for what period?OPP Advocate of plaintiff states that the outcome of this issue is depend upon the issues no.2 and 3 while the stand of the defendant is that since the plaintiff is not entitled to claim any amount from the defendant, the question of payment of any interest does not arise.
I have seen the pleadings and feel that the plaintiff has prove this issue on the following grounds:-
firstly, plaintiff has given the entitlement of the following sums in para-14 of the plaint:-
(i) Towards balance 2% as not 4,60,941.42 paid.
(ii) Earnest Money 1,00,000.00
(iii) Towards refund of illegally forfeited Bank Guarantee given as security for performance 3,00,000.00 30/37 //31//
(iv) Towards interest payable due to illegal retention from 1-8-96 till 31-8-98 18% per annum 2,97,024.23 Total 11,57,965.65 The defendant in the WS states that whatever amounts due under the contract can be retained as lien in respect of claims under other contracts. It is only after the claims under Agreement 9 and Agreement no. 17 are settled that the claims under this agreement will be settled.
Till then the plaintiff has no right under the contract to claim any amount under this agreement as stipulated under clause 17 of the agreement.
The same stand has been taken by the defendant in the evidence. This infact is an admission of liability explaining that the liability shall be discharged if the other cases filed by the defendant against the plaintiff are disposed and the liability in those cases are ascertained.
In my view defendant has no right to withheld or keep lien on the outstanding amount unless and until a legal order has been passed by a legally competent person which 31/37 //32// in my opinion has not been done by the defendant DDA.
Secondly, it has already been held that the defendant has failed to prove the original agreement and hence defendant failed to prove the agreement between the parties. Since the document/agreement has not been proved by the DDA, the defendant/DDA is not entitled to withheld or to keep lien on any amount.
Even otherwise keeping the amount without payment of interest is unconscious and on the face of it is an illegal term i.e. not enforceable.
Thirdly, it has already been held that the defendant is not entitled to forfeit any amount. The DDA also failed to prove that the DDA withheld/lien any amount through a legal order passed by the Competent Authority.
Hence, in my view the plaintiff has proved this issue and it is held that plaintiff is entitled to claim interest in respect of the amount due on account of 32/37 //33// supply of goods and the forfeited amount (withholding or lien amount). The rate of interest is now wavering between 17 to 18% p.a. In my view 12% p.a. will be justified rate of interest payable by the defendant to the plaintiff on the amount of withholding/lien. The issue is accordingly decided in favour of the plaintiff. REGARDING ISSUE NO.6 What amount, if any, the plaintiff is entitled to recover from the defendant on account of supply of goods?OPP I have seen the pleadings and feel that the plaintiff has prove this issue on the following grounds:-
firstly, plaintiff has given the entitlement of the following sums In para-14 of the plaint:-
(i) Towards balance 2% as not 4,60,941.42 paid.
(ii) Earnest Money 1,00,000.00
(iii) Towards refund of illegally
forfeited Bank Guarantee
given as security for performance 3,00,000.00
(iv) Towards interest payable due
33/37
//34//
to illegal retention from 1-8-96
till 31-8-98 18% per annum 2,97,024.23
Total 11,57,965.65
The defendant in the WS states that whatever amounts due under the contract can be retained as lien in respect of claims under other contracts. It is only after the claims under Agreement 9 and Agreement no. 17 are settled that the claims under this agreement will be settled.
Till then the plaintiff has no right under the contract to claim any amount under this agreement as stipulated under clause 17 of the agreement.
The same stand has been taken by the defendant in the evidence. This infact is an admission of liability explaining that the liability shall be discharged if the other cases filed by the defendant against the plaintiff are disposed and the liability in those cases are ascertained.
In my view defendant has no right to withheld or keep lien on the outstanding amount unless and until a legal order has been passed by a legally competent person which in my opinion has not been done by the defendant DDA. 34/37
//35// Secondly, it has already been held that no legal/ valid order has been passed by a competent person regarding the withholding and keeping lien on the outstanding amount.
Thirdly, defendant/DDA has adjusted an amount of Rs.1,34,425/- by way of compensation/liquidated damages as stipulated in clause 2 of the agreement. It has already been held that the defendant has not proved the agreed, hence defendant cannot take any defence on the basis of this agreement.
Fourthly, even if the agreement between the parties is proved, I have seen the Ex.PW1/D6, this letter does not mentioned how compensation/liquidated damages has been arrived at. For claiming compensation/liquidated damages the defendant/DDA has to explain as to how DDA arrived at this amount and what are the basis. No basis or reasons has been given for seeking compensation/ 35/37 //36// liquidated damages in Ex.PW1/D6. Hence, claiming of compensation/liquidated damages is bad.
Fifthly, the contract was concluded in the year 1993, while this order has been dispatched on 02.11.97 i.e. after 4 years and this appears to be misuse of the authority given to the officials by the DDA.
In view of plaintiff has discharged the onus and it held that the plaintiff is entitled to recover from the defendant an amount of Rs.11,57,965.65 on account of supply of goods. The issue is accordingly decided in favour of the plaintiff and against the defendant. RELIEF
1. The plaintiff is entitled to a decree for recovery of Rs.11,57,965.65 on account of supply of goods from the defendant.
2. The plaintiff is also entitled to interest @12% 36/37 //37// from the date of fling of the suit till the realisation of the decreetal amount.
3. Decree of cost in favour of the plaintiff and against the defendant.
11. The suit of the plaintiff decreed accordingly. Decree Sheet be prepared accordingly.
12. File be consigned to Record Room.
Announced in the open court DAYA PRAKASH on dated : 17.01.2007 ADDITIONAL DISTRICT JUDGE (Typed 1 + 1) DELHI 37/37