Delhi District Court
Dev Raj Kataria vs . The Ceo, Delhi Jal Board on 7 June, 2019
Dev Raj Kataria Vs. The CEO, Delhi Jal Board
IN THE COURT OF MS. JYOTI KLER, ADDL. DISTRICT JUDGE05,
ROOM NO. 605, SOUTH DISTRICT, SAKET COURTS, NEW DELHI
Suit No. 6072/16
Case ID No. DLST010000242009
In the matter of
Sh. Dev Raj Kataria
R/o M46, IInd Floor,
Malviya Nagar,
New Delhi110017
Earlier at:
B91, Malviya Nagar
New Delhi110017
.............Plaintiff
Versus
1. The CEO
Delhi Jal Board
National Capital Territory of Delhi
Varunalaya Complex
Jhandewalan
New Delhi
2. The Executive Engineer (South) III
Delhi Jal Board
National Capital Territory of Delhi
Greater KailashI
Suit No.6072/16 Page 1 of 37
Dev Raj Kataria Vs. The CEO, Delhi Jal Board
New Delhi110048
3. The Executive Engineer (Project) WVII
Delhi Jal Board
National Capital Territory of Delhi
Annexe Jal Sadan, Shiv Mandir Marg
Lajpat Nagar
New Delhi110024
..............Defendants
Date of Institution : 02.03.2009
Date of reserving the judgment : 03.04.2019
Date of pronouncement : 07.06.2019
Decision : Dismissed
And
Delhi Jal Board
Through its Chief Executive Officer
Varunalaya, Jhandewalan
New Delhi
.........Plaintiff
Versus
Sh. Dev Raj Kataria
R/o M46, IInd Floor
Malviya Nagar
New Delhi110017
........Defendant
Suit No.6072/16 Page 2 of 37
Dev Raj Kataria Vs. The CEO, Delhi Jal Board
Date of Institution : 26.10.2009
Date of reserving the judgment : 03.04.2019
Date of pronouncement : 07.06.2019
Decision : Decreed
JUDGMENT
1. This judgment shall dispose off two cross suits. The first suit has been filed by Dev Raj Kataria against Delhi Jal Board and the second suit has been filed by Delhi Jal Board against Dev Raj Kataria. The second suit was clubbed with the first suit by the order dated 17.07.2013 passed by the Hon'ble High Court of Delhi. No separate issues were framed and no separate evidence was recorded in the second suit. Both, the first suit and the second suit, are for damages. Sh. Dev Raj Kataria (hereinafter referred as 'the plaintiff') alleges that Delhi Jal Board (hereinafter referred as 'the defendant') illegally rescinded the contract due to which he suffered losses. Defendant has alleged that plaintiff delayed performance of the contract due to which it was rescinded & defendant suffered losses. Plaintiff has sought recovery of Rs.36,61,205/ towards damages while defendant has sought recovery of Suit No.6072/16 Page 3 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board Rs.15,01,168/.
Admitted Facts of the Case
2. The facts admitted by both sides are set out in the forthcoming paragraph.
3. Defendant floated a tender in September, 2017 to carry out the work of shifting of 900/800/700/600 mm dia Dakshinpuri Water Main from Sheikh Sarai Authority to Pushpa Bhawan along Dr. Ambedkar Nagar due to construction of HCBS Corridor. Tender was awarded to the plaintiff . A letter of intent was issued and then a Work Order No.104 was issued on 11.10.2007. Contract value of the work order was Rs.1,08,29,893/. The work was of top priority, expected to be carried out day & night, and was to be completed within 45 days. There was a damage clause in the work order in case of delay. The work was to begin on 17.10.2007 and was to be completed by 01.12.2007. There was a delay in procurement of pipes. Plaintiff informed the defendant about the delay vide letter dated 06.11.2007. Defendant issued a show cause notice Suit No.6072/16 Page 4 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board to the plaintiff on 12.11.2007 to be answered within 7 days, why action be not taken against the plaintiff for breach of contract. This notice was answered by the plaintiff vide reply dated 16.11.2007. However, defendant issued letter dated 20.11.2007 stating that the reply dated 16.11.2007 was not satisfactory, and the contract was rescinded. Defendant then issued a fresh tender on 21.11.2007.
Case of the Plaintiff
4. Plaintiff alleged that he was supposed to execute the work order as per Schedule F of the agreement however this schedule was never provided to him. The work involved use of MS Pipes, which after procurement from a manufacturer, were to be lined with cement mortar and coal tar wrapping was thereafter to be done on these pipes. The pipes were to be inspected by M/s. RITES, a third party, at each of the said three stages. Plaintiff placed order for pipes, soon after issuance of Work Order, upon M/s. Mukat Pipes, Patiala Road, Rajpura and paid Rs.30.00 lakhs. The manufactured pipes were inspected by M/s. RITES & immediately thereafter plaintiff asked M/s. Mukat Pipes to Suit No.6072/16 Page 5 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board complete the lining and coating work. However, lining & coating plant of M/s Mukat Pipes suffered a breakdown. Plaintiff thus arranged the lining & coating work at AJS construction company located at Delhi. This was done by the plaintiff before receiving the notice dated 12.11.2007. AJS construction company informed the plaintiff on 14.11.2007 that first lot of lined & coated pipes shall be ready by 22.11.2007. Plaintiff paid a sum of Rs.4,50,000/ to AJS construction company for this work. M/s. Mukat Pipes also informed the plaintiff on 15.11.2017 that dispatches of pipes approved by M/s. RITES would commence on 16.11.2017, for lining & coating work. M/s Mukat Pipes also informed that second lot of pipes were ready for third party inspection and third lot was under manufacture. All these facts were conveyed to the defendant in the reply dated 16.11.2007. Defendant was also categorically informed that lined & coated pipes will be ready for inspection by M/s RITES on 19.11.2007.
5. M/s RITES inspected the site on 19.11.2007 during the day and they were informed that arrival of pipes was delayed due to traffic jam. M/s RITES did not wait for arrival of pipes Suit No.6072/16 Page 6 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board and left the spot. The pipes were available for inspection in the evening. Defendant terminated the contract on 20.11.2007 with malafide intention and issued another short notice tender immediately on 21.11.2007, in order to prevent the plaintiff from approaching the Court. Plaintiff suffered following losses due to illegal act of defendant: S.No. Particular Amount (Rs.)
1. Cost of pipe 33,15,472/
2. Storage per month @ 10,000/ 1,00,000/ (Nov.07 to Aug.08)
3. Transportation, loading and 78,000/ unloading of pipe
4. UT charges (pipe testing engineers) 11,426/
5. Amt. paid to AJS Construction 7,50,000/ Company
6. Amt. paid to petty contractors 2,00,000/
7. Labour charges supervisor 3 no. @7,500/ per month 22,500/ watchman 5 no. @5000/ per month 25,000/ (2 day & 3 night)
8. Cost of 14 sign boards @ 8000/ 11,2000/
9. Bank guarantee forfeited 3,91,000/
10. EMD forfeited 1,56,200/ Suit No.6072/16 Page 7 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board
11. Cost of trip to Patiala for third party insp.
Taxi fare 10,000/
lodging exp. 5,000/
12. Bank cc interest (till jan 2008) 66,467/
13. Legal fees, senior advocate 5,00,000/
14. DD charge (for pipe only) 6,000/
15. Misc. exp. 20,000/
16. Estimated loss of profit 11,00,000/
68,69,065/
(Less)
Pipes mentioned at sr. no. 1 sold to 32,07,860/
M/s L.R. Sharma & Co. on
27.09.2008
Total 36,61,205/
6. Plaintiff thus filed the present suit with following prayers: "It is therefore most respectfully and humbly prayed may graciously be pleased to pass a decree in favour of plaintiff and against all the defendants whereby:
A. Holding them jointly and severally liable to pay Rs.36,61,205/ (Rupees Thirty Six Lacs Sixty One Thousand Two Hundred & Five only) along with pendente lite and future rate of interest Suit No.6072/16 Page 8 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board @18% p.a. till realization in the interest of justice.
B. Pass any such other or further order/orders as this Hon'ble court deem fit and proper under the circumstances of the case in favour of the plaintiff and against the defendants."
Case of the Defendant
7. It is averred by the defendant that the work awarded to the plaintiff was of considerable importance keeping in view the construction of HSBC corridor that was being monitored by Dr. Bhure Lal Committee appointed by the Hon'ble Supreme Court. It was made clear that agency awarded the work was liable to attach urgency & was expected to work 24 hours. Work Order stipulated that the project should be complete within 45 days i.e. by 01.12.2007, commencing from 17.10.2017. The letter of intent dated 26.09.2007 was unequivocal, indicating that placement of order for procurement of pipes be done immediately. Since HSBC corridor was a time bound project, shifting of pipelines was also time bound. The contract therefore provided list of specified manufacturers from where pipes were Suit No.6072/16 Page 9 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board to be purchased. Contractor was required to submit a bar chart of the work in question but he did not submit it. Plaintiff showed his inability to procure pipes from specified manufacturers vide letter dated 09.10.2007 and sought permission to procure the pipes from M/s. Mukat Pipes Ltd. This was approved by defendant the same day. Plaintiff confirmed in the meeting held on 12.10.2007 that first lot of pipes would arrive on or before 29.10.2007. This commitment was not fulfilled by the plaintiff and a reminder was issued to the plaintiff on 30.10.2007. The plaintiff then sent a letter dated 06.11.2007 desiring the defendant to believe that plant of M/s Mukat Pipes had broken down and arrangement of inspection shall be made at Delhi. Plaintiff was asked to indicate the location of inspection by letter dated 07.11.2007. Plaintiff did not submit the mandatory Quality Assurance Plan of all the three stages of manufacture of pipes i.e. fabrication, lining & coating. QAP was submitted for first stage only, which made the defendant believe that no plant for lining & coating was in existence at the site of M/s. Mukat Pipes. Plaintiff lost precious 51 days from issuance of letter of intent till 16.11.2007 without results. Defendant issued showcause but reply was not Suit No.6072/16 Page 10 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board satisfactory. Site of AJS construction was also inspected on 17.11.2007 and 19.11.2007 but not a single pipe was available and lining plant was under the process of erection. Defendant thus rescinded the contract, forfeited earnest money and again invited tenders at the risk & cost of plaintiff. Bid was now awarded to M/s. L.R. Sharma & Co. Letter of Intent was issued to them on 07.12.2007 for Rs.1,31,50,719/. Period of completion was again 45 days. Work started on 14.12.2007 & was completed on 25.01.2008, within the stipulated time. Plaintiff suffered additional cost in completion of work through M/s L.R. Sharma & Co. which came out to be Rs.15,01,168/ after adjusting earnest money & performance bank guarantee for which defendant filed a separate suit. The defendant specifically denied that any work done by plaintiff was used & stated that excavation done by plaintiff was rather to be refilled because it was done without arrangement of pipes and was dangerous for the commuters. Defendant also pointed out that the plaintiff claims to have paid Rs.4.5 lakhs to M/s AJS Construction but was showing Rs.7.5 lakhs in the tabulated expenditure mentioned in the plaint.
Suit No.6072/16 Page 11 of 37Dev Raj Kataria Vs. The CEO, Delhi Jal Board Replication
8. Plaintiff denied that order for procurement of pipes could have been placed on the basis of Letter of Intent dated 26.09.2007, or that there was any obligation on plaintiff to procure pipes from specified manufacturers only. It is stated that plaintiff put all efforts in completing the work but could not complete it due to unforseen events. Plaintiff admitted that a reminder notice dated 30.10.2007 was issued to him. It is stated that even after breaking down of plant, plaintiff made efforts to complete the work in time by engaging M/s ASJ Construction, but defendant was impatient & prejudicial and did not wait on 19.11.2007 till evening for arrival of pipes. The earnest money and performance bank guarantee were forfeited arbitrarily and unilaterally.
9. The defendant, instead of increasing time of the plaintiff, issued another tender and awarded the bid to M/s LR Sharma & Co. at the cost of Rs.1,31,56,719/. Had the defendant been patient, plaintiff would have completed the work in lesser cost and time taken by M/s L.R. Sharma & Co. which was 67 days Suit No.6072/16 Page 12 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board from 20.11.2007, when contract was rescinded. Plaintiff reiterated that the contract between him and defendant had a force majeure clause and a clause for enhancement of time against payment of delay penalty. The amount of Rs.7.5 lakhs in table was inadvertently indicated and it was Rs.4.5 lakhs.
10. The plaintiff also filed written statement in the second suit instituted by the defendant alleging that it was a counter blast to the first suit filed by the plaintiff. The plaintiff reiterated the same story in the written statement of the second suit as was set out in the pleadings of the first suit.
11. The defendant filed replication in the second suit, reiterating the case set out in the pleadings of the first suit.
Issues
12. Issues were framed in the first suit on 23.07.2010 and read as below:
i) Whether the plaintiff is entitled to a decree for a sum of Rs.36,61,205/? OPP
ii) Whether the plaintiff is entitled to interest @18% and Suit No.6072/16 Page 13 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board if so, on what amount and for what period? OPP
iii) Relief.
Evidence
13. Evidence was recorded in the first suit after consolidating the second suit with it.
14. Plaintiff examined two witnesses in support of his case. He himself appeared in the witness box and was examined as PW1. He deposed by way of evidence affidavit Ex.PW1/A wherein he reiterated contents of the plaint and relied upon the following documents: S.No. Description of Documents Exhibit Number
1. Short Notice Tender Ex. PW1/1
2. Work Order dated 11.10.2007 Ex.PW1/2 3. Tender document Ex.PW1/3
4. Letter dated 06.11.2007 sent by the Ex.PW1/4 plaintiff to the defendant.
5. Show cause notice dated 12.11.2007 Ex.PW1/5 sent by the defendant to the plaintiff.
6. Letter dated 14.11.2007 by AJS Ex.PW1/6 Construction company to the plaintiff
7. Letter dated 15.11.2007 by Mukat Pipes Ex.PW1/7 to the plaintiff
8. Reply dated 16.11.2007, by plaintiff to Ex.PW1/8 (also defendant, in response to show cause Ex.P1) Suit No.6072/16 Page 14 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board notice
9. Letter dated 20.11.2007 sent by Ex.PW1/9 defendant to plaintiff rescinding the contract
10. The Short Notice Tender dated Ex.PW1/10 21.11.2007
11. Receipt regarding payment of Ex.PW1/11 Rs.4,50,000/ to AJS Construction Company
12. Receipt regarding payment of Rs. 1 lac Ex.PW1/12 to AJS Construction Company 13. Rent Receipts Ex.PW1/13
14. Transport Receipts Ex.PW1/14
15. Inspection & Testing Report Ex.PW1/15 (colly)
16. Receipt of payment to petty contractors Ex.PW1/16 (colly)
17. Letter dated 09.06.2008 sent by plaintiff Ex.PW1/17 (also to the defendant calling upon the Ex.P2) defendant to appoint an Arbitrator.
18. UPC Receipt Ex.PW1/1819. Postal Receipts Ex.PW1/19 20. AD Card Ex.PW1/20
21. Letter dated 28.08.2008 written by the Ex.PW1/21 (also defendant to the plaintiff rejecting the Ex.P3 & Ex.P6) request for referring the matter to Arbitration
22. Legal notice dated 12.11.2008 sent by Ex.PW1/22 (also the plaintiff to the defendant Ex.P4)
23. Registered Cover Ex.PW1/23
24. UPC Receipts & AD card Ex.PW1/24
25. Delivery note reflecting that the pipes Ex.PW1/25 were sold by the plaintiff to the Suit No.6072/16 Page 15 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board defendant.
26. Reply dated 08.12.2008 to the legal Ex.PW1/26 (also notice dated 12.11.2008. Ex.P5)
27. Letter dated 15.11.2007 written by Mark A Mukut Pipes reflecting details of payments received from the plaintiff
15. PW1 was cross examined by the defendant in detail.
16. Plaintiff also examined his nephew Sh. Sanjay Chugh as PW2 in support of his case. PW2 identified the documents already Mark A, Ex.PW1/11, Ex.PW1/12, Ex.PW1/8, Ex.PW1/7 and Ex.PW1/4. PW2 was also cross examined by the defendant.
17. Defendant examined only one witness i.e. Sh. Ram Gopal Saraswat, an official of Delhi Jal Board, as DW1 by way of evidence affidavit Ex.DW1/A. DW1 reiterated contents of the written statement and relied upon the following documents: S.No. Description of Documents Exhibit Number
1. Letter of Intent dated 26.09.2007 Mark DW1/1 specifying that procurement may be planned
2. Order dated 30.11.2007 passed by the Ex.D1 Hon'ble High Court of Delhi in writ filed by plaintiff Suit No.6072/16 Page 16 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board
3. Minutes of meeting dated 12.10.2007 Ex.D2
4. Letter dated 09.10.2007 written by Ex.D3 plaintiff to the defendant stating that M/s Mukat Pipes shall deliver M.S. Pipes within 30 days of work order
5. Letter dated 09.10.2007 by Delhi Jal Mark DW1/4 Board to plaintiff approving procurement of M.S. Pipes but specifying that resources may be mobilised
6. Letter dated 30.10.2007 received from Mark DW1/6 the defendant questioning why M.S. Pipes had not been received by 30.10.2007.
7. Letter dated 07.11.2007 sent by Delhi Mark DW1/8 Jal Board to Plaintiff asking him to make arrangement for inspection
8. Letter dated 17.11.2007 by M/s Rites to Mark DW1/11 defendant informing that plant at AJS Construction was still being erected and pipes had not reached
9. Letter dated 19.11.2007 written by M/s Mark DW1/12 Rites to defendant saying that the pipes had not reached AJS Construction, plant was still being erected and was likely to take some more time
10. Order dated 03.03.2008 vide which writ Mark DW1/15 petition was withdrawn
11. Letter of intent dated 07.12.2007 issued Ex.DW1/17 to M/s L.R. Sharma & Company
11. Letter dated 30.01.2009 written by Ex.DW1/22 defendant to plaintiff seeking compensation of Rs.15,01,108/ Suit No.6072/16 Page 17 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board
18. Apart from the aforesaid documents, DW1 also relied upon the documents already Ex.PW1/1, Ex.PW1/2, Ex.PW1/4, Ex.PW1/5, Ex.PW1/8, Ex.PW1/9, Ex.PW1/10, Ex.PW1/17, Ex.PW1/21, Ex.PW1/22 & Ex.PW1/26.
19. DW1 was cross examined by the plaintiff in detail.
Final Arguments
20. After completion of evidence, final arguments were heard.
21. Ld. Counsel for the plaintiff contended that there was a delay compensation clause in the contract however, defendant did not give benefit of the same to the plaintiff and instead terminated the contract. The defendant also exhibited undue impatience and did not wait for arrival of pipes on the spot for the purpose of inspection on 19.11.2007 despite knowing fully well that the vehicle carrying pipes was stuck in traffic jams. The termination of contract by the defendant was illegal and defendant is thus liable to compensate the plaintiff for the loss suffered by him due to illegal termination.
Suit No.6072/16 Page 18 of 37Dev Raj Kataria Vs. The CEO, Delhi Jal Board
22. Ld. Counsel for the defendant contended that the plaintiff did not understand the sense of urgency attached to the project and despite knowing that the time was essence of the contract, delayed the performance at every stage. It is submitted that defendant also suffered losses due to non performance of contract by the plaintiff because the defendant had to again invite tender and bid was awarded to another contractor at a higher amount. Hence, it is the defendant who is entitled to be compensated.
Issue Wise Findings
23. I have considered the rival contentions and perused the record carefully.
24. The only issue framed in this suit is whether plaintiff is entitled to recover the damages sought by him. No issues were framed in the cross suit, however, parties went to trial in both the suits and evidence was also led on the aspect if defendant was entitled to recover damages. Discussion on these two questions involves common pleas and therefore these two questions are being taken up together for decision in the Suit No.6072/16 Page 19 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board forthcoming paragraphs.
25. Whether plaintiff is entitled for damages or defendant is entitled, depends on who was in breach of the contract. The contract herein consists of Ex.PW1/1, Ex.PW1/2 and Ex.PW1/3, which are admitted documents. Defendant has alleged that the plaintiff was delaying performance of the contract despite knowing that it was of utmost urgency and that is why the contract was rescinded. Plaintiff alleges that the contract was wrongfully rescinded by the defendant. Before going into the question of breach, it shall be relevant to note some of the clauses of contract Ex.PW1/3, which read as below: "Clause 2 Compensation for Delay If the contractor fails to maintain the required progress in terms of CLAUSE 5 or to complete the work and clear the site on or before the contract or extended date of completion, he shall, without prejudice, to any other right or remedy available under the law to the Government on account of such breach, pay as agreed compensation the amount calculated at the rates stipulated below as the Superintending Engineer (whose decision in writing shall be final and binding) may decide on the amount of tendered value of the work for every completed day/month (as applicable) that the progress remains below that specified in Suit No.6072/16 Page 20 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board Clause 5 or that the work remains incomplete". This will also apply to items or group of items for which a separate period of completion has been specified.
Compensation for delay of work @1.5% per month delay to be computed on per day basis Provided always that the total amount of compensation for delay to be paid under this condition shall not exceed 10% of the Tendered Value of work or to the Tendered Value of the item or group of items of work for which a separate period of completion is originally given.
The amount of compensation may be adjusted or setoff against any sum payable to the Contractor under this or any other contract with the Government. In case, the contractor does not achieve a particular milestone mentioned in scheduleF, or the rescheduled milestone(s) in terms of CLAUSE 5.4, the amount shown against that milestone shall be withheld, to be adjusted against the compensation levied at the final grant of extension of time. Withholding of this amount on failure to achieve milestones shall be automatic without any notice to the contractor. However, if the contractor catches up with the progress of work on the subsequent milestone(s), the withheld amount shall be released. In case the contractor fails to make up for the delay in subsequent milestone(s), amount mentioned against each milestone missed subsequently also shall be withheld. However, no interest, whatsoever, shall be payable on such withheld amount.
Suit No.6072/16 Page 21 of 37Dev Raj Kataria Vs. The CEO, Delhi Jal Board Clause 3: When Contract Can be determined Subject to other provisions contained in this CLAUSE the EngineerinCharge may, without prejudice to his any other rights or remedy against the contractor in respect of any delay, inferior workmanship any claims for damages and/or any other provisions of his contract or otherwise, and whether the date of completion has or has not elapsed, by notice in writing absolutely determine the contract in any of the following cases:
.........
(iii) If the contractor has, without reasonable cause, suspended the progress of the work or has failed to proceed with the work with due diligence so that in the opinion of the EngineerinCharge (which shall be final and binding) he will be unable to secure completion of work by the date for completion and continues to do so after a notice in writing of seven days from the EngineerinCharge.
Clause - 5 Time Extensions for Delay The time allowed for execution of the works as specified in the Schedule 'F' or the extended time in accordance with these conditions shall be essence of the Contract. The execution of the works shall commence from the 15 th Day or such time period as mentioned in letter of Award. If the Contractor commits default in commencing the execution of the work as aforesaid. Government shall without Suit No.6072/16 Page 22 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board prejudice to any other right or remedy available in law, be at liberty to forfeit the earnest money & performance guarantee absolutely.
5.1 As soon as possible after the contract is concluded the Contractor shall submit a Time & Progress Chart for each milestone and get it approved by the Department. The Chart shall be prepared in direct relation to the time stated in the Contract documents for completion of items of the works. It shall indicate the forecast of the dates of commencement and completion of various trades of sections of the work and may be amended as necessary by agreement between the EngineerinCharge and the Contractor within the limitations of time Imposed in the contract documents, and further to ensure good progress during the execution of the work, the contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs for any work a separate programme has been agreed upon) complete the work as per milestone given in schedule "F".
5.2 If the work(s) be delayed by:
i) Force majeure, or
ii) Abnormally bad weather or
iii) Serious loss or damage by fire or
iv) Civil commotion local commotion of workmen, strike or lockout, affecting any of the trades employed on the work, or Suit No.6072/16 Page 23 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board
v) Delay on the part of other contractors or tradesmen engaged by EngineerinCharge executing work not forming part of the Contract, or
vi) Nonavailability of stores, which are the responsibility of Government to supply or
vii) Nonavailability or break down of tools and Plant to be supplied or supplied Government or
viii) Any other cause which, in the absolute discretion of the authority mentioned Schedule 'F' is beyond the Contractors control.
Then upon the happening of any such event causing delay, the Contractor shall Immediately give notice thereof in writing to the EngineerinCharge but shall nevertheless use constrict his best endeavors to prevent or make good the delay and shall do an that may be reason required to the satisfaction of the Engineerincharge to proceed with the works.
5.3 & 5.4 Request for rescheduling of Milestones as per scheduleF and extension of time, to be eligible for consideration, shall be made by the Contractor in writing within fourteen days of the happening of the event causing delay on the prescribed form. The Contractor may also, if practicable, indicate in such a request the period for which extension is desired.
In any such case the authority mentioned in Schedule 'F' may give a fair and reasonable extension of time and Suit No.6072/16 Page 24 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board reschedule the milestones for completion of work. Such extension shall be communicated to the contractor by the EngineerinCharge in writing, within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the EngineerinCharge and this shall be binding on the contractor.
Clause 14: Cancellation of Contract in Full or Part If contractor:
i) At any time makes default in proceeding with the works or any part of the work with the due diligence and continues to do so after a notice in writing of 7 days from the EngineerinCharge; or
ii) Commits default to complying with any of the terms and conditions of the contract and does not remedy it or take effective steps to remedy it within 7 days after a notice in writing is given to him in that behalf by the Engineerin Charge; or
iii) Fails to complete the works or items of work with individual dates of completion, on or before the date(s) of completion, and does not complete them within the period specified in a notice given in writing in that behalf by the EngineerinCharge;or ...........Suit No.6072/16 Page 25 of 37
Dev Raj Kataria Vs. The CEO, Delhi Jal Board The Accepting Authority may, without prejudice to any other right or remedy which shall have accrued or shall accrue hereafter to Government by a notice in writing to cancel the contract as whole or only such items of work in default from the Contract.
The EngineerinCharge shall on such cancellation by the Accepting Authority have power to:
a) Take possession of the site and any materials, constructional plant, implements stores, etc., thereon;
and/or
b) Carry out the incomplete work by any means at the risk and cost of the contractor, On cancellation of the contract in full or in part, the EngineerinCharge shall determine, what amount, if any, is recoverable from the contractor for completion of works or part of the works or in case the works or part of the work is not to be completed, the loss of damage suffered by Government. In determining the amount, credit shall be given to the contractor for the value of the work executed by him up to the time of cancellation, the value of contractor's materials taken over and incorporated in the work' and use of plant and machinery belonging to the contractor.
Any excess expenditure incurred or to be incurred by Delhi Jal Board in completing the works or part of the works or the excess loss or damages suffered or may be suffered by Delhi Jal Board as aforesaid after allowing such credit shall Suit No.6072/16 Page 26 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board without prejudice to any other right or remedy available to Delhi Jal Board in law be recovered from any money due to the contractor or any account, and if such moneys are not sufficient the contractor shall be called upon in writing and shall be liable to pay the same within 30 days."
26. The work order no. 104, which is Ex.PW1/2 specified the period within which work was to be completed i.e. 45 days. There is no dispute over the dates when Letter of Intent and Work Order were issued. There is also no dispute over the fact that work was to be completed by 01.12.2007. The contract Ex.PW1/3, Clause 5, specifically provides that time was the essence of the contract. Plaintiff himself has admitted that work was of top priority & expected to be carried out day & night. Various documents on record reflect that plaintiff was unlikely to complete the work by 01.12.2007. It is an admitted fact that plaintiff had sent a request to the defendant for approving purchase of pipes from M/s Mukat pipes on 09.10.2007 vide Ex.D3, and this request was approved by Delhi Jal Board on 09.10.2007 itself. It is also a matter of record that the defendant was urging the plaintiff to mobilise resources from the day of issuance of Letter of Intent which is Mark DW1/1. The minutes Suit No.6072/16 Page 27 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board of meeting Ex.D2 reflect that plaintiff had promised that first lot of pipes shall be available by 29.10.2007, however despite reminder dated 30.10.2007, plaintiff sought some more time for arranging pipes on 06.11.2007 vide letter Ex.PW1/4. Even the fabricated pipes, let alone coated and wrapped ones, were not available till 19.11.2007 till 3:30PM, as per inspection report Mark DW1/12 which fact is not disputed by the plaintiff. The plaintiff states that pipes were available in the evening of 19.11.2007. This fact is not proved however. Even if it is assumed that fabricated pipes were available in the evening of 19.11.2007, still some more time would have been taken for coating & wrapping. Plaintiff himself stated in the replication that he would have completed the work before it was done by M/s L.R. Sharma & Company, the second contractor, had some extension was given to him. The plaintiff, in essence, admits delay in execution of work by saying so. Clause (3) read with Clause 5 & 14 of Ex.PW1/3 thus empowered the defendant to terminate the contract.
27. Delay in performance of the contract having been admitted, the plaintiff then went on to state that the Suit No.6072/16 Page 28 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board performance was delayed because plant of M/s Mukat Pipes, who was to supply the MS pipes to the plaintiff, had broken down. It is alleged by the plaintiff that this situation is covered under the force majeure clause, which was one of the exception laid down in the terms of the contract and plaintiff was entitled for extension of time under this clause (5) due to force majeure. Since the plea of force majeure was raised by the plaintiff, it was for him to prove the same. However, no evidence was led by the plaintiff that there was a break down of the plant of M/s Mukut Pipes. No witness from M/s Mukat Pipes was summoned to prove this fact. Plaintiff also could not tell during his cross examination about the date when the plant of M/s Mukat Pipes had broken down. In such a case, plaintiff cannot be given benefit of force majeure clause in the contract.
28. The next question which arises for consideration is if the contract was rightly rescinded by the defendant? As already discussed above, delay in performance of contract is admitted by the plaintiff and he could not prove that delay was due to force majeure. Effect of delay in performance of contract is provided in Section 55 of the Contract Act 1872, which reads as Suit No.6072/16 Page 29 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board below: "55. Effect of failure to perform at a fixed time, in contract in which time is essential. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential. - If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that agreed upon. - If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the nonperformance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so."
29. It is absolutely clear on reading of Section 55 of the Contract Act, 1872 that the contract can be rescinded due to Suit No.6072/16 Page 30 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board delay in performance, if time was essence of the contract. Question thus is if time was essence of the contract in the present case.
30. The plaintiff himself admitted in the plaint that the contract was of utmost urgency and agency which was awarded the contract i.e. the plaintiff herein, was expected to work day and night. The contract also specified a particular time period for completion i.e. 45 days, as is the admitted case of the parties. The work order Ex.PW1/2 specifically states that slipage in completion of work beyond the stipulated period will not be acceptable. The clause 3(iii) of the Clauses of Contract under tender document specifies that if the contractor failed to proceed with the work with due diligence and Engineer Incharge of Delhi Jal Board was of the opinion that he shall not be able to secure completion of work by the due date, and contractor engages in the same conduct even after 7 days of the notice given in writing, the contract could be determined by Delhi Jal Board. Clause 5 specifically states that time shall be the essence of this contract and the time can be extended only in certain cases like force majeure. The contract also provides Suit No.6072/16 Page 31 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board that the contractor shall seek for extension of time in writing. All these clauses undoubtedly reflect that time was essence of the contract which is subject matter of this.
31. It was argued on behalf of the plaintiff that clause 2 of the Clauses of Contract under the tender document provided for compensation for delay and in view of this clause, it can be said that time was not the essence of the contract. I do not agree with this submission made on behalf of the plaintiff. A careful reading of clause 2 and clause 5 makes it clear that extension of time was agreed only in certain cases and provision of compensation is for cases where contract was not performed by the due date or by extended date. Clause 2 does not provide that time could be extended merely because damages for delay were provided.
32. Since time was essence of the contract, the defendant was within its rights to rescind the contract in view of Section 55 Part I of the Contract Act, 1872. The contract Ex.PW1/3 also provides in Clause 14 that in case the contract is determined by the defendant, the defendant was entitled to carry out the Suit No.6072/16 Page 32 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board incomplete work by any means at the risk & cost of the contractor. Delhi Jal Board was thus within its rights to issue the second tender immediately after cancellation of the contract in question, and that too at the risk & cost of the plaintiff.
33. Section 67 of the Contract Act, 1872 provides that a party who rescinds the contract shall be liable to return all the benefits that he may have received under the contract. In this case, plaintiff claims that excavation work for laying pipes had already been completed by the plaintiff, benefit of which was taken by the defendant in the second contract. The defendant has categorically averred that excavation was to be refilled because it was on the main road and dangerous for the commuters if left open. It is a matter of record that the work for laying of pipes started after 07.12.2007 under the second contract awarded to M/s L.R. Sharma, while the contract in favour of plaintiff was rescinded on 20.11.2007. The case put forth by the defendant regarding refilling of the excavation thus appears probable because there was a huge gap of more than 17 days between the date of recission of the contract and the date of awarding the contract to another contractor, and also Suit No.6072/16 Page 33 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board because work was to be carried out at the main road having heavy rush of vehicles. Plaintiff led no evidence to prove that the excavation work done by him was used by the defendant. In such a scenario, plaintiff is not entitled for recovery in terms of Section 67 of the Indian Contract Act, 1872.
34. The defendant has specifically averred and it was admitted by the plaintiff that second contract was awarded by the defendant for a sum of Rs.1,31,56,791/. The amount of earnest money deposited with the defendant and amount of performance bank guarantee furnished to the defendant is also not disputed. Since the second contract was awarded by the defendant at the risk & cost of the plaintiff, the defendant is entitled to recover the differential amount from the plaintiff, who was in breach of contract, due to delay in performance. The defendant rightfully rescinded the contract and the plaintiff therefore is not entitled for any losses.
35. For reasons aforesaid, issue no. (i) is decided against the plaintiff. It is held that the plaintiff is not entitled to recover damages from the defendant. Since plaintiff is not entitled for Suit No.6072/16 Page 34 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board recovery, no question of awarding interest arises too & issue no.
(ii) accordingly is also decided against the plaintiff.
36. The plaintiff is however liable to compensate the defendant for the difference in contract prices, after adjusting the earnest money and performance bank guarantee, which comes out to be Rs.15,01,168/.
37. It shall be useful to refer to Section 34 of the CPC at this stage. The said Section reads as below: "34. Interest. (1) Where and in so far as the decree is for the payment of money the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest of such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:
Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no Suit No.6072/16 Page 35 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board contractual rate, the rate at which moneys are lent or advanced by nationalised bank in relation to the commercial transactions.
Explanation I. - In this subsection, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).
Explanation II. - for the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.
(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie."
38. It is clear on reading of Section 34 CPC that Court can award prelitigation & pendente lite interest at a reasonable rate in a decree for payment of money, and future interest shall not exceed the rate of 6% per annum, commercial transactions being exceptions. The interest can be awarded on principal sum and not on interest.
39. Since defendant has been found entitled to recover damages from the plaintiff, which shall result in a money Suit No.6072/16 Page 36 of 37 Dev Raj Kataria Vs. The CEO, Delhi Jal Board decree, interest can also be awarded in favour of defendant in terms of Section 34 CPC.
40. In view of discussion above, the suit filed by the plaintiff is dismissed and suit filed by the defendant is decreed in the sum of Rs.15,01,168/ with pendente lite and future interest @6% per annum.
41. Decree sheet be prepared accordingly.
Digitally
signed by
JYOTI JYOTI KLER
42. File be consigned to Record Room. KLER
Date:
2019.06.12
19:05:08
+0530
Announced in the open (JYOTI KLER)
Court on 07.06.2019 ADJ05 (SOUTH DISTRICT)
(Judgment contains 37 pages) SAKET COURTS, NEW DELHI Suit No.6072/16 Page 37 of 37