Delhi District Court
Nitin Tyagi vs Municipal Corporation Of Delhi on 17 December, 2022
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-04, SHAHDARA,
KARKARDOOMA COURTS, DELHI
CS (Comm) No. 305/2022
In the matter of :-
Nitin Tyagi
Sole Proprietor
M/s Nitin Tyagi
F-116, Gali no. 10, West Jyoti Nagar
Shahdara, Delhi - 110094
............Plaintiff
Vs.
1. Municipal Corporation of Delhi
Through its Commissioner
419, Udyog Sadan
Patpaarganj Industrial Area, Delhi - 91
2. Executive Engineer (M-1) Shahd. North
East Delhi Municipal Corporation
Staff Quarters, D-1, Swami Daya Nand Hospital
Shahdara, Delhi
......... Defendants
Date of Institution : 04.05.2022
Date of Final arguments : 13.12.2022 & 17.12.2022
Date of Judgment : 17.12.2022
JUDGMENT
1. This judgment shall dispose off application under order 12 Rule 6 CPC filed in present suit for recovery on behalf of plaintiff against the defendant.
CS (Comm) No. 305/2022 1/72. As stated, plaintiff is the Sole Proprietor of M/s Nitin Tyagi and is indulged in the work of civil nature for defendant since long, whereas defendant is a statutory body which is engaged in providing civic amenities to the public at large for the assigned area. The defendant time and again has been inviting tenders for its various projects at different locations. As further stated, plaintiff as successful bidder was awarded work order pertaining to present case by the defendant. The said work was completed in all respect by the plaintiff in time, to the satisfaction of the defendant. After completion of the said work, plaintiff submitted his final bills which were passed by the defendant. However, despite finalization and passing of the final bills by the defendant, it did not make payment to the plaintiff towards the work order despite various reminders and requests of the plaintiff.
3. Legal notice sent to the defendant also did not yield any result. Plaintiff, therefore, was constrained to file application before DLSA, Shahdara, Delhi in terms of Section 12 A of the Commercial Courts Act, 2015, to explore the possibility of settlement between the parties amicably wherein defendant appeared and submitted that it did not want to participate in the process of Pre-Mediation, hence the proceedings were closed by issuing 'Non-Starter' Report by the authority concerned.
4. As further stated, since the transactions between the parties are commercial in nature and defendant failed to make payment due to the plaintiff, defendant is liable to pay interest on the Principal amount after six months from the date of passing of the CS (Comm) No. 305/2022 2/7 final bill and 12 months from the date of completion of work upon the Security Deposit till realization.
5. In written statement filed on behalf of defendant, award of work order in favour of plaintiff was admitted. As submitted, the actual claim amount of Rs. 4,12,385/- including security deposit of Rs. 65,924/- is pending though the bills have already been passed. It was also submitted that the documents necessary for making of the payment had not been submitted by the plaintiff. It was also submitted that certain conditions were mentioned in the agreement between the parties with regard to the payment to be made to the contractor after completion of the work. Payment of the passed bills was further dependent upon availability of funds and was strictly to be made on queue basis in terms of clause 9 of the terms and conditions of the agreement.
6. Further, clause 45 of the terms and conditions stipulated that security deposit of the work shall not be refunded till the contractor produces clearance certificate from the labour officer. Clause 17 of the General Conditions of the contract was further referred that the security amount can be paid only after clearance of the final bill. As submitted, the department had introduced a policy for payment vide No. CA/F&G/215/D-145 dated 05.11.2015 and as per the said policy guidelines, the contractor payments were to be made as per first come first serve and on availability of funds. But even after the 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 the contractor's obligations, remain un- CS (Comm) No. 305/2022 3/7 attended for which notices had been received from the respective departments.
7. Applications u/o 12 Rule 6 CPC in the present matter, thereafter was filed on behalf of plaintiff with submission that defendant has admitted with regard to the bills in question having been passed. It was submitted that since the defendant has admitted its liability to pay the claim of the plaintiff, plaintiff was entitled to the judgment/decree in terms of prayer clause on the basis of admissions made by the defendant in written statement.
8. It was further submitted on behalf of plaintiff that though the amount of bill passed on 25.02.2020 was Rs. 3,76,461/- but inadvertently due to typographical mistake, same was mentioned in the plaint as Rs. 3,26,461/-, which be read as Rs. 3,76,461/-, besides the amount of other bill of Rs. 20,000/-. Ld. Counsel for defendants also fairly admitted the said fact that the bill dated 25.2.2020 was passed in sum of Rs. 3,76,461/- and not for Rs. 3,26,461/- as was mentioned in the plaint and aggregated amount is Rs. 3,96,461/-.
9. In reply to application under order 12 Rule 6 CPC, it was submitted that payment of bills was to be made strictly on queue basis . Plaintiff after going through and understanding the terms and conditions of agreement as well as tender documents, now cannot agitate against the said terms and conditions.
10. It is not disputed on record that the admitted amount of bills i.e. Rs. 3,76,461/- + Rs. 20,000/-, aggregating to Rs. 3,96,461/- as well as security amount of Rs. 65,924/-, have not been paid to the plaintiff even after passing of the final bills. The contention of defendant with regard to the plaintiff being aware CS (Comm) No. 305/2022 4/7 of the rules, therefore cannot agitate with regard to non payment of the dues is unfounded and has rather been dealt with in judgments passed by the higher courts in similar matters . In North Delhi Municipal Corporation Vs. Vipin Gupta, RFA no. 160/2017 decided on 22.3.2018, NDMC Vs. Shishpal, RFA no. 171/2017 decided on 22.03.2018, NDMC Vs. Gautam Anand, RFA no. 436/2017 and NDMC Vs. M/s R.K. Goel Abhay Kumar Jain, RFA (Comm) 11 of 2021 decided on 22.07.2021, it was interalia observed :
" There are too many contingencies and conditions that are stipulated in order to make payment, namely:
(i) funds should be available with the Corporation
(ii) funds should be available under specific head
(iii) the Contractor's turn to be paid should arise ; and
(iv) Interest would not be paid for the delayed period.
51. These four conditions are so vague and ambiguous into the future that at no point would a contractor, who had executed the work order, be able to demand payment " . (NDMC Vs. Shishpal) xxxxxxxxxxxx " In so far as payment under clause 9 of the General Conditions of Contract is concerned, the Corporation itself specifies the time for payment of the final bills as 6 months and 9 months. Thus, the contract itself considers and specifies the reasonable time. However, the same is sought to be diluted by specifying that this period shall be adhered to ' as far as possible' . The queue system and availability of funds are deemed by the Corporation to override the 6 months and 9 months period. There is no reason as to why the court should consider that the intention was to prescribe no upper limit for making of payment and leave the period for payment as an open ended one".
It was further observed that " in respect of final bills raised by contractors for works executed, that have been approved by Engineer-in-Charge, the clauses have to be read in the following manner:
a) Reasonable time for making of payments of final bills in respect of work orders up to Rs. 5 lacs shall be 6 months and CS (Comm) No. 305/2022 5/7 work orders exceeding Rs. 5 lacs shall be 9 months from the date when the bill is passed by the Engineer-In-Charge.
b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded while applying the queue system.
c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non payment would attract payment of interest for the delayed periods. (NDMC Vs. Vipin Gupta).
11. In NDMC Vs. Shishpal, RFA no. 171/2017 decided on 22.03.2018, the corporation accordingly was directed to pay interest @ 8% per annum on the bill amount after the expiry of six months period of passing of bill. In case the amount of the passed bill was more than Rs. 5 lacs, then the interest shall be calculated after expiry of nine months. Similar proposition would apply for delay in return of security amount.
12. In the instant matter, defendant has acknowledged and admitted liability towards the bill passed as well towards security amount. Since the amount of the bill is less than Rs. 5 lacs, following the ratio of the judgments (Supra), defendant had time of six months to pay this amount without any interest but no payment has been made till date. Thus, the plaintiff cannot be deprived of the interest for the period after completion of six months till this payment is cleared. Plaintiff though had also claimed interest on the security amount of Rs. 65,924/- but vide his statement dated 17.12.2022, restricted his claim to the amount of bills passed i.e. Rs. 3,96,461, besides refund of security amount, alongwith interest only on the amount of bill passed and did not wish to claim interest on security amount.
CS (Comm) No. 305/2022 6/713. Accordingly, application under order 12 Rule 6 CPC filed by the plaintiff is allowed. Instant suit is decreed with cost in favour of plaintiff and against the defendants for an amount of Rs. 3,96,461/- ( Rs. 3,76,461/- + Rs. 20,000/-) alongwith interest @ 8% p.a. on Rs. 3,76,461/- and Rs. 20,000/- w.e.f. 25.08.2020 and 14.02.2021 respectively till realization.
14. Suit is further decreed in sum of Rs. 65,924/- towards security deposit, to be paid by the defendant within one month. If the payment towards decreetal amount is not cleared within one month, thereafter interest shall be at 12% p.a. till realization.
15. Decree sheet be prepared accordingly. After completion of formalities, files be consigned to record room.
SAVITA Digitally signed by
SAVITA RAO
RAO Date: 2022.12.17
16:19:17 +0530
Announced in the open (SAVITA RAO)
court on this 17 th day DISTRICT JUDGE
of Dec. 2022 (COMMERCIAL COURT)-04
SHAHDARA, KKD COURTS,
DELHI
CS (Comm) No. 305/2022 7/7