Delhi District Court
Surender Krishan Gupta vs Municipal Corporation Of Delhi on 20 November, 2023
CNR No. DLCT010111202022
IN THE COURT OF MS. ILLA RAWAT :
DISTRICT JUDGE COMMERCIAL COURT- 03:
(CENTRAL) : TIS HAZARI : DELHI.
CS (COMM) No. 1904/2022
In the matter of :-
Surender Krishan Gupta
Sole Proprietor;
M/s Surender Krishan Gupta
44, Anand Lok,
Delhi-110049. ......Plaintiff
Versus
1. Municipal Corporation of Delhi
Through its Commissioner,
Civic Centre, Minto Road,
New Delhi-110002.
2. The Executive Engineer (PR-I) Central Zone
Municipal Corporation of Delhi,
Mandir Marg, Jal Vihar,
Lajpat Nagar, Delhi-110024. .......Defendants
Date of Institution : 27.07.2022
Date on which Judgment reserved : 20.11.2023
Date on which judgment pronounced : 20.11.2023
SUIT FOR RECOVERY
CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 1 / 20
JUDGMENT
1. Vide this judgment I shall dispose off the suit for recovery of Rs.20,88,000/- along with pendente lite and future interest @ 12% per annum, filed by plaintiff against the defendants.
2. Briefly stated facts of the case as averred in the plaint are that the plaintiff is the sole proprietor of M/s Surender Krishan Gupta, a firm enrolled as Municipal Contractor with the defendants and is engaged in the civil nature of work for the defendant Corporation. During the course of business, plaintiff made a bid for tender invited by the concerned Executive Engineer of defendant. Upon completion of required conditions at the stage of pre-work order, plaintiff was awarded work order no.11 dated 17.06.2011. After award of the work, plaintiff entered into a work order agreement with defendant no.2. As required, the plaintiff deposited the security/earnest money towards the work order and thereafter made necessary arrangement for execution and completion of the awarded work. He completed the work order to the satisfaction of the Engineer- in-Charge/defendant no.2. The period prescribed for defect liability also passed over without any negative remarks and to the satisfaction of the Engineer-in-Charge/defendant No.2.
3. It is further averred the after completion of the awarded work order, the defendants passed the bills and released the payment in favour of the plaintiff but the security/earnest money have not been released to the plaintiff despite the fact that CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 2 / 20 the concerned S C directed release of the security/earnest money to plaintiff on 27.07.2018.
4. The plaintiff has alleged that despite directions for releasing the security/earnest money to the plaintiff, defendants failed to release his payments and also did not inform him reason for withholding the security/earnest money. Thus aggrieved by the acts of defendants, plaintiff got issued a legal notice dated 04.10.2021, U/s 477/478 of M.C.D. Act, through his counsel, calling upon defendant Corporation to release payment of Rs.18,00,000/- towards the refund of security/earnest money with Rs.2,88,000/- towards interest @ 12% per annum from the date of the passing of the bill within 60 days of the receipt of the notice. The legal notice was duly served upon defendants but was neither replied to nor acted upon by defendant. Due to non- payment of the dues by the defendants, plaintiff has been put to loss of investment and interest. The plaintiff has thus prayed for a decree in sum of Rs.20,88,000/- (i.e. Rs.18,00,000/- towards principal amount and Rs.2,88,000 towards interest w.e.f. 01.07.2020 to 30.12.2021) alongwith pendente lite and future interest @ 12% p.a. on the principal amount from the date of filing of the suit till its realization.
5. Defendants have contested the suit by filing a detailed written statement. By way of preliminary objection, it is stated that suit of plaintiff is barred by limitation since the work assigned to the plaintiff purportedly completed on 25.05.2012, however, the present suit has been filed only on 27.07.2022 which is way beyond the prescribed limitation of 3 years, hence CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 3 / 20 the suit deserves to be dismissed in limine.
6. Another objection taken by defendants is that plaintiff has failed to submit bills for payment as per agreement between the parties. It is stated that plaintiff was awarded work order no.11 dated 17.06.2011 based on tender process. The notice inviting tender sets out relevant terms and conditions and makes it clear that the general conditions of contract (hereinafter referred to as 'GCC') and special conditions of contract would be applicable.
7. Another objection taken by defendants is regarding the maintainability of the suit filed by the plaintiff on the ground that plaintiff has failed to comply with the Clauses 17 and 45 of GCC and is hence not entitled to refund of security deposit. It is stated that as per Clause 17 of GCC, contractor is required to wait for a period of 12 months from the date of submission of the final bill to reclaim security amount. He is also required to submit a labour certificate. Since plaintiff neither submitted final bill nor submitted labour clearance certificate, he is not entitled to the refund of the security amount. The observations made in judgment in case of North Delhi Municipal Corporation vs. Sanjeev Kumar (supra) have been relied upon in support of this objection also.
8. On merits, award of work order to the plaintiff is admitted, however, it is reiterated that plaintiff was bound by the terms and conditions given in the Notice Inviting Tender (NIT) as well as the agreement signed pursuant thereto as well as GCC. It is denied that plaintiff made necessary arrangements for CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 4 / 20 execution and completion of work within stipulated time or that he completed the same to the satisfaction of the defendants. It is stated that unless the plaintiff submits labour clearance certificate as is required under the GCC and the binding judgment of Hon'ble Delhi High Court in NDMC Vs. M/s R.K. Goel Abhay Kumar Jain, there can be no question of any payment or discharge of liability towards the plaintiff. It is again reiterated that plaintiff is not entitled to any relief for want of submission of the final bill and labour clearance certificate and it is prayed that suit of the plaintiff be dismissed.
9. The plaintiff filed the replication reiterating the averments made in the plaint and denying the contra averments made in the written statement. Plaintiff as well as defendant filed their respective admission/denial on affidavits.
10. From the pleadings of parties, following issues were framed:-
1) Whether the suit of the plaintiff is barred by limitation? (OPD)
2) Whether plaintiff is not entitled to suit amount for want of submitting bills for payment? (OPD)
3) Whether the plaintiff is not entitled to relief of security deposit for want of compliance with Clause 17 and 45 of GCC? (OPD)
4) Whether the plaintiff is entitled for decree of recovery of Rs.20,88,000/- against the defendant, as prayed for?(OPP)
5) Whether plaintiff is entitled for interest. If yes, at CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 5 / 20 what rate and for which period? (OPP)
6) Relief.
11. In order to prove its case, plaintiff has examined himself as PW1. He has reiterated the facts averred in the plaint in his affidavit Ex.PW-1/A and relied upon following documents:-
S.No. Details of documents Exhibit
1. Copy of order dated 01.08.2018 with documents Mark-A (colly)
2. Copy of general terms and conditions Ex.PW1/3
3. Copy of legal notice dated 04.10.2021 Ex.PW1/4 (Colly)
4. Indemnity Bond/Agreement dated 31.07.2018 Ex.PW1/5
5. Received copy of letter dated 27.07.2018 written Ex.PW1/6 by plaintiff to Executive Engineer, MCD
12. During his cross-examination, PW1/plaintiff termed it correct that in his affidavit Ex.PW1/A, it has been mentioned that he was the partner of M/s Surender Kishan Gupta. He volunteered to state that the same has been recorded inadvertently as he had already mentioned in the plaint that said firm is proprietorship firm and he is its proprietor. He was unable to remember the number of work order and volunteered to state that the same was mentioned in the plaint. He could not recall the date when he completed the work pertaining to work order due to lapse of time and stated that he could tell the same after refreshing his memory from the file. After refreshing his memory from the Court file, he stated that he finished the work on 25.05.2012. He admitted that he had not applied for the labour clearance certificate from 25.05.2012 till date. He then deposed that he had obtained labour clearance certificate from labour CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 6 / 20 department and submitted it with the department within one month of completion of work on 25.05.2012. He was, however, unable to produce copy of labour clearance certificate submitted by him to the department.
13. He then deposed that he did not have the copy of labour clearance certificate with him nor could he produce the same. He was unable to recall if there was a delay of one month in completion of work by him. He deposed that he was assigned the work of construction of dhobi ghat as per the work order given to him. He denied the suggestion that he had failed to complete the work by 27.04.2012 i.e. within the time stipulated under the work order. He had not applied for the extension of time for completing the work when he could not complete the same by 27.04.2012. He denied the suggestion that he was not entitled to refund of security amount as he had neither obtained extension of time for completion of work nor submitted labour clearance certificate to the defendant no.1.
14. No other witness was examined on behalf of plaintiff.
15. In order to prove their defence, defendant has examined Sh. Muzaffar Naiem, Assistant Engineer (Pr.-I), Central Zone, MCD, Shiv Mandir Marg, Lajpat Nagar, Delhi, as DW1. He has reiterated the facts averred in the written statement in his affidavit Ex.DW-1/A.
16. During his cross-examination, DW1 deposed that the present case pertained to work order no.11 dated 17.06.2011. CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 7 / 20 He termed it correct that the bill pertaining to this work order had been prepared and passed by defendants (MCD) and that the payment of bill amount had been released. He termed it correct that the security/earnest money had not been released to plaintiff till date. He clarified that said amount had not been released to the plaintiff as he had not submitted the final bill till date. He then deposed that the payment of bill amount was made on the basis of measurement book maintained by MCD. He further termed it correct that recording in the measurement book made by department had been accepted by contractor and thereafter payment was approved and sent to Head Quarter and ultimately bill amount was released to the contractor. As per their record, no Labour complaint was pending against the contractor. He volunteered to state that the contractor had not deposited any labour clearance certificate from the Labour Department. He denied the suggestion that contractor had submitted Labour Clearance Certificate with department within one month of completion of work on 25.05.2012.
At this stage, attention of DW1 was drawn to Ex.PW1/2 whereby 90% of security and earnest money was directed to be released to the Contractor on 27.07.2018. He admitted that Ex.PW1/2 was correct as per record. He termed it correct that despite noting given in Ex.PW1/2, security and earnest money had not been released to the contractor. The DW1 volunteered to state that it is because he (contractor) did not submit record with respect to his labourers. He termed it correct that Ex.PW1/2 did not contain any noting to the effect that record of labourers had to be obtained from Contractor before releasing 90% security and earnest money. He volunteered to state that CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 8 / 20 they had passed the bill but objection came from Head Quarter for releasing the payment.
17. When asked whether he (DW1) could produce any letter from Head Quarter whereby such an objection had been raised, the DW1, after going through the record brought by him, stated that there was no such letter on record. He denied the suggestion that plaintiff had not been released his earnest money and security deposit despite clearance from the department or that the plaintiff was entitled to interest on the unpaid security and earnest money due to inordinate delay by the department in making the payment to him.
18. No other witness was examined on behalf of defendant.
19. Arguments were addressed by Sh. S.K. Singh Counsel for the plaintiff and Sh. Sanjeet Malik, counsel for defendants. During the course of arguments, counsels for plaintiff and defendants reiterated respective averments made in the plaint and written statement and also referred to documents filed on behalf of respective parties as well as evidence adduced on record by them.
20. Counsel for defendants has contended that the claim of plaintiff is hopelessly barred by limitation. The plaintiff neither made any request in writing for refund of the amount of security and earnest money nor did he file original bills and Labour Clearance Certificate and hence plaintiff was neither CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 9 / 20 entitled to refund of earnest money/ security deposit and/or interest thereof.
In rebuttal, counsel for plaintiff has pointed out towards letter dated 27.07.2018, Ex.PW1/6, and submitted that plaintiff had made a request in writing to defendants to refund security/earnest money but defendants paid no heed to said communication. Since no communication was received from defendants in furtherance to letter dated 27.07.2018/Ex.PW1/6 and also after plaintiff had sent legal notice dated 04.10.2021, Ex.PW1/4, it was presumed that no further compliance was called for from the plaintiff and that the plea of non-submission of Labour Clearance Certificate had been raised by defendants as an afterthought to deny plaintiff of his dues.
21. I have heard the learned Counsels for the parties and have also perused the record and my findings on aforesaid issues are as under:-
ISSUE NO.1 Whether the suit of the plaintiff is barred by limitation? (OPD)
22. Onus of proving this issue was on defendants. The counsel for defendants argued that the work assigned to the plaintiff was purportedly completed on 25.05.2012. The plaintiff failed to submit original bill on his letterhead and hence the officials of Defendant Corporation prepared bill on basis of measurements and passed the same. The amount due under passed bill was paid to plaintiff. The plaintiff failed to pursue matter with respect to payment of earnest money and security amount even though deductions in this regard were CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 10 / 20 communicated to plaintiff on 17.06.2011. Since the suit has been filed only on 27.07.2022 which is way beyond the prescribed limitation of three years, the suit filed by him is barred by limitation.
23. Perusal of record reveals that plaintiff has relied upon copy of order/internal notings dated 01.08.2018 by the officials of Defendant Corporation as Ex.PW1/2. Although the plaintiff only filed photocopies of these documents and the same were de-exhibited and marked as Mark-A, during the testimony of PW1, the said documents were subsequently put to DW1 Sh. Muzaffar Naiem, AE during his cross-examination and were admitted by him to be correct as per record. The DW1 also admitted that despite noting given on the 1 st page of Ex.PW1/2, security deposit and earnest money had not been released to the contractor. Perusal of affidavit of admission/denial of documents of plaintiff, filed by defendants, also reveals that existence of documents Ex.PW1/2 (Colly) is admitted. In these circumstances, the notings on 1st page of Ex.PW1/2 are not only relevant but can also be made basis for giving plaintiff benefit of period of extension of limitation.
24. A bare perusal of notings on 1st page of Ex.PW1/2 reveals that there is following noting dated 01.08.2018 thereupon:-
"Please report whether payment released or not against the previous bills and in case payment is not released, indemnity bond cum affidavit may be taken from contractor before further processing the case."
CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 11 / 20
25. It appears that pursuant to this noting, letter Ex.PW1/6 written by plaintiff, who also submitted an indemnity bond Ex.PW1/5, on 31.07.2018. These were taken note of and it was further noted on back side of 1st page of Ex.PW1/2 that :-
"The payment for the previous passed bills has not been made, the same is reported by DCA/Engg at Page 1/C & 2/C and the contents is also incorporated in the note at Page 1/N. The contractor is also submitted an indemnity bond which is placed at page 12/C & 13/C. In view of above, permission may kindly be accorded to pass duplicate bill on current date for the release of payment of 90% Security and E/M."
26. On behalf of defendants, it could not be clarified why no further action was taken by the official of Defendant Corporation to prepare the duplicate bills and to release 90% of security money and earnest money to plaintiff despite specific observations by another official of Defendant Corporation on 1st page of Ex.PW1/2. In the event any further action like submitting of original bills on letterhead by contractor and/or labour clearance certificate by the contractor was called for, it would have found mentioned in the note of the defendant corporation as referred to herein above. It is noteworthy that 2 nd page of Ex.PW1/2 also brings out the fact that the department had already considered and allowed plaintiff's request for refund of 90% security as far back as on 21.02.2014, without any rider of original bills or labour clearance certificate attached to it.
CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 12 / 20
27. It is also brought out from perusal of record that prior to filing of the suit, legal notice Ex.PW1/4 was served upon defendants by the plaintiff wherein directions contained on 1st page of Ex.PW1/2 were clearly referred to. The defendants did not respond to the legal notice despite service. They also failed to participate in pre-institution mediation proceedings and chose to remain silent with respect to their commitment to refund 90% of security money and earnest deposit to plaintiff which is reflected from their own departmental notings.
28 It is true that despite observations reflected from 1st and 2nd page of Ex.PW1/2, the plaintiff filed his suit only on 27.07.2022, much beyond the stipulated period of three years from the last computation date i.e. 01.08.2018 (1st page of Ex.PW1/2). Here again, plaintiff is entitled to benefit of extention of limitation period in terms of order dated 10.01.2022 passed by Hon'ble Supreme Court of India in Suo Moto Writ Petition (Civil) No.3/2020 as also benefit of period during which matter remaining pending in pre-institution mediation proceedings i.e. from 16.12.2021 till 17.02.2022.
29. After giving benefit of extension of period of limitation, as detailed in foregoing paragraphs, the suit of plaintiff, which was filed on 28.07.2022, is apparently within the period of limitation.
This issue is decided in favour of the plaintiff and against the defendant.
CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 13 / 20 ISSUE NO.2 Whether the plaintiff is not entitled to suit amount for want of submitting bills for payment? (OPD) AND ISSUE NO.3 Whether the plaintiff is not entitled to the relief of refund of security/earnest money deposited for want of compliance of Clause 17 and 45 of GCC? (OPD) AND ISSUE No.4 Whether plaintiff is entitled to decree of recovery of Rs.20,88,000/- against the defendant, as prayed for?(OPP)
30. All these issues are being taken up together as they are inter connected. In the present case, it is not disputed that Defendant Corporation had issued work order bearing no.11 dated 17.06.2011 to plaintiff. The plaintiff completed work under the work order and the officials of defendant, including the concerned Executive Engineer, have already prepared, passed the bills and released the payments with respect to the work order. Now the only remaining dispute that needs adjudication pertains to refund of security/earnest money.
31. As already observed while deciding issue no.1, the 1st and 2nd page of Ex.PW1/2 (Colly) make it apparent that the Defendant Corporation did not seek any further documents from plaintiff, save and except those mentioned in the official notings of the department. The labour clearance certificate and original CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 14 / 20 bills on the letterhead of the plaintiff do not find mention in any of the two notings and hence plaintiff cannot be denied the suit amount for want of submitting original bills for payment.
32. Even otherwise, the Hon'ble High Court of Delhi in case of Rajnish Yadav, Proprietor of M/s Bharat Construction Co. (supra) has observed as under:-
25. .......... There is no dispute that the security deposit is refundable to the appellant/ plaintiff and the same could be withheld only to secure MCD against any claims due to non-performance of the statutory obligations on the part of the appellant/plaintiff. There is no material to indicate that the appellant/plaintiff has not cleared its due towards labour or any other statutory levy. A considerable amount of time has lapsed since the contract was complete.
Admittedly, no claim has been made against MCD on account of any acts of commission or omission on the part of the appellant/plaintiff. Denying the appellant's/plaintiff's claim in this context would amount to permitting MCD to appropriate the security amount. Admittedly, there are no grounds for MCD to appropriate the security deposit. Thus, the same is required to be refunded to the appellant/plaintiff.
33. In the instant case also, nothing has been placed on record by defendants to bring out that plaintiff has failed to clear dues towards labour or any other statutory levy. Admittedly, no claim has been made against defendant/MCD on account of any acts of commission or omission on the part of plaintiff and thus in these facts and circumstances as well as in view of the observations made in the judgment of Rajnish Yadav, Proprietor of M/s Bharat Construction Co. (supra), plaintiff is also entitled to refund of the security/earnest money of Rs.18,00,000/- qua work order 11 dated 17.06.2011. Non submission of original bills as also now compliance of clause 17 and 45 of GCC is not sufficient for defendants to deny refund of security and earnest CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 15 / 20 money to the plaintiff. These issue are accordingly decided in favour of the plaintiff and against the defendants.
ISSUE NO. 5Whether plaintiff is entitled for interest. If yes, at what rate and for which period? (OPP)
34. Ld. Counsel appearing for the defendants states that as per Clause 7 of the agreement, defendants are not liable to pay interest. On the other hand, Ld. Counsel appearing for the plaintiff urges that since the defendants failed to make payment of security/earnest money despite lapse of considerable time of passing of the bills and payment thereof to the plaintiff, the defendants are liable to pay Rs.2,88,000/- towards interest @ 12% p.a. on the entire outstanding amount of Rs.18,00,000/- from 01.07.2020 to 30.12.2021 alongwith pendente lite and future interest @ 12% p.a. on the principal amount from the date of filing of the suit till the payment is made by the defendants.
35. In North Delhi Municipal Corporation & Anr. vs. Sanjeev Kumar (RFA-430/2017) & CM Nos. 15925-26 of 2017, DOD: 22.3.2018), Hon'ble High Court dealt with the issues relating to clause-7, 9, 17 & 45 of the General Conditions of Contract extensively by framing the following questions:
(i) Whether payment of the principal amount can be delayed in view of Clause- 7 & 9 of the General Conditions of Contract read with the amendments?
(ii) Whether the refunds of earnest money/security deposit can be delayed in view of Clause 17 & 45 of the General Conditions of Contract?
(iii) Whether interest is payable on delayed CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 16 / 20 payments/refunds and if so, for which period?
36. After dealing with all the issues extensively, Hon'ble Court summarized the conclusions and findings in para 77 to 81 and same are reproduced as under:
77. The General Conditions of Contract i.e., clauses 7 and 9 which are admittedly part of the work orders issued by both the NrDMC and the EDMC are being tested in these batch of cases. A contract which stipulates that the consideration would be paid in an unforeseen time in the future based on certain factors which are indeterminable, would in effect be a contract without consideration. Even if the contract is held to be a valid contract, then the concept of 'reasonableness' has to be read into the same. Section 46 of the Contract Act and the explanation thereto is clear that "what is a reasonable time is a question of fact in each case." A Corporation which gets works executed cannot therefore include terms in the contract which are per se unconscionable and unreasonable as-
a) There is no fixed time period as to when the funds would be available;
b) There is also no fixed mechanism to determine as to when and in what manner the head of account is to be determined and as to how the Contractor would acquire knowledge of these two facts;
c) There is also no certainty as to how many persons are in the queue prior to the Contractor and for what amounts;
d) There is enormous ambiguity in the receipt under the particular heads of accounts
78. These clauses in effect say that the Contractor is left with no remedy if the Corporation does not pay for the work that has been executed. Such a Clause would be illegal and contrary to law. Such clauses, even in commercial contracts, would be contrary to Section 25 read with Section 46 of the Contract Act.
79. The clauses do not specify an outer time limit for payment. The expression reasonable time has to be 'a time'. The concept of time itself is ensconced with specificity and precision. Clause 9 is the opposite of being precise. It is as vague and ambiguous as it could be because it depends on factors which are totally extraneous to the contract, namely -
. Allotment of funds to the Corporation by the CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 17 / 20 Government;
. Allotment of funds in a particular head;
. Allotment of funds for payments who are in queue prior to the contractor;
80. Thus, these factors, which are beyond the control of the Contractor and which would govern the payment of consideration, make the said clauses of the contract completely unreasonable. The clauses have to thus, be read or interpreted in a manner so as to instill reasonableness in them.
81. By applying the above said principles, in respect of final bills raised by Contractors for works executed, that have been approved by the Engineer-in-Charge, the Clauses have to be read in the following manner:
a) Reasonable time for making of payments of final bills in respect of work orders up to Rs.5 lakhs shall be 6 months and work orders exceeding Rs.5 lakhs shall be 9 months from the date when the bill is passed by the Engineer-in-Charge.
b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded, while applying the queue system.
c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non-payment would attract payment of interest for the delayed periods.
d) A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
e) To the extent that queue basis is applied only for clearing of payments which do not extend beyond the period of 6 months and 9 months period, it is reasonable. However, if the queue basis is applied in order to make Contractors wait for indefinite periods CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 18 / 20 for receiving payments, then the same would be unreasonable and would have to therefore be read down.
f) The Security amount/Earnest money deposited would be refundable upon the fulfilment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments.
(emphasis supplied)
37. Since by not making the payment in time, the defendants deprived the plaintiff to utilize the amount, thus defendants are liable to compensate the plaintiff by paying interest on the due amount. The interest amount of 18% p.a. claimed by plaintiff also appears to be on higher side as in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar, RFA No. 430/2017 decided on 22.03.2018, interest amount of 8% p.a. only was awarded on delayed payment. However, considering that bills amount already stands paid to plaintiff, the defendants are granted a period of 30 days from today i.e. 20.11.2023 the date the judgment/decree has been passed against them, to pay the decreetal amount. In case the defendants fail to make payment to the plaintiff within a period of 30 days from today then the defendants shall be liable to pay simple interest @ 8% p.a. from the date of filing of the suit till the realization of the decreetal amount.
R E L I E F:-
38. In view of above, I hereby pass a money decree in the sum of Rs.18,00,000/- (Rupees Eighteen Lakhs only) in favour of the plaintiff and against the defendants which defendants shall be liable to pay jointly or severally. The defendants are directed to pay the decreetal amount to the CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 19 / 20 plaintiff within a period of 30 days from today, failing which defendants shall be liable to pay simple interest @ 8% per annum on decreetal amount from the date of filing of the suit till realization.
The defendants will further pay the full costs of the suit and additionally Rs.1,000/- spent by the plaintiff in DLSA for invoking pre-institution mediation. Suit is decreed as per above directions.
Decree sheet be prepared accordingly.
File be consigned to record room after due Digitally signed compliance. ILLA by ILLA RAWAT Date: Announced in the open Court RAWAT 2023.11.20 16:48:16 +0530 on 20th Day of November, 2023.
(ILLA RAWAT) District Judge Commercial Court-03 Central District, THC, Delhi.
CS (COMM) No.1904/2022 Surender Krishan Gupta Vs. Municipal Corporation of Delhi & Anr. Pg. 20 / 20