Delhi District Court
M/S Ved Prakash Mittal And Sons vs Dda on 15 September, 2023
IN THE COURT OF SHRI NAVJEET BUDHIRAJA
ADDITIONAL SESSIONS JUDGE - 02, SOUTH
DISTRICT, SAKET COURTS, NEW DELHI
CS DJ No.1159/2017
In the matter of:
M/S VED PRAKASH MITHAL & SONS
(A PARTNERSHIP FIRM),
ENGINEERS & CONTRACTORS,
THROUGH ITS PARTNER
SH. RAJINDRA PRAKASH MITHAL,
27/20, SHAKTI NAGAR,
DELHI-110007.
..... Plaintiff
Vs.
DELHI DEVELOPMENT AUTHORITY,
THROUGH VICE CHAIRMAN,
VIKAS SADAN, I.N.A.
NEW DELHI ..... Defendant
Date of Institution : 23.09.2013
Date on which judgment reserved : 05.08.2023
Date of Judgment : 15.09.2023
Result : Decreed only
to the extent
as mentioned
in issue no. 2
and 3.
(This judgment is being pronounced by the undersigned
after his transfer in terms of order No.35/G-
I/Gaz.IA/DHC/2023 as the case was listed for pronouncement
of the judgment before the transfer order.)
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Digitally signed by
NAVJEET NAVJEET BUDHIRAJA
BUDHIRAJA Date: 2023.09.15
15:58:21 +0530
SUIT FOR RECOVERY OF RS. 62,45,603/- (RUPEES
SIXTY TWO LAKHS FORTY FIVE THOUSAND SIX
HUNDRED THREE ONLY)
JUDGMENT
This judgment shall govern the disposal of the suit for recovery of Rs.62,45,603/- instituted on behalf of the plaintiff M/s Ved Prakash Mithal and Sons Engineers and Contractors, through its partner Sh. Rajindra Prakash Mithal, against the defendant Delhi Development Authority (in short 'DDA').
2. Plaintiff is a partnership firm duly registered under the relevant provision of the Partnership Act and is engaged in the business of Civil Consultancy, Engineering and Building Construction Work. Sh. Rajindra Prakash Mithal, who is duly authorized to file the present suit, is one of the partners of the plaintiff firm and his name appears as one of the partners of the plaintiff firm in the register maintained by the Registrar of Firms under the Partnership Act. Defendant is a statutory authority constituted under the Delhi Development Act, 1957 {hereinafter referred as DDA Act}.
3. Epitome of the case of the plaintiff is that sealed percentage rate tender was invited by the Executive Engineer, Northern Division No.5, DDA, from the approved contractors of appropriate class in DDA, CPWD, MES, MCD, NDMC and P&T for work of construction of 300 EWS Houses between Kondli Extension and DDA MIG Houses, Pocket-6, Kondli Gharoli Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 2/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 15:58:35 +0530 Complex including internal development and internal electrical installation all complete. On the basis of documents i.e. registration certificate/enlistment in appropriate class, registration, production of valid ITCC and proof of specialized contractor on approved list of DDA, income tax certificate etc, submitted by the plaintiff firm, the tender form/document was issued to the plaintiff firm and along with tender, the requisite earnest money was deposited by the plaintiff with the defendant authority on account of security deposit. The said work was awarded to the plaintiff firm by the Executive Engineer, ED 12 of DDA followed by execution of an agreement bearing No. 20/EE/ED/12/DDA/2007-2008.
4. The letter of award contained an instruction for the plaintiff company to contact the concerned Assistant Engineer and take his instructions to start the work at once. The plaintiff company contacted the concerned Assistant Engineer, took instructions and started the work at the site. The plaintiff company mobilized all its resources at the site and had made arrangements of staff, labor, equipments and material for the due execution and timely completion of the work but due to various defaults on the part of the DDA, the aforesaid work could not be completed as per the stipulation contained in the agreement.
5. Despite proper and smooth execution of work by the plaintiff company and making all efforts to execute and complete the work within stipulated time, the smooth progress of the work Digitally CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 3/ 66 signed by NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 15:58:46 +0530 was hampered and hindered by the defendant in as much as they failed to make timely payments for the work done and executed by the plaintiff company and the DDA further failed and neglected to issue drawings and decisions to execute the work.
6. The work awarded to the plaintiff had stipulated date of start as 25.09.2007 and stipulated date of completion as 24.09.2009, however, on account of shifting of site, the stipulated date of start was consequentially changed to 05.03.2008 with stipulated date of completion as 05.03.2010, but, on account of delays and hindrances attributable to DDA, the aforesaid work was duly completed by the plaintiff on 30.07.2010 to the satisfaction of DDA and the DDA recorded the completion of the said work and the defect liability period also expired on 30.01.2011.
7. The extension of time was granted by the competent authority i.e. Superintending Engineer, ED-12/DDA without levy of compensation, till the actual date of completion of work. Though the stipulated date of completion as per the agreement was 05.03.2010, however due to hindrances and delays attributable to DDA, the work could not be completed on extension of time till the actual and physical completion without levy of compensation. The total period of hindrance was 286 days, but the actual period was 148 days.
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8. Since the defendant was not in a position to take over the completed flats after physical completion of the same, the concerned officials of defendant directed the plaintiff to execute part of work at the time of handing over the flats to respective allottees and in this regard, a supplementary agreement dated 01.08.2010, for initial period of one year, was also executed by and between the parties. As per Clause 7 of the agreement, the plaintiff was entitled to the payment of its final bill within six months from the date of actual completion of work, however, defendant settled the final bill much after the said date.
9. After settling the final bill and remittance of payment due, the plaintiff had been repeatedly requesting the defendant to make payment to him qua the other legitimate dues and claims to which he is entitled and despite various letter and reminders, no heed was paid to the aforesaid request of the plaintiff.
10. The amounts due and payable by the defendant to the plaintiff on account of various claims which have arisen during the execution of the aforesaid work are as under:
A. Claim No.1 for Rs.40,000/- wrongfully and unlawfully withheld by the defendant from various running account bills of electrical work not released by the defendant to the plaintiff.
Digitally
signed by
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NAVJEET BUDHIRAJA
BUDHIRAJA Date:
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+0530
B. Claim no.2 for Rs.60,000/- wrongfully and
unlawfully withheld by the DDA from various running account bills of civil work not released by the defendant to the plaintiff. C. Claim no.3 for Rs.2,50,000/- wrongfully and unlawfully withheld by defendant on account of allotment of flats.
D. Claim no.4 on account of price rise and/or escalation payable and calculable as clause 10 CC of the agreement, amounting to Rs.48,19,603.95/- on civil work, electrical work and on the work executed under the supplementary agreement, wrongfully and unlawfully not paid by the defendant to the plaintiff.
The next claim is numbered as 6 instead of 5. E. Claim no.6 for the payment of Rs.1,25,400/- at the rate of Rs.6000/- per month on account of watch and ward charges being incurred by the plaintiff by keeping and deploying the watch and ward staff at site with effect from 30.07.2010 to 13.03.2013 i.e. till the date when the site was taken over by the defendant from the plaintiff (excluding the payment made till 29.07.2011) F. Claim no.7 for damages of Rs.9,50,000/- on account of delay in execution of work, attributable to DDA, damages caused due to shifting of site and prolongation of work and damages due to idle labor, staff, T&P, machinery etc. Claim no. 7 is numbered twice.
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2023.09.15 15:59:20 +0530 G. Claim no.7 for payment on account of interest due and payable by the defendant at the rate of 18% per annum on the aforesaid amounts from the date of completion of the work, till the realization of the amount.
11. Despite repeated requests and reminder, the defendant did not release the aforesaid payment which was illegally and arbitrarily withheld by it and various communications were sent by the plaintiff to the defendant from time to time which were duly received by it claiming the aforesaid amount due and payable by defendant to the plaintiff.
12. The defendant caused hindrances in timely execution of the awarded work and as such is solely responsible for unnecessary prolongation of contract due to which the work could not be completed within the stipulated time, and therefore, the plaintiff has suffered huge losses in terms of money and time due to prolongation of the contract and delay in execution and completion of the aforesaid work and delay in taking over the constructed flats.
13. Despite various personal visits and reminders, the defendant did not pay any heed to the requests of the plaintiff company and failed in releasing the aforesaid payments due and payable by it to the plaintiff, who then got a statutory notice dated 20.07.2012 under Section 53B of DDA Act served upon the DDA through speed post/AD wherein the plaintiff called upon Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 7/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 15:59:30 +0530 the defendant to remit the aforesaid amounts due and payable by it to the plaintiff company. Plaintiff further called upon the defendant to remit interest on the aforesaid amount @18% per annum being the customary and usual rate of interest prevalent in the market on such commercial transactions, with effect from date of completion of the project.
14. Defendant replied the said notice dated 14.08.2012, denying and refuting the claims of the plaintiff, without any basis and reasons and the said notice was followed by another notice dated 28.12.2012. After the said notice, some part payment was released by the defendant to the plaintiff on 13.03.2013, but the defendant has failed and neglected to pay the balance amount on account of the aforesaid claims. Hence, the present suit.
15. Written statement, assailing the suit, came to be filed on behalf of the defendant wherein it stated that the present suit has been instituted beyond the prescribed period of limitation as enshrined under the provision of Section 53(B) of the DDA Act as the work was completed by the plaintiff on 30.07.2010 as per the plaintiff. It is further stated that the amount as claimed in the present suit is not the amount as claimed by the plaintiff in the notice under Section 53(B) of the DDA Act. It is further stated that without admitting the receipt of the subsequent notice under Section 53(B) of the DDA Act, as per the plaintiff himself, the first notice under Section 53(B) has been withdrawn by the plaintiff company with the issuance of another notice under Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 8/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 15:59:40 +0530 Section 53(B), and, therefore, the said notice dated 28.12.2013 has not been served on the DDA, hence the present suit is not maintainable in view of the non compliance of the statutory provision of Section 53(B) of the DDA Act.
16. On merits, defendant denied the authorization of Rajendra Prakash Mithal to sign, verify and institute the present suit as one of the partners of the plaintiff. In so far as the invitation of tender is concerned, it is stated that tenders were invited by the Executive Engineer, ED12, DDA. It is further denied that the plaintiff took the instructions and started the work at the site, as alleged and also that the plaintiff had mobilized all its resources and started the procurement of the materials. It is stated that plaintiff had not taken over the site because of the dispute raised by the villagers of Kondli, which is recorded in the site order book. It is further stated that the plaintiff started to mobilize its resource only after 06.03.2008 when the possession of the site was taken over by it. It is further denied that the smooth progress of the work was hampered or hindered by the defendant, and rather it was the plaintiff only which failed to raise monthly bills for the work executed, and the defendant was constrained to raise the running amount bills and make the payments to the plaintiff. It is further stated that the running account bills were accepted by the plaintiff. It is further stated that all drawings were issued to the plaintiff before the stage of its requirement and the work was not hampered in any manner.
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17. It is further the contest that defendant had written a letter dated 07.02.2008 to the plaintiff specifying the date of start of the work to be 05.03.2008 as per clause 5 of the agreement, instead of 25.09.2007. The work was completed by the plaintiff on 30.07.2010 when the completion certificate was recorded. The extension of time was granted to the plaintiff upon his application as per part 1, which was granted by the defendant without levy of compensation. It is further stated that the completion certificate dated 30.07.2010 was granted by the defendant subject to the following:
(i) Removal of defects noticed during allotment/ maintenance work.
(ii) Final grinding and polishing of floors and skirting.
(iii) Final coat of white wash, paint etc. and cleaning glazed ceramic tiles.
(iv) Cleaning and testing of all manholes, sewer lines, SCI/G.I. stacks W.C. floor trap and water lines, sluice valve fire hydrants etc.
(v) Easing of doors and windows.
(vi) To furnish guarantee bond for water proofing treatment.
(vii) Providing fittings and fixtures during allotment (under supplementary agreement) like fixing of windows, glass Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 10/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:00:05 +0530 pans, doors windows, fittings, sanitary fittings and water supply fittings etc.
18. It is further canvassed that with the closure of the aforesaid agreement between the parties, a supplementary agreement was executed on 30.07.2010 to bound the plaintiff to execute the balance work as per Schedule B.
19. In so far as claim no. 1 for Rs. 40,000/-, it is stated that the averments made are devoid of material particulars and the amount was withheld due to QAC inspection carried out in the year 2009 and 2010. Later, paras of one QAC inspection was dropped and then amount of Rs. 20,000/- was released to the plaintiff vide a letter dated 31.12.2013.
20. In so far as claim no. 2 of Rs. 60,000/- is concerned, it is stated that there were three QAC inspections with regard to civil works as per clause 14 of the agreement and a sum of Rs. 20,000/- each for three QAC paras was withheld in the third running account bill, sixth running account bill and the eleventh running account bill, which bills were accepted by the plaintiff. It is stated that the QAC paras have not been settled as the plaintiff failed to remove the defects.
21. In so far as next claim of Rs. 2,50,000/- is concerned, the said amount is stated to have been released to the plaintiff, and the said claim does not survive.
Digitally
signed by
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22. In so far as claim no. 4 of Rs. 48,19,603.95/- on account of the price rise and/or escalation as per clause 10 CC of the agreement is concerned, it is stated that no escalation was to be paid for the work executed in the extended period of the contract as per clause 10CC and all the payments have been made to the plaintiff company in three separate 10CC running account bills, which were accepted by the plaintiff.
23. In so far as claim no. 6 for the payment of Rs. 1,25,400/- of watch and ward charges is concerned, it is stated that plaintiff is not entitled to any amount over and above the period of expiry of the supplementary agreement i.e. 25.05.2011, and the defendant had already raised the 15th final bill, which was accepted by the plaintiff.
24. In so far as claim no. 7 of Rs. 9,50,000/- towards damages on account of delay in execution of work, damage due due to shifting of site and prolongation of work and damages due to idle labor, staff, T & P machinery, the claim is denied stating that the possession of the original site was never taken over by the plaintiff on 25.09.2007 as claimed, and extension of time was granted by the defendant without levy of compensation to keep the agreement alive, and the plaintiff had executed the performa for extension wherein it was specifically mentioned that the plaintiff will not claim any thing extra on account of extension of time. Rest of the averments are denied on behalf of defendant.
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25. Replication to the written statement was filed on behalf of plaintiff reaffirming the contents of the plaint and denying those made in the written statement.
26. The consummation of pleadings was followed by admission/denial of documents. The admitted documents of the plaintiff were marked as Ex.P1 to P13. The admitted documents of the defendant were marked as Ex. D1 to D13, Ex.D15 to D26 and Ex. D31 to D39.
27. On the heels of the admission/denial of documents, following issues were framed:
(i) Whether the suit of the plaintiff is barred by limitations and is hit by section 53(B) of Delhi Development Act? OPD
(ii) Whether plaintiff is entitled to recovery of Rs.
62,45,603/- along with 18 % interests ? OPD
(iii) Relief.
28. Plaintiff thereafter led evidence wherein Sh. Rajendra Prakash Mithal was examined as PW1 vide his affidavit Ex.PW1/A, who also tendered following documents:
• Copies of form A, B and C Ex.PW1/1 (colly.).
• The letter dated 27.06.2007 of the Plaintiff is Ex.PW1/2.
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2023.09.15 16:00:36 +0530 • The letter dated 21.10.2008 of the Plaintiff is Ex.PW1/3.
• The letter dated 1.4.2008 of the Plaintiff is Ex.PW1/4.
• The letter dated 13.10.2010 of the Plaintiff is Ex.PW1/5.
• The letter dated 3.10.2011 of the Plaintiff with Bank Guarantees is Mark A. • Various payment vouchers are Mark B (colly.).
• The extract of EOT granted by DDA is Ex.PW1/8 (already Ex.D34).
29. PW1 was cross-examined on behalf of defendant following which plaintiff closed its evidence.
30. On behalf of defendant Sh. Manoj Kumar Gupta, Executive Engineer, ED12, DDA was examined as DW1 vide his affidavit Ex.DW1/A, who also relied upon the documents already exhibited in admission/denial. This witness was cross-examined on behalf of plaintiff and was discharged. Defendant also closed its evidence thereafter, paving the path for final arguments.
31. Ld. Counsel for the plaintiff led his tirade against the defendant by narrating the facts of the plaint and the manner in which contract was executed between the parties. He pointed out Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 14/ 66 BUDHIRAJA NAVJEET Date:
BUDHIRAJA 2023.09.15 16:00:47 +0530 that initially the site which was earmarked for construction of the flats could not be handed over to the plaintiff as per the dates of performance of the contract which were 25.09.2007 till 24.09.2009, and an alternate site could be handed over on 05.03.2008, which was the fresh date agreed between the parties for the start of the contract which was to end by 05.03.2010. Ld. Counsel further expounded that the contract could be concluded only on 30.07.2010 as per the extension granted by the defendant without claiming any compensation, and the delay is to be attributed to the hindrances caused by the defendant itself, which is the subject matter of the present suit. Ld. Counsel further highlighted that certain payments were withheld, which also constitute the subject matter of the present suit. Though, it was conceded that out of Rs.40,000/- in claim (1), Rs.20,000/- has stood paid by the defendant. Likewise for claim (3), Rs.2,50,000/- has also stood paid, however, remaining payment as per the claims under different heads have not been paid. Ld. Counsel also attracted the attention of the court to various communications exchanged between the parties i.e. letter dated 01.11.2007, 18.12.2007 etc. and responses of the defendant to those letters. Ld. Counsel also alluded to various entries pertaining to civil and electric work to assert that the work was completed, and the payments have been withheld illegally.
32. Ld. Counsel for the plaintiff further referred to the defence of the defendant as well in order to punch holes in its defence. Ld. Counsel then spoke about the supplementary CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 15/ 66 Digitally signed by NAVJEET BUDHIRAJA NAVJEET Date:
BUDHIRAJA 2023.09.15 16:00:58 +0530 agreement entered into between the parties in regard to watch and ward charges and pointed out that the final possession of the flats was taken over by the defendant on 13.03.2013, and defendant is thus liable to pay for the period after the conclusion of the supplementary agreement at the rate of Rs.6,600/- per month. Ld. Counsel further emphasized upon the claim of damages of Rs.9,50,000/- as a result of shifting of the site which caused substantial loss to the plaintiff as he had installed the machinery, undertook some construction and employed the labor which were not utilized at the original site. Ld. Counsel also argued with alacrity that the claim (4) of Rs.48 lacs has remained unchallenged, which otherwise also stands proved from the calculation cited in the present suit. Ld. Counsel also addressed the issue of limitation which has been raised by the defendant by referring to the Judgments in (1) Lucky Star Estates (India) Pvt. Ltd. Vs. Delhi Development Authority [2004(76) DRJ (DB)]; (2) I.P. Power Generation Company Ltd. Vs. Siddhartha Extension Resident Welfare Association & Ors.
[2013 SCC OnLine Del 4956]; (3) Col. A.B. Singh (Through L.Rs) Vs. Shri Chunnilal Sawhney & Orthers [ 2011 SCC OnLine Delhi 4289]; (4) Yashod Kumari & Anr. Vs. MCD & Ors. [2004(78) DRJ 629 (DB)] and urged that the suit is within the period of limitation. Ld. Counsel also alluded to Delhi Development Authority Vs. M/s N.N. Buildcon Pvt. Ltd, 2017 SCC Online Delhi 11494 and R.L. Kalathia & Co. Vs. State of Gujarat dated 14.01.2011 of Supreme Court of India.
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33. On the contrary, Ld. Counsel for the defendant combated the arguments of the plaintiff by asserting that the claim of the plaintiff of the delays being attributed to the defendant is completely false and fabricated, and plaintiff had no legal basis to file the present suit. Ld. Counsel, though acknowledged the dates as projected by Ld. Counsel for the plaintiff, as well as the extension of time which was granted to the plaintiff to complete the work, without any compensation, but seriously disputed that the plaintiff was entitled to any damages, and other charges for escalation of the cost of concluding the contract. In this process, Ld. Counsel for the defendant also referred to various documents i.e. Ex.P-1, Ex.PW-1/3, Ex.P-3, Ex.P-5, Ex.P-6, Ex.P-7, Ex.P-8, Ex.PW-1/4, Ex.PW-1/5, Ex.D-1, Ex.D-2, Ex.D-3, Ex.D-5, Ex.D-10, Ex.D-11, Ex.D-12, Ex.D-17, Ex.D-18, Ex.D-19, Ex.D-21, Ex.D-22, Ex.D-23, Ex.D-24, Ex.D- 25, Ex.D-27, which are the admitted correspondences exchanged between the parties. Ld. Counsel further highlighted that the judgment in Lucky Star case and Yashoda case are on different footing and not applicable to the facts of the present case. It was further highlighted that the final bill issued by the defendant included everything, and no payment for alleged escalation of cost, during the extended period of work was to be given to the plaintiff.
34. In regard to various claims of the plaintiff under different heads, Ld. Counsel for defendant has referred to its pleading and evidence, which are not repeated herein for brevity.
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35. Both the sides also submitted written synopsis in support of their oral submissions.
36. Having heard the rival contentions of Ld. Counsel for the plaintiff Sh. Piyush Kalra and for the defendant Ms. Promila Kapoor, my issue wise finding is herein under.
37. At the outset, I decide the objection raised on behalf of defendant at the time of tendering of evidence by PW1 as to mode of manner and proof. PW1 had clarified that letter dated 03.10.2011 which was Ex.PW1/6 in the affidavit was marked as Mark A and payment vouchers were mentioned as Ex.PW1/7 (colly) in the affidavit were marked as Mark B as the original of the same was with the defendant. Defendant at that time has not Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 18/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:01:33 +0530 controverted that the original was submitted with them, thus, this objection is held to be without any force.
38. Issue no.1: Whether the suit of the plaintiff is barred by limitations and is hit by section 53(B) of Delhi Development Act? OPP 38.1. This issue contains two limbs, one is with regard to the service of the mandatory notice u/s 53 (B) of the DDA Act and the other limb is in regard to the suit being barred by limitation. The burden to prove this issue was on the defendant. It was pleaded as well as argued that as per provision of section 53(B)(2) of the DDA Act, no suit shall be instituted after the expiry of six months from the date on which cause of action arises. Thus, the limitation for filing the present suit for recovery of money is six months from the date of completion of the work, which was completed on 30.07.2010 as per the completion certificate Ex.D32. It is further argued that even the supplementary agreement dated 30.07.2010 Ex.D39 also came to an end on 29.07.2011, and thus, the present suit being filed by the plaintiff on 24.10.2013, is clearly barred by limitation. It is also argued that the second notice dated 28.12.2012 has not been served on the DDA, for the non compliance of which also, the suit is liable to be dismissed.
38.2. On the contrary, Ld. Counsel for the plaintiff countered the aforesaid arguments by stating that the limitation of six months as prescribed in section 53(B) of the DDA Act is Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 19/ 66 BUDHIRAJA NAVJEET Date:
BUDHIRAJA 2023.09.15 16:02:13 +0530 not applicable herein in view of the Judgment in Lucky Star Estates (India) Pvt. Ltd. Vs. Delhi Development Authority, 2004 (76) DRJ. It is also argued that otherwise also the defendant made some part payment in September 2013, as well as after filing of the suit, therefore computing from those dates, the suit is within the period of limitation. In so far as service of mandatory notice u/s 53(B) of DDA Act, Ld. Counsel clarified that the first notice dated 20.07.2012 was admittedly received by the defendant, which was also responded to, and the second notice dated 28.12.2012 was in the nature of a follow up of the first notice, following which some part payment was also released by the defendant to the plaintiff on 13.03.2013. Ld. Counsel further relied upon the Judgment in Col. A.B. Singh (Through L.Rs) Vs. Shri Chunnilal Sawhney & Orthers [ 2011 SCC OnLine Delhi 4289] and Yashod Kumari & Anr. Vs. MCD & Ors. [2004(78) DRJ 629 (DB)], to hammer home the point that once the suit has been contested by the defendant, the non service of notice under section 53 (B) of the DDA Act is of no consequence.
38.3. So far as the legal position in regard to the applicability of six months period as envisaged in section 53 (B) of the DDA Act is concerned, the Judgments relied upon by Ld. Counsel for plaintiff in (1) Lucky Star Estates (India) Pvt. Ltd.
Vs. Delhi Development Authority [2004(76) DRJ (DB)]; (2) I.P. Power Generation Company Ltd. Vs. Siddhartha Extension Resident Welfare Association & Ors. [2013 SCC Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 20/ 66 BUDHIRAJA NAVJEET BUDHIRAJA Date:
2023.09.15 16:02:24 +0530 OnLine Del 4956]; (3) Col. A.B. Singh (Through L.Rs) Vs. Shri Chunnilal Sawhney & Orthers [ 2011 SCC OnLine Delhi 4289]; (4) Yashod Kumari & Anr. Vs. MCD & Ors. [2004(78) DRJ 629 (DB)] are worth noting. The exposition of Lucky Star Estates case is that the execution of the contract between the parties is not an act done in pursuance of the DDA Act, therefore, the period of limitation of six months as provided therein would not be applicable. Though, in the said case, the dispute related to the return of earnest money in regard to auction of a land, but the ratio laid down therein can be adopted in the present suit which is also a suit for recovery of damages against the defendant in execution of the work contract between the parties. Therefore, I also hold an opinion that the period of six months limitation would not be applicable to the present suit.
38.4. The present suit would, thus, be governed by ordinary law of limitation and since the nature of the relief(s) sought in the present suit is seeking recovery of various claims under different heads flowing from the agreement Ex.D38 and breach of its terms leading to its prolongation, the cause of action can be said to have lasted till the date of closure of supplementary agreement Ex.D39 i.e. 25.05.2011. Though, it is the contention of the defendant that the supplementary agreement was independent of the main agreement Ex.D38, however, in view of the admitted position that the supplementary agreement pertained to completion of the left over work in the flats in the form of installing of the fittings, supplementary agreement Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 21/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:02:45 +0530 cannot be divorced to the main agreement. Thus, the date of the conclusion of the transaction between the parties is to be treated as 25.05.2011. It is also an irrefragable position that some payment was made on 13.03.2013 by the defendant to the plaintiff under this contract, followed by some more payment even after the date of institution of the suit on 23.09.2013. Thus, viewing from any angle, the suit is within the 3 years limitation period as provided in Article 55 of the Limitation Act.
38.5. In so far as the plea of non-service of the second notice dated 28.12.2012 is concerned, the same also cannot be countenanced as the service of first notice Ex.P12 under section 53 (B) has been admitted, which was responded to, and there is no such indication that the alleged second notice by the plaintiff to the defendant amounted to the withdrawal of the first notice.
Otherwise also, in view of the dictum of the Courts in Col. A.B. Singh (Through L.Rs) Vs. Shri Chunnilal Sawhney & Orthers [ 2011 SCC OnLine Delhi 4289] and Yashod Kumari & Anr. Vs. MCD & Ors. [2004(78) DRJ 629 (DB)], once the defendant has contested the present suit to the hilt, defendant cannot squeal about the non-service of the second notice dated 28.12.2012.
38.6. In view of the aforesaid, issue no. 1 is decided in favor of the plaintiff and against the defendant.
39. Issue no.2: Whether plaintiff is entitled to recovery of Rs. 62,45,603/- along with 18 % interest ? OPP Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 22/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:03:00 +0530 39.1. The genesis of the present suit is that the plaintiff herein as a partnership firm, duly registered under the provisions of the Partnership Act, and is engaged in the business of civil consultancy, engineering and building construction work. Sh.
Rajendra Prakash Mithal is one of the persons of the plaintiff firm and has been duly authorized by and on behalf of the other persons to sign, verify and instituting the present suit. Defendant, in the written statement, though has denied that Sh. Rajendra Prakash Mittal is duly authorized, however, the said denial is without any basis. Plaintiff/PW-1 in his affidavit Ex.PW-1/A has produced and proved the relevant forms A, B and C enunciated under Partnership Act Ex.PW-1/1 (Colly). In his cross- examination, defendant has not been able to elicit any adverse circumstance which could dent the competency of Sh. Rajendra Prakash Mithal.
39.2. It is further the case and deposition of the plaintiff/PW1 that tender was invited by the executive engineer, Northern Division No.5 DDA from the approved contractors for work of issuing EWS houses between Kondli Extension of DDA MIG houses including initial development and electrical installation, the requisite earnest money of which was deposited by the plaintiff, and as a consequence of which work was awarded to the plaintiff firm by the executive engineer, ED-12, of the defendant authority. As against this, on behalf of defendant, though there is not much demur, however, it was stated that Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 23/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:03:23 +0530 tenders were invited by the executive engineer ED-12 DDA and not by the executive engineer, Northern Division no.5. In so far as award of work to the plaintiff firm is concerned and execution of the agreement Ex.D38 is concerned, defendant has not challenged the same.
39.3. It is further the grouse and consequent deposition of the plaintiff that the letter of award contained an instruction for the plaintiff company to consult the concerned assistant engineer and to seek his instructions to start the work at once following which plaintiff company consulted the concerned assistant engineer, took instructions from him, and started the work at the site. The plaintiff company also claimed to have mobilized all its resources and started the procurement of the materials required for the successful execution of the work. On the contrary, the stand of the defendant is that the plaintiff company had to start the work as per the provisions of the agreement and though the concerned assistant engineer had issued the instructions on 20.09.2007 to the plaintiff to start the work immediately, but it was denied that the plaintiff took the instructions and started the work at site or that he had mobilized all its resources. Rather, it is claimed that the plaintiff had not taken over the site because of the dispute raised by the villagers of Kondli. It is further the stand of the defendant that plaintiff company started to mobilize all its resources only after 05.03.2008 when the possession of the site had been taken over by the plaintiff company, which fact is also recorded in the site order book records.
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2023.09.15 16:03:35 +0530 39.4. In the wake of the afore-noted contentious pleadings, I deem it apposite to deal with claim no. 7 of paragraph 10 of the plaint which is of Rs.9.5 lacs as damages on account of delay in execution of the work, damages caused due to shifting of site and prolongation of the work and damages due to idle labor, staff, T&P, machinery etc. In this regard, let us have a glance at cross-examination of plaintiff/PW-1. At one point, PW-1 stated that he was handed over the site in September 2007 on which he constructed the cement godown. However, there is no material on record which could evince that the plaintiff had taken over the site in September 2007. Rather, he acknowledged that there is no endorsement of the plaintiff in respect of taking over the site in September 2007 and the site order book Ex.D31, page 86 contains his signatures endorsing the date of handing over the site to be 05.03.2008. Though, PW-1 volunteered that the non-availability of the original site is also mentioned in the site order book vide entry dated 20.09.2007, and the taking over of the site as reflected on 05.03.2008 was a changed site, however, for the purpose of assessing the damages as claimed, plaintiff has to first establish the taking over of the original site and constructing of the structure by employing labor and machinery.
39.5. Pertinently, in the affidavit of the plaintiff Ex.PW-
1/A as well, plaintiff has failed to disclose the details of the resources alleged to be mobilized by him at the original site Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 25/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:03:46 +0530 which could entitle him to claim damages. Mere mention of the fact of arrangement of staff, labor, equipments and material would not in any manner advance the cause of the plaintiff as the plaint is bound to reflect the details as to for what period the labor was engaged, the strength of the labor, the kind of machinery employed etc. Since, the damages sought under this head would be in the nature of damages arising out of breach of contract, plaintiff has to establish the losses/damages caused to him owing to the decision of the defendant to change the site for the awarded work.
39.6. Moving further, to ascertain whether the plaintiff had taken over the possession of the earlier site as per the award of work dated 12.09.2007, this aspect can be adverted to by having a glance at various correspondences exchanged between the parties. The first such correspondence is a letter dated 05.10.2007 which is shown to be written on behalf of plaintiff to the Executive Engineer, ED12, DDA, Ex. P3, as per which plaintiff claimed to have made arrangements of site staff, men and material to start the work, and it is stated that when they went to take over the site, it was found that villagers were using the back side of the site through a passage which could not have been stopped. They were informed that the housing is illegal and the area is the main entrance of their village since 1905. They were not allowed to make cement godowns and labor huts, which were demolished. Further, by way of the said letter, DDA was informed about the sorry state of affairs and that the plaintiff was Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 26/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:03:55 +0530 suffering loss of profit and damages due to deployed men and material. This letter was followed by another letter dated 12.10.2007 by Executive Engineer, ED12, DDA to the Superintending Engineer Ex.P4 whereby he was informed that the work was awarded to the plaintiff agency on 15.09.2007 and the date of start of the work was 30.09.2007. The agency had taken up the work and started to construct cement stores, jhuggies of labor etc. The letter dated 05.10.2007 written by the plaintiff was brought into the knowledge of Superintending Engineer and necessary directions were sought to execute the work. From these correspondences, it is made out that the plaintiff had started to construct the stores, but the extent of the construction cannot be ascertained. The plaintiff was bound to clarify the nature and extent of the construction to claim damages for change of site. Further, from none of the correspondences, it is made out that the plaintiff indicated to the defendant to close the contract and claim damages for non handing over the original site. In this regard, cross-examination of plaintiff/PW1 dated 25.10.2016 can be looked at wherein he affirmed that as per clause 3A, the plaintiff could close the work if the same could not be started within 1/8 period of the stipulated time for any reason not within the control of the contractor.
39.7. The aforesaid correspondences were followed by correspondence dated 18.12.2007 by the plaintiff to the defendant Ex.P6 whereby defendant was informed about dismantling of the labor huts erected in the presence of Junior Engineer and Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 27/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:04:05 +0530 Assistant Engineer and from the defendant to the plaintiff dated 07.02.2008 Ex. P7. It was also pointed out on behalf of the defendant during arguments that on the back of the letter dated 18.12.2007 Ex.D4, as per the defendant's record, an endorsement was made duly signed by AE-1 ED12 to the effect that as claimed by the agency, neither the huts have erected nor dismantled by the villagers. Thereafter, the next crucial correspondence is from the defendant to the plaintiff dated 30.01.2008 Ex.P8 whereby plaintiff was informed that the original site could not be handed over to him due to dispute created by the villagers of the said area. But the matter had been finalized by the competent authority and it was decided that the houses are to be constructed near to the original site. Plaintiff was requested to contact Assistant Engineer 1 to take over the site for construction of the houses. Thereafter, at the end of the plaintiff also, a letter Ex.PW1/4 dated 01.04.2008 was issued to the defendant that the new site at Gharoli Dairy Farm was handed over to them on 05.03.2008. Plaintiff also acknowledged that as per the layout given to them, the site was made available for 480 EWS houses and they were ready to construct 480 EWS houses instead of 380 on the same agreement within the same completion period and it was stipulated that nothing extra will be charged on this account if the approval of the same would be given to them. The next material correspondence is the letter dated 08.07.2008 by the plaintiff to the defendant Ex.P1 as per which the plaintiff reiterated that the defendant had failed to hand over the original site to them, which was later on changed from Kondli Extension Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 28/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:04:16 +0530 to Gharoli Farm, which had caused a huge loss to the plaintiff in shifting the site and idle staff. It was claimed therein that the plaintiff had to shift the full arrangements with proper machinery, shuttering material, boring tank, godowns and offices to the site of Gharoli Dairy Farm, which had caused a loss of Rs. 6 lakh.
39.8. It is to be analyzed now, on the basis of the aforesaid communications, that whether plaintiff had taken over the original site and incurred expenses in engaging labor, machinery etc or not. As has already been noted in the preceding discussion that in the plaint and the evidence, plaintiff has failed to divulge the complete details of the labor employed and the machinery installed at the original site. From the aforesaid communications, particularly from letter dated 12.10.2007 Ex.P4 of Executive Engineer, DDA to the Superintendent Engineer, it is made out that the plaintiff had started to construct the cement stores and jhuggies of labors etc but due to the ruckus created by the villagers of Kondli, the said construction could not achieve fruition. Plaintiff has also acknowledged in its communication to the Executive Engineer, DDA Ex.P3 that the villagers had not allowed them to make cement godowns and labor huts. Thus, from these communications, it is not explicitly made out that the plaintiff had incurred expenses to the tune of Rs. 6 lakh as claimed by them in their letter dated 08.07.2008 Ex.P1, and thus, there is no basis to claim any damages due to shifting of site.
39.9. Apart from above, it is also relevant to note that when the plaintiff was informed vide Ex.P8 that due to dispute Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 29/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:04:25 +0530 created by the villagers, the original site could not be handed over to it and it was decided that the said houses were to be constructed at an alternative site, the defendant had acted in a breach of contract, and it was for the plaintiff to have taken up a call at that time whether to proceed with the contract at an alternative site or to have claimed damages from the defendant. The plaintiff by way of its correspondence Ex.PW1/4 had acknowledged the taking over of the new site on 05.03.2008 at Gharoli Dairy Farm and also acknowledged the layout of the site given to them for 480 EWS houses instead of 300 EWS houses on the same agreement and with the stipulation that nothing will be charged on this account. This, in my opinion, would constitute a novation of contract in supersession of the previous contract, in regard to which plaintiff is precluded from claiming any damages. In this respect, I hereby rely upon the observation of High Court of Delhi in case titled as M/S Anant Raj Agencies Vs. Delhi Development Authority & Anr. dated 08.07.2009, which is as under:
"Para 32.... j) I also find that the Arbitrator though noticing that undertakings had been given by the petitioner at the time of seeking extension of time, not to claim damages from DDA, has not dealt with the same. The said undertaking by the petitioner takes the form of a contract between the parties and the said contract having provided that no damages would be payable the petitioner could not turn around and claim damages for delay. Though the petitioner has contended that the said undertakings were under Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 30/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:04:36 +0530 coercion but no finding in that regard has been returned by the Arbitrator. No further material has been cited to show that immediately after furnishing the undertaking or at any time did the petitioner take a stand that the said undertaking had been obtained under coercion. The award is liable to set aside for this reason as well."
39.10. Furthermore, another significant aspect having a bearing on the present claim for damage of Rs. 9,50,000/- which is the overlapping of the claims. It is manifest from the pleadings of the plaintiff as well as evidence Ex.PW1/A that the head of damages of Rs. 9,50,000/- has been claimed on account of delay in execution of work, alleged to be attributed to the defendant, and damages caused due to shifting of the site and damages due to idle labor, staff, machinery etc. Clearly, the plaintiff has merged the two heads, and it is not culled out as to how the plaintiff has arrived at a figure of Rs. 9,50,000/-, when in the correspondence dated 08.07.2008 Ex.P1, it has claimed to have suffered a loss of Rs.6 lakh. As a matter of fact, the said figure of Rs. 6 lakh is also not substantiated by any material as already noted herein above. The contention of Ld. Counsel for the plaintiff that this figure of Rs. 9,50,000/- is otherwise not disputed by the defendant is not credit worthy as it is a settled legal position that for claiming damages or compensation by virtue of section 73 of the Contract Act, the loss has to be proved by the plaintiff. It is not the case herein that any sum has been named in the agreement between the parties, any breach whereof, a reasonable amount can be awarded to the plaintiff. The plaintiff Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 31/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:04:47 +0530 was bound to prove the losses suffered by him in the form of deploying labor and machinery and construction of godown during the time the original site could not be handed over to it. In the absence of any such material, plaintiff is not found entitled to recover damages of Rs. 9,50,000/- as claimed by him.Claim No. 1
39.11. This claim is to the tune of Rs. 40,000/- alleged to be wrongfully and unlawfully withheld by the defendant from various running accounts bill of electrical work done by the plaintiff. The stand of the defendant in regard to this claim is that two QAC (Quality Assurance Control) inspections were carried out in the year 2010 and a sum of Rs. 20,000/- was withheld for each QAC inspection. It is stated that out of the two QAC paras, first QAC inspection has been dropped and the amount of Rs. 20,000/- has been released to the plaintiff vide a letter dated 31.12.2013, which fact has not been disavowed by the plaintiff. It is further stated that since the QAC paras in the second inspection has not been dropped till date, the plaintiff is not entitled to the release of amount of Rs. 20,000/-.
39.12. PW1 avouched in his cross-examination that sum of Rs. 20,000/- had been withheld because of QAC paras reported on 31.12.2013. It is further discerned from the cross-examination of PW1 that after his response that all the defects noted in the site book order have been removed, a suggestion was posed to him CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 32/ 66 that all the defects brought to his knowledge have not been rectified/removed, which suggestion was denied by him. In furtherance to this, Ld. Counsel for the plaintiff pointed out during final arguments that whatever were the remarks on the inspection as per the master register Ex.D31, those were removed as per the compliance report, a separate column of which was found to be on the right side of the remarks column. Upon perusal of the same, I find substance in the argument of Ld. Counsel for the plaintiff. Once the defendant has admitted having withheld some amount, the burden shifted to the defendant to have established as to for which defect, the sum of Rs. 20,000/-
was withheld. PW1 was confronted with site order book of various dates, but defendant failed to pin point as to for which deficiency, which has remained unrectified, the sum of Rs. 20,000/- was withheld. At this stage, I also refer to the arguments of Ld. Counsel for the defendant that plaintiff has accepted the final bill without any protest, and therefore, now plaintiff cannot be permitted to flag the withholding of the sum against QAC paras. It is also the argument that plaintiff has failed to depose as to how and on what basis the amount has been withheld, what was the objection raised by the plaintiff when the amount was withheld, and when was the objection taken, and how the plaintiff is entitled to the release of withheld amount. These arguments, in my opinion, are misplaced and unfounded as the defendant has sought to wrongfully cast the burden upon the plaintiff, when in the light of pleading on part of the defendant that sum of Rs. 20,000/- has been withheld for failure of the CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 33/ 66 plaintiff to remove the deficiency, it was for the defendant to point out the said deficiencies.
39.13. As regards the raising of no objection by the plaintiff at the time of accepting the bills, a support can be drawn from the judgment of Supreme Court in R.L. Kalathia & Co. Vs. State of Gujarat dated 14.01.2011, relied upon by Ld. Counsel for the plaintiff that even if the contractor has issued no claim certificate but still that would not act as a bar to a contractor in raising the claims which are found to be genuine. Thus, in the light of this exegesis, it is observed that even if the plaintiff failed to take any objection at the time of acceptance of the bill, the plaintiff is not precluded from raising the claim by way of this suit. Further, the completion certificate by the defendant dated 30.07.2010 Ex.D32 also reveals that no defects were apparent. Though the same was issued subject to the finding of removal of defects during allotment and maintenance, but defendant has failed to pin point as to what defect was noticed during allotment or maintenance, which was not removed by the plaintiff. Further, though Ld. Counsel for the defendant has referred to clause 14 of the agreement Ex.D38 to justify the withholding of the amount, however, defendant has failed to present the computation on the basis of which amount under question was withheld.
39.14. Furthermore, defendant's witness DW1, when confronted with quarries related to pointing out of defects and its rectification thereof in the electrical and civil works, DW1 Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 34/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:05:03 +0530 appeared to have stonewalled those quarries and failed to point out the defects/deficiencies. The excerpt of the said cross- examination is as under:
"Q.17. Whether the defects pointed out by QAC electrical or civil are intimated on site order book or separate site order book?
Answer. Separate site order books for electrical and civil works.
Q.18. The site order books placed by you on record is for electrical or civil work?
Answer. The site order book placed by DDA on record pertains to civil work. Volunteer pertains to work.
Q.19. The site order book on record placed by DDA doesn't show any entries for rectification of electrical work by the contractor?
Answer. Objected by Ld. Counsel for defendant as the question pertains to content of document (i.e. lite order book exhibit D31). I have not seen any record pertains to same.
Q.20. Would it be correct to state that there is nothing on record placed by DDA to show that any rectification were required at the end of the contract with regard to electronic work?
Answer. As per record of the case file I have not seen the same."
39.15. In so far as the reliance placed by the defendant on the Judgment of High Court of Delhi in Kamal Construction Co. v. Delhi Development Authority dated 20.09.2012, the same is found to be on different footing as in the said case in point no. (iii) para 10, it was noted that deficiencies/defects and Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 35/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:05:13 +0530 pending work were brought to the knowledge of the contractor, due to non rectification of which the amount was withheld. Those deficiencies/defects were mentioned therein in detail running into 27 points, whereas in the instant case the completion certificate Ex.D32 issued by the defendant clearly reveals that no defects were apparent on the date of the completion of the agreement.
Clearly, the said case is distinct in the sense that 27 defects were found during the inspection which were not rectified by the contractor, which is not the case herein.
39.16. Thus, in view of the aforesaid discussion, plaintiff is found entitled to recover sum of Rs. 20,000/- from the defendant towards this claim of electrical work.
Claim No. 239.17. This claim is for Rs. 60,000/- alleged to be withheld by the defendant from various running accounts bills of civil works. It is stated that plaintiff was not informed about the deficiency in any quality or regarding the rectification of any defect in any work, during the progress of work or before the expiry of defects liability period of the main work or even till the completion of work to be executed under the supplementary agreement, and thus, the aforesaid act of the defendant in withholding the aforesaid claim is illegal and arbitrary. As against this, the stand of the defendant is that there were three QAC inspections with respect to the civil work as per clause 14 of the agreement executed between parties, which was conducted in Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 36/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:05:24 +0530 presence of the plaintiff and a sum of Rs. 20,000/- for each of the three QAC paras was withheld. It is further stated that amount of Rs. 20,000/- towards first QAC paras was withheld by the defendant in the third running account bill, which was accepted by the plaintiff, the amount of Rs. 20,000/- towards second QAC paras was withheld by the defendant in the sixth running account bill which was also accepted by the plaintiff on 11.06.2009, and the amount of Rs. 20,000/- towards the third QAC paras was withheld in the 11th running account bill, and which bill was also accepted by the plaintiff company on 26.02.2010. It is further stated that the plaintiff was required to remove the defects, and for such inaction, plaintiff is not entitled to claim the said amount. The acceptance of the running bills has not been oppugned by the plaintiff.
39.18. Ld. Counsel for the defendant also riveted the attention of the Court to the cross-examination of PW1. PW1 was confronted with various pages of the site order book, and he confirmed the signatures of his son Sh. Akash Mithal, who is the partner in the plaintiff firm on 05.11.2008, 19.12.2008, 30.12.2008, 04.03.2009, 01.04.2009, 08.04.2009, 08.05.2009, 29.05.2009, 04.08.2008, 03.01.2010, 24.02.2010, 09.03.2010, 17.03.2010 and 23.06.2010 at point A to O of Ex.D31. Further, PW1 was asked that all the defects pointed out by QAC, engineer in charge, chief engineer were noted in the site book order, which was always in his knowledge, on which he responded that all the defects noted in the site order book have been removed. But Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 37/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:05:33 +0530 again as noted in the preceding discussion, the onus shifted upon the defendant, who has failed to pin point the defects in respect of which the sum of Rs. 60,000/- has been withheld. In the cross- examination of PW1, on this aspect, a question was posted to him that although the work was done as per the specifications but defects still remain, which was replied by him in negative. Thus, the onus was upon the defendant to have confronted the plaintiff the specific defects which still remained despite the issuance of the completion certificate. DW1, in his cross-examination also could not pin point any specific defect in the site order book Ex.D1 pertaining to civil work. Therefore, in the light of the preceding discussion and the case law relied therein, plaintiff is also found entitled to recover the amount of Rs. 60,000/- under this claim of civil work.Claim No. 3
39.19. This claim is in the sum of Rs. 2,50,000/- alleged to be wrongfully and unlawfully withheld by the defendant.
However, in regard to this claim, during the final arguments, Ld. Counsel for the plaintiff conceded that this amount has already stood paid by the defendant on 03.10.2013, and thus, this claim does not survive. This fact is also born out from the cross- examination of PW1 dated 22.02.2017 wherein he has affirmed that amount of Rs. 2,50,000/- has already been released and nothing is due qua this claim. Thus, no further discussion is warranted herein.
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39.20. Before adverting to this claim, I deem it fit to highlight one of the contentions on behalf of the plaintiff that the defendant had not cleared the bills of payments in favour of the plaintiff in time which also laid to the prolongation of the agreement. But there is no unequivocal pleading and evidence in this regard. Rather in the cross examination of PW1, defendant has been able to elicit certain responses from PW1 that plaintiff had not submitted any running account bill as well as the final bill, despite the fact that as per clause 7 of the agreement, final bill was to be submitted by the plaintiff within one month of the date of the completion, and as per clause 8, running account bills were also to be submitted by the plaintiff. He also affirmed that the defendant had made payments against the running account bills from time to time and the final bill was accepted by the plaintiff without any objection/protest. Thus, on this count, the argument of Ld. Counsel for the plaintiff is not worthy of any consideration.
39.21. This claim is to the tune of Rs. 48,19,603.95/- on account of price rise and /or escalation payable as per clause 10CC of the agreement and civil work, electrical work and on the work executed under the supplementary agreement. It is pleaded on behalf of plaintiff, as well as deposed in the affidavit Ex.PW1/A, that on account of delays and hindrances attributable to the defendant, the work assigned was duly completed by the CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 39/ 66 plaintiff on 30.07.2010 to the satisfaction of the defendant, which was recorded as completion and the defect liability period also expired on 30.07.2011. The extension of the time was also granted by the competent authority i.e. the Superintendent Engineer, ED12/DDA without levy of compensation, though the stipulated date of completion, as per the agreement, was 05.03.2010. It is stated that though the total period of hindrance was 286 days, however, the actual period of delay came out to be 148 days and as per computations filed on record Mark B, sum of Rs. 48,19,603.95/- is due and payable by the defendant to the plaintiff.
39.22. The stand of the defendant, on the contrary, apropos the aforesaid claim is that the plaintiff is not entitled to claim any amount on account of the price rise and /or escalation as per clause 10CC of the agreement. The plaintiff is entitled to the amount as per clause 10CC by virtue of terms and conditions cited therein. It is further stated that the plaintiff was entitled for the escalation in price only for work done during the stipulated period of contract and no escalation was to be paid for the work executed in the extended period of contract even if extension of time was granted without claiming any compensation from the plaintiff. It is stated that the plaintiff has been paid as per the 10CC of the agreement in three separate running accounts bills, which is not refuted by the plaintiff, and all the bills were accepted without any demur. It is further stated that the plaintiff company never claimed any amount subsequent to the expiry of Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 40/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:05:55 +0530 stipulated period of the agreement and it was for the first time in the first notice under section 53B of the DDA Act that the amount of more than 1 crore was claimed as damages, which notice was later withdrawn. It is further stated that it was the plaintiff company who had applied to the defendant for grant of extension of time and had executed the part-I proforma Ex.D33 and submitted the same to the defendant, wherein it was specifically recorded that the plaintiff company will not claim anything due to the extended period. It is further stated that plaintiff ought to have filed the detailed computations of the amount claimed under 10CC along with present suit so as to enable the defendant to rebut the same.
39.23. Before rendering any finding on the most crucial claim of the present suit, let us analyse the legal position in regard to loss of profit and other damages for prolongation of the contract.
39.24. In works contract, delays and prolongation are inevitable which are entered into for long projects. Prolongations often result in economic hardships. If the terms of the contract provide for recourses or alternatives to address such hardships, then the relieves are accordingly availed by the affected party.
However, if the contract does not explicitly provides for recourse in any event of such prolongation, then uncertainty and a complex dispute arises for ascertaining the breach, the damage and compensation thereof. When the contract is prolonged by the Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 41/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:06:05 +0530 owner, the capacity of the contractor to undertake other projects/ventures is diminished and thereby his profit earning capacity is affected as well. Further owing to the prolongation, expenditure of inputs increases and thus profit decreases. Remedies in case of prolongation in terms of compensation are available against damage suffered. Following are the heads of damages which are generally sought on account of prolongation of contract beyond the agreed period of contract: (a) loss of profit; (b) compensation for increased overhead expenses; (c) compensation for escalation of price and (d) compensation for loss due to idle machinery or reduction in profit.
Loss of Profit 39.25. In cases of prolongation of works contract i.e. breach of the term to complete within the stipulated time, the prolongation itself does not give rise to a claim. To establish the claim for loss of profit due to prolongation of contract, the existence of opportunity is to be established to say that had the contract been timely acted upon, the claimant would have earned additional profits given it available resources. To assess such quantum of loss of profit, reliance is placed on formulas that are recognized in construction contract, namely, Hudson, Emden Formula, Eichleay Formula. The same has been proved by the Supreme Court in Mcdermott International Inc. Vs. Burn Standard Co. Ltd & Ors. [(2006) 11 SCC 181]. But in the instant case, there is no such pleading of loss of profit on behalf Digitally signed by NAVJEET NAVJEET BUDHIRAJA CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 42/ 66 BUDHIRAJA Date:
2023.09.15 16:06:14 +0530 of plaintiff, which could have been earned in case of completion of the work within the stipulated time period. Thus, the aforesaid formulas cannot be adopted to assess the quantum of loss of profit for prolongation of the contract.
Compensation For Escalation Of Price And Compensation For Loss Due To Idle Machinery 39.26. In the present suit, as noted above compensation/damages have not been claimed under the head of loss of profit as it is not the case of the plaintiff herein that there was an existing opportunity in favor of the plaintiff to earn profit which could not be availed due to prolongation of the contract with the defendant. The plaintiff has, rather, claimed the damages on account of prise rise/escalation due to prolongation of the agreement, which is allegedly attributed to the defendant. Thus, in order to assert its right to claim the amount under this head, plaintiff has to stand on its own legs on three counts:
(i) that the prolongation of the agreement occurred due to the hindrances caused by the defendant.
(ii) during the prolongation of the agreement, there was price rise/escalation and wastage of machinery.
(iii) that the plaintiff is entitled to claim the amount as per the price rise/escalation, in the given set of facts.
39.27. In so far as afore noted (i) is concerned, the plaint and the evidence of the plaintiff Ex.PW1/A clearly reveals that Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 43/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:06:23 +0530 the stipulated date of completion of the agreement was 05.03.2010, but the work could be completed by the plaintiff on 30.07.2010, on which date completion was recorded by the defendant. The plea of the plaintiff is that the delay was on account of the hindrances attributable to the defendant for its failure and neglect to issue drawings and decisions to execute the work, and the actual period of delay was 148 days. As against this, defendant has acknowledged that extension of time was granted to the plaintiff and completion was recorded on 30.07.2010, however, defendant clearly denied that the hindrances and delays were attributable to it.
39.28. The perusal of plaint and the affidavit reveals that other than the delay in supply of drawings, plaintiff has not listed any specific circumstances which could be attributed to the defendant for causing the delay and hindrance. The pleadings in this regard appear to be generic in nature, without any specificity, which could make the Court appreciate the allegation of the delays and hindrances being caused by the defendant.
39.29. During final arguments, though, Ld. Counsel for the plaintiff pointed out various communications which were sent to the defendant in regard to non supply of essentials which led to the stalling of the work. One such communication is Ex.P9 dated 12.06.2008 written by the plaintiff to the defendant notifying the stoppage of work due to non-availability of steel and also due to non-availability of complete structural drawing of pile column Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 44/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:06:33 +0530 and rules. The next communication is Ex.P1 dated 08.07.2008 whereby the plaintiff is shown to have written to the defendant regarding the non-availability of steel of 16 MM diameter. The next communication is Ex.P11 dated 06.08.2009 which is shown to be written by the plaintiff to the defendant notifying the non- availability of cement and the closure of the work from 22.07.2009. Further, alongside the application for extension of time Part-1 Ex.D33 and Part-2 Ex.D34, certain hindrances have been listed, which have not been categorically challenged by the defendant. Given these circumstances and the fact that defendant has failed to establish that the extension of time was given to the plaintiff to complete the work because of the delays caused at the end of the plaintiff itself, the Court is constrained to conclude that the prolongation of the work contract took place due to the hindrances caused by the defendant.
39.30. Now embarking upon the afore noted (ii) and (iii) aspect. Ld. Counsel for the plaintiff has argued that computation of Rs. 48,19,603.95/- is nowhere disputed by the defendant, but in my opinion, to prove this computation which encompasses the prise rise/escalation and idleness of the labor and machinery, the plaintiff had to furnish the category wise details. Though, plaintiff /PW1 has relied upon the calculations contained in Mark B, but those calculations appear to be rough notes without detailing the formula adopted to arrive at the figure of Rs.
48,19,603.95/-. Plaint as well as evidence of the plaintiff is bereft of the details as to for which period the escalation/ price rise has Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 45/ 66 BUDHIRAJA NAVJEET BUDHIRAJA Date:
2023.09.15 16:06:44 +0530 been sought, what was the escalation/price rise of particular material, what was the prise rise/escalation in the cost of labor, how much loss has been suffered by the plaintiff due to idleness of the machinery etc. PW1, in his cross-examination dated 24.03.2017, also affirmed that in the plaint and affidavit of evidence the number of labor, machinery, T & P have not been mentioned. Though, he volunteered that there was no need for same because the same has already been provided to the department. But plaintiff was bound to comprehensively prove the said computation and figure to prove the escalation. Just because the defendant has failed to challenge the calculation in explicit terms in the pleading, the fact that the defendant has denied its liability to pay the said amount of Rs. 48,19,603.95/-, onus was always upon the plaintiff to stand on its own legs and to have proved this substantial claim. In this regard, the support can be drawn from the observations of the High Court of Delhi in case titled as North Delhi Municipal Corporation Vs. Ravi Builders dated 19.07.2018 in paragraph 19, which is extracted as under:
"19. As the claim made by the respondent was one of damages, it was for the respondent to prove the same by leading evidence in support of the claim of increase in cost of material. The respondent cannot support its claim by relying upon the lack of evidence led by the petitioner. The claimant has to stand on its own legs and support its own claims."CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 46/ 66
39.31. I also rely upon the Judgment of High Court of Delhi in Indo Nabin Projects Ltd. vs Powergrid Corporation Of India dated 04.04.2018 wherein paragraphs 10 and 12 are relevant to be reproduced, which are as under:-
"10. Admittedly, the petitioner had not furnished any evidence or material to establish that it had incurred additional expenditure on account of overheads during the extended period. The petitioner had also not produced any material to establish the quantum of profit that it expected to earn during the said period. The Arbitral Tribunal had not accepted the aforesaid claim on account of charges and loss of profits solely on the ground that the petitioner had not produced any material and evidence to establish the same. The contention that such damages could be awarded on the basis of standard formulae was also not accepted by the Arbitral Tribunal. The relevant extract of the impugned award is set out below:-
"(8). It is our view that in order to make any claim under Section 55 read with Section 73 towards the overhead expenses during the extended period , the claimants should have led some evidence by oral or documentary to prove that certain expenses were actually required and made in order to keep the site establishment running throughout the extended period. It is ~n.other matter for the arbitrators to either adopt Hudson or any other formula as may be considered appropriate by them. (9). The claimants further state that they had actually submitted the audited Balance Sheets for eight years to support their claim for overheads. It is to be noted that the above was sought by the Arbitration Tribunal to understand the computation and adoption of rate of 10% for the CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 47/ 66 overheads and 5% for computing the loss and was submitted by way of proof of th.eir incurring the overhead expenses. Even otherwise the evidence required to prove overhead costs would have to be related to the project under question and not the overall company particulars.
(10). Hence we are of the opinion that the claimants are not entitled to any compensation for loss on account of additional overheads incurred in keeping their establishment up and running during the extended period and hence the claim for Rs.1,50,13,698 towards site and head office overheads is rejected."
12. Standard formulae adopted for computing loss of profits or overheads are essentially tools used for computing the extent of overheads in profits. Undoubtedly, in a given set of facts, the said formula may be effectively used for computing the amounts of overheads/profits. However, that cannot lead to the conclusion that in all cases, the Arbitral Tribunal would be bound to accept computation of overheads/loss of profits based on standard formulae and the claimant is absolved from producing any other material to establish its claims of loss on account of overheads/loss of profits.
Whether it is apposite to use the standard formulae in a given case is also required to be established by the contractor. This would necessarily require the claimant to produce some material to justify norms as adopted in the standard formula relied upon by him. A claimant is also required to establish as a matter of fact that it had incurred expenditure on overheads attributable to the works executed during the extended period."
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2023.09.15 16:06:56 +0530 39.32. The present suit can be approached from another angle as well. In the event of prolongation if the prices of direct inputs of the contractor escalates, then in such an event if there is any term in the contract concerning such escalation, that would prevail. If the contract provides that the price will remain firm and is not subject to any escalation under whatsoever ground till the completion of the work, then in such contract, compensation cannot be awarded despite the escalation beyond the term stipulated. This was held by the Supreme Court in New India Civil Erectors (P) Ltd. v. Oil & Natural Gas Corporation, (1997) 11 SCC 75. The relevant paragraph is extracted herein under :-
"The above stipulation clearly says that total build up area of a floor shall include stair case and common corridor but shall exclude balconies. It expressly provides that "work should be measured on the build-up area excluding balcony area". It is undisputed that in the plan of the flats attached to the Tender notice, balconies were provided. Shri Nariman contended that the said plans were modified later and that the flats as finally constructed, did not have any balconies and, hence, no question of excluding the balconies area can arise. Shri Nariman could not, however, bring to our notice any agreed or sanctioned plan modifying the plan attached to the Tender notice. The appellant could not have constructed flats except in accordance with the plans attached to the Tender notice, unless of course there was a later mutually agreed modified plan - and there is none in this case. We cannot, therefore, entertain the contention at this stage that there are no balconies at all in the flats constructed and that, therefore, the aforesaid Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 49/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:07:04 +0530 stipulation has no relevance. We must proceed on the assumption that the plans attached to the Tender notice are the agreed plans and that construction has been made according to them and that in the light of the agreed stipulation referred to above, the areas covered by balconies should be excluded. In this view of the matter we agree with the Division Bench that the arbitrators over- stepped their authority by including in area of the balconies in the measurement of the build-up area. It is axiomatic that the arbitrator being a creature of the agreement, must operate within the four corners of the agreement and cannot travel beyond it. More particularly, he cannot award any amount which is ruled out or prohibited by the terms of the agreement. In this case, the agreement between the parties clearly says that in measuring the build-up area, the balcony area should be excluded. The arbitrators could not have acted contrary to the said stipulation and awarded any awarded any amount to the appellant on the account. We, therefore, affirm the decision of the Division Bench on this score [Claim No.6] Claim No.9: The appellant claimed an amount of Rs.32,21,099.89p. Under this head, against which the arbitrators have awarded a sum of Rs.16,31,425/-. The above claim was made on account of escalation in the cost of construction during the period subsequent to the expiry of the original contract period. The appellant's claim on this account was resisted by the respondent-
corporation with reference to and on the basis of the stipulation in the corporations' acceptance letters dated 10th January, 1985 which stated clearly that "the above price is firm and is not subject to any escalation under whatsoever ground till the completion of the work". The Division Bench held, and CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 50/ 66 in our opinion rightly, that in the face of the said express stipulation between the parties, the appellant could not have claimed any amount on account of escalation in the cost of construction carried on by him the expiry of the original contract period. The aforesaid stipulation provides clearly that there shall be no escalation on any ground whatsoever and the said prohibition is effective till the completion of the work. The learned arbitrators, could not therefore have awarded any amount on the ground that the appellant must have incurred extra expense in carrying out the construction after the expiry of the original contract period. The aforesaid stipulation between the parties is binding upon them both and the arbitrators. We are of the opinion that the learned single Judge was not right in holding that the said prohibition is confirmed to the original contract period and does not operate thereafter. Merely, because the time was made the essence of the contract and the work was completed within 15 months, it does not follow that the aforesaid stipulation was confirmed to the original contract period this is not a case of the arbitrators construing the agreement. It is a clear case of the arbitrators acting contrary to the stipulation/condition contained in the agreement between the parties. We therefore, affirm the decision of the Division Bench on this Count as well [claim No.9]."
39.33. In the instant case, clause 10CC of the agreement Ex.D38 stipulates that if the prices of material or wages of labor required for execution of the work increase, the contractor shall be compensated for such increase and the amount of the contract would accordingly be varied, subject to the condition that such CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 51/ 66 compensation shall be available only for the work done during the stipulated period of the contract and no escalation shall be paid for work executed in extended contract period even if extension of time is granted without any compensation. The stand of the defendant in the written statement is that plaintiff company has already been given the benefit of clause 10 CC for the stipulated date of the completion of work by way of three separate 10 CC running account bills, which were accepted by the plaintiff. Though, during the arguments, Ld. Counsel for the defendant submitted with vehemence that later on clause 10 CC was removed from the agreement which was conceded by the plaintiff. However, I am of the view that once the defendant has taken a stand in the written statement that the bills were prepared and payments were made as per clause 10 CC of the agreement, defendant cannot be permitted to wriggle out of the same and clamour for deletion of the said clause.
39.34. Ld. Counsel for the defendant has referred to a Judgment of High Court of Delhi in North Delhi Municipal Corporation Vs. Ravi Builders dated 19.07.2018 in support of its plea for deletion of 10 CC clause from the contract, however, the said case is clearly distinct from the present case as therein there is no such observation that payments were released pursuant to 10 CC clause whereas in the instant case admittedly the payments were released to the plaintiff as per clause 10 CC of the agreement for the stipulated time of completion of the agreement. Further, in that case the stipulated time period of CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 52/ 66 contract was less than 18 months and thus, it was observed by the High Court that in any case clause 10 CC could not have been invoked.
39.35. Be that as it may, in the absence of any stipulation for the claim of escalation of price beyond the stipulated period of contract and during the extended period, plaintiff on the basis principle laid down in Erectors case (noted above) is not found entitled to claim any amount under this head.
39.36. I also rely upon the Judgment of High Court of Delhi in M/S Anant Raj Agencies Vs. Delhi Development Authority & Anr. dated 08.07.2009 wherein the Hon'ble Justice discussed the series of Judgments of single bench and division bench touching upon the issue of claim of escalation of price beyond the stipulated period and also that any undertaking given on the part of contractor not to claim any escalated figures would amount to a contract in itself. Paragraph 32 is relevant to be reproduced, which is as under:-
"32. Re: Award of Rs.41,26,467/- under item No.2 of other payments due on account of loss due to increase in price of building materials and other expenses.
a) The claims under other payments due were made owing to alleged delay in execution of the work. The date of award of work was 31st August, 1985 and the date of start was 10th September, 1985.
Stipulated date of completion was 9th July, 1986. The work could be completed only on 30th August, 1991. The delays according to the petitioner were Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 53/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:07:22 +0530 attributable to DDA. It was also not disputed that DDA had granted extension of time up to 30th August, 1991 without levy of compensation. It was contended by the petitioner on the basis thereof that DDA thus admitted delay attributable to it. It was the contention of DDA before the Arbitrator that the claims under said head were not arbitrable; that the petitioner is not entitled to any amount for delay in as much as the petitioner had been compensated under Clause 10 CC of the agreement; that in terms of Clause 1 of the additional specifications and conditions of the contract also no damages were liable to be paid.
b) The Arbitrator held the claims to be arbitrable in as much as the agreement was for reference of all claims under the agreement and the said claim was also under the agreement. The Arbitrator also held that the work had been delayed because of lapses of DDA in handing over of site, layout plan, drawings, finalization of colour scheme etc. sanction of extra and substituted items and payment of running account bills and in supply of stipulated material. It was further held that whenever there is delay in building contract, the contractor is bound to suffer. It was further held that Clause 1 of the Additional Specifications and Conditions of contract did not bar the said claims and excluded only those losses which were suffered because of change in programme of construction during the stipulated period of contract and not beyond the stipulated period of the contract. It was held that Clause 1 did not cover the delay on account of drawings, decisions, non-release of payments. The Arbitrator also held that Clause 10 CC does not take into its ambit complete escalation coming into work though the amounts given under Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 54/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:07:33 +0530 Clause 10 CC were deductable from the actual escalation to which the petitioner may be entitled. Holding so, the Arbitrator applying the method of cost indices worked out the total escalation to be of Rs.48,58,012.90p and after deducting therefrom Rs.7,31,546/- given under Clause 10 CC, made an award for Rs.41,26,467/-.
c) The objection of DDA inter-alia is that DDA had granted extension of time without levy of compensation on the basis of undertaking of the petitioner that it had not suffered any damages and was not to claim any such damages. It was thus contended that the petitioner was barred from putting forth such claim.
Reliance was also placed on M/s Ishwar Singh & Sons Vs. DDA MANU/DE/0310/1994 laying down that arbitrator has no jurisdiction to award any sum on account of damages contrary to specific provision of the contract.
DDA also relied upon C-67 in this regard.
d) The petitioner has in reply to the objections not denied having given an undertaking. With respect to Annexure C-67 it is stated that the same was given under coercion as huge payments of the petitioners were withheld and otherwise it was not the requirement of the contract that any such undertaking will be given.
e) The counsel for DDA has in this regard also relied upon Anant Raj Agencies Vs. DDA 2005 (1) Arbitration Law Reporter 590 (Delhi). In the said judgment, following the judgments of the Division Benches of this court in DDA Vs. U. Kashyap 1998 VII AD (Delhi) 300 & in DDA Vs. K.C. Goyal & Co. 2001 II AD (Delhi) 116 it was held that an award for compensation for escalation on the basis of cost indices, beyond Clause 10 CC of the contract is Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 55/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:07:43 +0530 erroneous on the face of it and amounts to misconduct. It was further held that where a contract provides for a formula as per which escalation has to be worked out, Arbitrator being bound by the contract between the parties cannot adopt a different methodology. The award for amounts in excess of those worked out under Clause 10 CC was thus set aside holding the same to be in patent duplication.
f) I also find that the same view has been taken thereafter also. Two other single judges of this court in Anant Raj Agencies Vs. DDA CS(OS) No.2650A/1996 decided on 21st February, 2008 as well as in Jagat Ram Trehan & Sons Vs. DDA 2002 63 DRJ 92 have taken the same view.
g) I however find that another Division Bench of this court in DDA Vs. M/s S.S. Jetley MANU/DE/0861/2000, inspite of earlier judgment in V. Kashyap (Supra) held that claim for prolongation of contract due to fault of DDA and for idle labour, staff, machinery, centering, shuttering and electricity, water etc. was dehors Clause 10 CC and allowable. It was however reiterated that with respect to items provided in 10 CC, no formula other than that applied in 10 CC can be applied.
h) The matter does not rest there. Even in subsequent judgment, dichotomy persists. Another single judge in Satya Prakash & Bros. Vs. DDA decided on 28th September, 2001 held that arbitrator cannot act contrary to contract and the award, since it was not possible to bifurcate the amount awarded on account of delay by DDA in taking decisions (for which it was held no claim could be allowed owing to clause
1) and for delay on account of non supply of cement, and further since Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 56/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:07:55 +0530 award did not deal with aforesaid clause 1, the matter was remanded back.
However, another single judge in Narayan Das R. Israni Vs. DDA 126 (2006) DLT 10 held that clause 10 CC applies only in respect of increase in labour rates and material rates for period beyond stipulated time and refused to interfere with the award for damages under other heads on account of prolongation of contract for reasons attributable to DDA.
i) I however find that in the present case, the challenge is not to the computation done under clause 10CC. The claim and award though on account of prolongation for reasons attributable to DDA the damages awarded with respect thereto are under the same heads as under clause 10CC. It is for this reason only that the arbitrator after assessing the damages payable by DDA to petitioner for such prolongation has allowed deduction therefrom the amount already paid under clause 10CC. Had the said assessment been with respect to items not covered clause 10CC, the question of deducting therefrom the amount assessed and paid under clause 10CC would not have arisen. The arbitrator has thus assessed damages under the same head as in clause 10CC but applying the formula other than that provided in clause in 10CC. This is an error apparent on face of record and not permissible as per the judgments (supra) and thus this part of the award is not sustainable and liable to be set aside.
j) I also find that the Arbitrator though noticing that undertakings had been given by the petitioner at the time of seeking extension of time, not to claim damages from DDA, has not dealt with the same. The said undertaking by the petitioner takes the form of a contract between the parties and the said contract CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 57/ 66 having provided that no damages would be payable the petitioner could not turn around and claim damages for delay.
Though the petitioner has contended that the said undertakings were under coercion but no finding in that regard has been returned by the Arbitrator. No further material has been cited to show that immediately after furnishing the undertaking or at any time did the petitioner take a stand that the said undertaking had been obtained under coercion. The award is liable to set aside for this reason as well."
39.37. Let me now come to grips with the case laws relied upon by Ld. Counsel for the plaintiff. At first blush, the judgments referred to by the plaintiff appear to have substance in favour of the plaintiff that the plaintiff's right cannot be scotched by clause 10 CC of the agreement and beyond the stipulated period of contract, compensation can be awarded to the contractor. But every case has to be adjudicated as per the peculiar facts unless the ratio decidendi is such that reflects the binding nature of the judgment. In this backdrop, I found the ambitious reliance on the Judgment of High Court of Delhi in Delhi Development Authority Vs. M/s N.N. Buildcon Pvt. Ltd 2017 SCC Online DEL 11494 to be misconceived, as there are many features therein which are distinct from the present suit. First is that in the said case, the claimant /contractor vide a separate letter informed the DDA/employer that since the sites have been handed over late, they will not be able to continue with work because of abnormal rise in cost of men and material beyond the stipulated period unless escalation is paid till actual CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 58/ 66 completion. The claimant further mentioned that if its request is not acceptable to the department, he will be left with no other option but to stop the work on stipulated date of completion and request for closure of contract. This fact was noted in paragraph 8 of the said judgment which is showcased as under:
"8. The relevant part of the Award, which deals with Clause 10CC and then proceeds to hold DDA liable, is extracted as under:-
"4.7 The Clause 10CC of Agreement stipulates that no escalation shall be paid for work executed in extended contract period even if extension is granted without any action under Clause -2. The Claimant vide his letter dt. 19/11/2012 (exh-C-54) informed the Respondent that since the sites have been handed over late, they will not be able to continue with work (because of abnormal rise in cost of men & materials) beyond the stipulated period unless escalation is paid till actual completion. The Claimant further mentioned that if his request is not acceptable to department, he will be left with no other option but to stop the work on stipulated date-of completion and requested for closure of contract. It is observed that neither the Respondent closed the contract nor the Claimant stopped the work on stipulated date of completion presumably because case for payment of escalation beyond stipulated date of completion was under consideration with department. The Respondent vide letter dt.27/ll/2013 (Exh-C-63) in reply to Claimants letter dt. 7/11/2013 informed that the case (escalation beyond stipulate period) is under consideration with higher authority and final outcome shall be intimated in due course. The case was finally rejected as intimated vide Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 59/ 66 NAVJEET BUDHIRAJA Date: BUDHIRAJA 2023.09.15 16:08:11 +0530 Respondent letter dt. 28/1/15 (Exh-C-
95)."
39.38. In the instant case, there is no such intimation at the end of the plaintiff to the defendant claiming any amount due to price rise /escalation while the contract was subsisting. The plaintiff never brought it to the knowledge of the defendant that in case of prolongation of the agreement from 05.03.2010 till 30.07.2010, plaintiff may suffer losses due to price rise/escalation in the cost of labor or the material. Secondly, in the aforesaid judgment referred by Ld. Counsel for the plaintiff, the Hon'ble Court had appreciated in paragraph 9 that a small delay is something which is in the contemplation of the parties in constructions contract but when the delay was almost equivalent to the initial contract period, the said understanding of the parties would break down. Paragraph 9 of the said judgment is also reproduced herein under:
"9. DDA has emphasized in these proceedings that the observations in para 4.18 are to the effect that the procedure followed by CPWD is quite popular and it is also followed by DDA. It is a constant refrain that when the parties agreed upon a bar, there was no question of the Tribunal awarding escalation costs. The phraseology adopted by the Tribunal might lead one to conclude that what was awarded was something beyond the contract. However, it is not merely a conclusion in para 4.18 or some sentences that are to be considered. What is apparent from the extracted paras of the Award is that the Tribunal was aware that small delay, having regard to the overall extension of time agreed (3 Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 60/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:08:21 +0530 months) was something within the contemplation of the parties as an extension under Clause 10CC. However, when the delay was almost equivalent to the initial contract period, as in the present case, the understanding of the parties that such a bar would operate ipso facto, would break down. In this case, what circumstances indicate, which is undisputed, is that the claims were confined to escalation in wages and rise in price material for the extended period of time. Rise in wages is something that can be reasonably construed, which is not within the contemplation of the parties, because it occurs periodically in two to three years. So viewed, the arbitral tribunal's understanding that the extension upto three months or six months, as in the present case, was something that could be contemplated within the understanding of the parties is irreproachable. However, to accept that one of the parties should bear the cost of rise, beyond that period, especially when the rise of wages or other prices, could be significant, would not only be inequitable but would also be doing violation to the understanding or consensus ad idem."
39.39. In the instant case, the prolongation of the agreement took place for almost five months, as against the delay of 24 months, which had occurred in the aforesaid case, and which made the Ld. Arbitrator and the Hon'ble Court to award compensation to the contractor. The period of delay of 3 to 6 months in execution of contracts of such kind is understandable and can be said to be within the contemplation of the parties, but in the case in hand, in the light of fact that the prolongation extended to the period of 5 months only, the grant of Digitally signed by CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 61/ 66 NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:08:31 +0530 damages/compensation in the aforesaid case cannot be stated to be on the same footing as in the instant case.
39.40. The other distinct feature can be noted in the paragraph 5 of the aforesaid judgment wherein it was pointed out by the counsel for the contractor that the extended period was almost equal to the contract period and the claims were made towards escalation in price of raw materials and statutory increase in labour wages during that period, which is under the case herein, as there is no such pleading of statutory increase in wages of labour during the extended period, which was for five months, as against the period of 24 months in the said judgment.
39.41. In so far as the Judgment of High Court of Delhi in PC Sharma and Company Vs. DDA is concerned, again the said Judgment is distinguished on facts, as in the said case also, a letter dated 07.09.1983 was written by the contractor that they were required to cut the steel reinforcement and this operation was not covered by the terms and conditions and thus a request was made to pay the extra cost involved therein at the rate of 0.50 per kg, which is not the case herein, as plaintiff never brought any kind of price rise/escalation to the knowledge of the defendant during the subsistence of the agreement.
39.42. On the anvil of aforenoted legal and factual position, the claim under this head falls face down.Claim No. 6
Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 62/ 66 BUDHIRAJA NAVJEET BUDHIRAJA Date:
2023.09.15 16:08:42 +0530 39.43. This claim is in respect of payment of Rs. 1,25,400/-
at the rate of Rs. 6,600/- per month on account of watch and ward charges incurred by the plaintiff by keeping and deploying the watch and ward staff at the site w.e.f. 30.07.2010 to 13.03.2013 i.e. till the date when the site was taken over by the defendant.
39.44. The basis of the aforesaid claim is stated to be a supplementary agreement dated 01.08.2010 for a period of one year Ex.D39 executed between the parties. PW1 deposed that after the construction of flats, defendant was not ready and willing to take possession of the same and a supplementary agreement for keeping watch and ward and further for affixing certain items i.e. sanitary and other items, at the time of handing over of the flats to the respective allottees. It is further deposed that the plaintiff allotted the flats to the individual allottees as and when the allotment letters were issued to them. The plaintiff deployed watch and ward at the site and duly took care of the constructed flats and the material lying therein and there was no complaint of theft and pilferage of any nature whatsoever. It is further deposed that as per the supplementary agreement, the plaintiff was entitled to Rs. 6,600/- per month, but the defendant had paid a sum of Rs. 79,200/- to the plaintiff for the stipulated period as per the pleading but failed to remit the balance amount of Rs. 1,25,400/- to the plaintiff, for payment of watch and ward from 20.07.2011 till 13.03.2013 i.e. the date when all the flats had been taken over by the defendant from the plaintiff, including the flats, the possession whereof had been handed over Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 63/ 66 NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:08:56 +0530 to the allottees by the plaintiff, as per the allotment letter and directions of the plaintiff.
39.45. On behalf of defendant, the aforesaid claim has been repudiated on the premise that the plaintiff company is not entitled to any amount over and above Rs. 79,200/- towards the watch and ward charges and the defendant had already paid towards the duration of the supplementary agreement executed between the parties. It is further stated that the plaintiff company did not provide any deployment of watch and ward staff for the period for which it is claiming charges. It is further stated that supplementary agreement Ex.D39 was closed on 25.05.2011 and the defendant raised the 15th and final bill, which was then accepted by the plaintiff. The plaintiff company did not affix the sanitary fittings and kept the entire stock to itself. It is further stated that vide a letter dated 07.05.2012 Ex.D17, the plaintiff had intimated the defendant that the watch and ward does not rest on part of the plaintiff and that for any damage or theft in future, the plaintiff company would not be liable. It is further the stand of the defendant that the said total bill was passed for Rs.
34,34,248/- out of which the defendant had paid the amount of Rs. 17,62,536/- to the plaintiff company, withholding the balance amount, which was accepted by the plaintiff. The said withheld amount was later on released to the plaintiff in tranches. It is further the stand of the defendant that supplementary agreement was entered into between the parties for keeping watch and ward and for further affixing of certain items, but it is denied that the Digitally signed CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 64/ 66 by NAVJEET NAVJEET BUDHIRAJA BUDHIRAJA Date:
2023.09.15 16:09:11 +0530 plaintiff allotted the flats to the individual allottees, as and when the allotment letters were issued to them.
39.46. To further build upon this claim, cross-examination of PW1 is now referred to. Though plaintiff/PW1 has claimed to have deployed watch and ward till 13.03.2013, however, in his cross-examination he affirmed that as such no security agency was hired for watch and ward. He also affirmed having not filed on record any voucher/ bill etc of payment to the chowkidar.
Though he claimed that all the payments were made from the account, but no bank account statements have been filed on record. In such eventuality, I do not find any justification for the plaintiff to claim watch and ward charges over and above the duration of the supplementary agreement. There is no evidence on record that the plaintiff had hired any security agency or any chowkidar beyond the period of supplementary agreement or that the plaintiff had incurred any expenses towards the said alleged service. Moreover, the plaintiff, in its letter dated 07.05.2012 Ex.D17 had intimated the defendant about not providing any further watch and ward services beyond the duration of the supplementary agreement, therefore, this claim of the plaintiff deserves no consideration and, thus, cannot be allowed.
39.47. The upshot of the forgoing discussion is that plaintiff is found entitled to recover sum of Rs. 20,000/- as per claim no. 1 and Rs. 60,000/- as per claim no. 2 from the defendant. The interest has been claimed at rate of 18 % per annum from the date Digitally signed by NAVJEET CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 65/ 66 BUDHIRAJA NAVJEET Date:
BUDHIRAJA 2023.09.15 16:09:21 +0530 of institution of the suit till realization, however, in my opinion, ends of justice would be achieved by granting 9 % interest on the aforesaid amount.
39.48. This issue is, thus, decided in favor of the plaintiff in respect of claim no. 1 and 2 only as noted above.
40. Issue no. 3: Relief.
40.1. The suit of the plaintiff is decreed only to the extent of Rs. 20,000/- as per claim no. 1 and Rs. 60,000/- as per claim no. 2 against the defendant with interest at the rate of 9 % per annum from the date of institution of the suit till realization. Remaining claims are found to be untenable and rejected. Cost of the suit to the extent of the decretal amount only is awarded to the plaintiff. Decree sheet be drawn up.
Announced & dictated in the open court on 15.09.2023 (Navjeet Budhiraja) Additional Sessions Judge-02 South District, Saket Courts, New Delhi 15.09.2023 Certified that this judgment contains 66 pages and each page bears my signatures.
(Navjeet Budhiraja) Additional Sessions Judge-02 South District, Saket Courts, New Delhi 15.09.2023 Digitally signed CS DJ No. 1159/2017 M/s Ved Prakash Mittal & Sons Vs. DDA 15.09.2023 Page No. 66/ 66 by NAVJEET BUDHIRAJA NAVJEET Date:
BUDHIRAJA 2023.09.15 16:09:33 +0530