Delhi District Court
M/S Big Brothers Projects Pvt Ltd vs M/S Ansal Urban Condominiums Pvt Ltd And ... on 16 January, 2025
IN THE COURT OF SH. VIDYA PRAKASH
DISTRICT JUDGE (COMMERCIAL COURT)-02
NEW DELHI DISTRICT, PATIALA HOUSE COURTS
NEW DELHI
CNR NO.: DLND010128922019
CS (COMM.)/165/2019
IN THE MATTER OF:-
M/S BIG BROTHERS PROJECTS PVT LTD
Regd. Office at 102, Plot No.6
Anupam Plaza-I, LSC
Gazipur, Delhi - 110 096
(Through Its Authorized Representative/
Director Sh. Prashant Dhyani)
......PLAINTIFF
VERSUS
1. M/s Ansal Urban Condominiums Pvt. Ltd.
2. M/s Ansal Landmark Township Pvt. Ltd.
Both having Regd. Office at:
115, Ansal Bhawan
16, K. G. Marg,
New Delhi- 110001
......DEFENDANT
Date of institution of suit : 22-07-2019
Date of reserving judgment : 28-11-2024
Date of pronouncement of judgment : 16-01-2025
JUDGEMENT
1. Vide this judgment, I shall dispose off the present suit for recovery of Rs.83,47,263/- along with costs and pendent- lite & future interest @ 12 % per annum, filed by the plaintiff against the defendants.
CS (COMM.)/165/2019 Page 1 of 47BRIEF FACTS OF THE CASE:
2. Brief facts of the present case, as discernible from relevant paras of the plaint, are as under:-
2.1 The plaintiff is stated to be a duly incorporated company, registered and governed under the provisions of The Companies Act, 1956.
2.2 The defendant nos.1 & 2 are also stated to be companies incorporated under the Companies Act.
The defendant no.1 company is subsidiary of defendant no.2 and the defendant no.2 is in actual control and is responsible for day-to-day functioning of the defendant no.1 and is jointly and severally liable for the liabilities of defendant no.1.
2.3 The plaintiff was awarded contract for various Plumbing and sanitary jobs/works by the defendants for their project 'The Group Housing Towers at Aquapolis, Ghaziabad' and accordingly, work orders were issued by the defendants giving description of the jobs to be performed in the said project by the plaintiff. The details of the various work of plumbing, sanitary and other works executed between the plaintiff and the defendants for various towers of the project are as under:-
Sr. Work Order No. Date
No.
1 AUCPL/GHZ/WO/11/22 14.11.2011
CS (COMM.)/165/2019 Page 2 of 47
Sr. Work Order No. Date
No.
2 AUCPL/GHZ/WO/12/43 10.06.2012
3 AUCPL/GHZ/WO/12/57 14.07.2012
4 AUCPL/GHZ/WO/12/52 27.06.2012
5 AUCPL/GHZ/SERV/WO/15/454 31.08.2015
6 AUCPL/GHZ/SERV/WO/15/210 26.11.2015
7 AUCPL/GHZ/WO/13/125 30.11.2013
2.4 It is averred that the defendants had been causing undue delays in the execution of the work and had been changing scope of work by amending the work orders from time to time, as the ground work for performing sanitary and plumbing work of the project was not ready. Due to amendments in the work orders from time to time, not only abnormal delay in execution of the work was caused but it also resulted in huge losses to the plaintiff as the plaintiff was burdened with overheads costs such as idling of men, machinery, resources and opportunity loss for abnormal period of 5 years. The details of the amended work orders are stated to be as under:-
2.4.1 Work order No.AUCPL/GHZ/WO/11/22 dated 14.11.2011 was initially awarded for total cost of Rs.1,33,03,076/- for Tower No.D-4 & B2B, the same was firstly amended on 23.7.2013 and total cost was changed to Rs.1,50,02,123/-, secondly on CS (COMM.)/165/2019 Page 3 of 47 27.1.2014, the total cost was changed to Rs.1,58,16,731/- and thirdly on 7.11.2015 and total cost was changed to Rs.1,09,74,589/-, which itself shows that the work order dated 14.11.2011 was amended till 7.11.2015 and scope of work was changed. Thus, the plaintiff till 7.11.2015 could not perform the awarded work. Further, in the last amendment dated 7.11.2015, lot of plumbing works (for which work front could not be provided by defendants in Tower D4 & Tower B2B) were deleted from the scope of Work order No.AUCPL/GHZ/WO/11/22 dated 14.11.2011 and for these deleted works, two new work orders AUCPL/GHZ/SERV/WO/15/210 dated 26.11.2015 for Tower D4 & AUCPL/GHZ/SERV/WO/15/211 dated 26.11.2015 for Tower B2B, were issued to plaintiff to conceal/ Hide defendants' failure to provide work fronts. Even thereafter also, the work front was not available to perform the sanitary and plumbing work covered under these two new work orders as again the ground work was not completed by the defendants and they also changed the planning. It is stated that further till 23.7.2016, the ground work was not completed by the defendants so CS (COMM.)/165/2019 Page 4 of 47 that the plaintiff could not perform the job, which caused enormous overheads resulting in huge losses to the plaintiff.
The plaintiff could hardly execute the work amounting to Rs.92,857/- in Tower D4 only against the awarded WO/ AUCPL/GHZ/SERV/WO/15/210 dated 26.11.2015 for value of Rs.3,92,164/- and the plaintiff could not execute any work in Tower No-B2B against the awarded WO/AUCPL/GHZ/SERV/WO/15/211 dated 26.11.2015 for value of Rs.6,57,169/- as the ground work was not completed by the defendants, which caused enormous overheads resulting in huge losses to the plaintiff.
2.4.2 Work order No.AUCPL/GHZ/WO/12/43 dated 10.6.2012 for tower No.D-11 was awarded for a total cost of Rs.79,76,151/-, the same was firstly amended on 14.1.2014 and total cost was changed to Rs.95,20,455/-, which itself shows that the work order dated 10.6.2012 was amended till 14.1.2014 and scope of work was changed. Thus, the plaintiff till 14.1.2014 could not perform the work and thereafter also, the work front was not available to perform the sanitary and pluming work as the ground work was not completed by the CS (COMM.)/165/2019 Page 5 of 47 defendants and they also changed the planning and drawings. It is stated that thereafter till 23.7.2016, the ground work was not completed by the defendants so that the plaintiff could perform the job, which caused enormous overheads resulting in huge losses to the plaintiff. The plaintiff could hardly execute the work amounting to Rs.19,34,074/- only against the awarded PO value of Rs.95,20,455/- as ground work in Tower D-11 was not complete. Even till date in Tower D-11, the basic ground work was not complete so as to perform the Sanitary & Plumbing works.
2.4.3 Work order No.AUCPL/GHZ/WO/12/57 dated 14.7.2012 was awarded for total cost of Rs.4,09,982/-, the same was amended on 24.12.2015 and total cost was changed to Rs.3,44,254/-, which itself shows that the work order dated was amended till 24.12.2015 and scope of work was changed. Thus, the plaintiff till 24.12.2015 could not perform the work and thereafter also, the work front was not available to perform the sanitary and pluming work as the ground work was not completed by the defendants and they also changed the planning and drawings and further till CS (COMM.)/165/2019 Page 6 of 47 23.7.2016, the ground work was not completed by the defendants so that the plaintiff could perform the job, which caused enormous overheads resulting in huge losses to the plaintiff.
2.4.4 Work order No.AUCPL/GHZ/WO/13/125 dated 30.11.2013 was awarded for total cost of Rs.65,96,289/-, the same was amended on 11.2.2015 and total cost was changed to Rs.65,59,489/-, and later on also, again amended on 31.8.2015 and total cost was changed to Rs.54,30,195/- which itself shows that the work order dated was amended till 31.8.2015 and scope of work was changed. Thus, the plaintiff till 31.8.2015 could not perform the work and thereafter also, the work front was available to perform the sanitary and pluming work as the ground work was not completed by the defendants and they also changed the planning and drawings and further till 23.7.2016, the ground work was not completed by the defendants so that the plaintiff could perform the job, which caused enormous overheads resulting in huge losses to the plaintiff.
2.4.5 With respect to the remaining work orders till 23.7.2016, the ground work was not completed by the defendants so that the CS (COMM.)/165/2019 Page 7 of 47 plaintiff could perform the job, which caused enormous overheads resulting in huge losses to the plaintiff.
2.5 It is claimed that the plaintiff had deployed men and machinery at the project site and the plaintiff was burdened with their costs for a period of about 5 years, whereas, had the defendants not amended the scope of work and their ground work was completed for performing sanitary and plumbing work, the plaintiff would have completed the entire work within the stipulated time. Even till 23.7.2016, the ground work was not completed by the defendants for performing sanitary and plumbing work, which forced the plaintiff to demobilize from the site as the plaintiff was not able to bear the overhead cost of men and machinery and idling of resources and opportunity loss to earn from other projects, had the defendants not delayed provided ground work to perform plumbing and sanitary work awarded to the plaintiff. As such till 23.7.2016, the plaintiff kept on suffering losses and finally demobilized itself from the site and raised the final invoices to claim the cost of the work performed by it, as per the terms of the contract.
2.6 That as per the terms and conditions of the said work orders, it was item rate contact as such the plaintiff was entitled to be paid with respect to the actual quantity executed and work performed as CS (COMM.)/165/2019 Page 8 of 47 well as escalation in terms of agreement between the parties, besides the losses suffered by the plaintiff. In this regard, the plaintiff has relied and referred to terms and condition nos. 2, 5 and 8 regarding Item Rates for New Contract, Term of Payment and Escalation respectively, in Para no.6 of the plaint.
2.7 It is further stated that the plaintiff performed various plumbing and sanitary works in the said project for the period from November 2011 to 23rd July 2016 as per the terms of the work orders. Plaintiffs were raising the running bills (RA Bills) with respect to the work performed from time to time, but timely payments were not made by defendants as per the terms and conditions of the contract, rather some part payments were only made and that too after great delay, due to which plaintiff suffered huge losses.
2.8 From the beginning, there were acts of breach of the terms of contract by the defendants, which caused great loss to plaintiff. It is stated that due to non availability of timely government approvals/ sanctions with the defendants, work fronts were not ready for installation of sanitary and plumbing work; non-payments of running bills as per schedule; pending civil work and non-finalization of decisions relating to the final positing of the sanitary and plumbing work and there were site hindrances by the defendants, the floors of the CS (COMM.)/165/2019 Page 9 of 47 towers were not ready for installation and finalization of plumbing and sanitary work, and amendment of work orders, due to which the project was considerably delayed and it was causing great loss to the plaintiff. It is stated that the defendants were under obligations to provide fronts ready for installation of sanitary and plumbing work and made timely payment of the RA bills raised by the plaintiff but the defendants failed to do so. As the progress of the work was stalled due to acts of breaches of the defendants and the plaintiff suffered huge loss due to idling of the resources, men and machinery and burden of overheads and opportunity losses also. On repeated demands by plaintiff for compensation of their losses, some part payments of Rs.2,73,000/- only against Idle labour and Rs.3,21,435/- towards Escalation were initially paid in the Running Bills, although, initially the plaintiff was promised by the defendants that they would be properly compensated for the losses suffered by them but later on the defendants failed to fulfill their promises and refused to compensate the plaintiff for the delay caused and the losses suffered by the plaintiff.
2.9 Therefore, on account of acts of delays/ breaches on part of defendants and non-payments of the running bills of the plaintiff in time, the plaintiff had no option but to take decisions to demobilize from the CS (COMM.)/165/2019 Page 10 of 47 project w.e.f. 23.7.2016 in order to prevent further losses due to idling of the resources, men and machinery and burden of overheads. The defendants were not even making the payment of running (RA) bills submitted by the plaintiff within normal accepted period of 30 days in the trade and due to which, the plaintiff was finding it difficult to manage its expenses and was suffering further losses as the plaintiff had deployed its men and machinery at the site especially for the project of the defendants.
2.10 It is stated that as per the terms of the contract between the parties, the plaintiff was entitled to be paid for the work performed and material supplied. It is further stated that for the period November 2011 to 23rd July 2016, the plaintiff completed various works and raised RA bills and also raised final bills dated 23.7.2016 on the basis of certified measurements and agreed rates. The plaintiff also raised bills towards the escalation permitted under the terms of contract, and claimed the losses suffered by it, but the defendants failed to pay the same.
2.11 It is further stated that the plaintiff submitted final bills after demobilizing from the site on 23.7.2016 on the basis of the measurement books, which were already certified and since only part/ stage payments were made by the defendants earlier as such the plaintiff being fully entitled to claim the CS (COMM.)/165/2019 Page 11 of 47 remaining cost of the work performed by the plaintiff, raised the final invoices dated 23.7.2016 upon the defendants, but the defendants failed to pay the same. It is stated that as per the terms of the contract, the plaintiff is very much entitled to claim the invoices with respect to the work completed by the plaintiff along with permitted escalation, besides the losses suffered by the plaintiff. The details of running bills submitted on the basis of duly certified measurement books and final bills raised are stated as under:-
1. Work order No.AUCPL/GHZ/WO/11/22 dt 14.11.2011 17th RA BILL FINAL BILL Amount Balance received Rs.1,03,64,289Rs.1,10,58,738Rs.1,03,66,604Rs.6,93,134 It is hereby submitted that the total amount received Rs.1,03,66,604/- includes the payment of Rs.2,73,000/- paid by defendants towards part of idling labour and Rs.3,21,435/- paid by the defendants towards escalation and since the idling of labour and escalation have been claimed separately in the present suit as such after separating the said amount, the amount of bill amount due is as under;
17TH RA BILL FINAL BILL AMOUNT BALANCE RECEIVED Rs.1,03,64,289Rs.1,10,58,738Rs.97,72,169 Rs.12,86,569
2. Work order No.AUCPL/GHZ/WO/12/43 dt 10.6.2012 6th RA BILL FINAL BILL AMOUNT BALANCE RECEIVED Rs.18,57,319 Rs.19,34,074 Rs.23,57,430 -Rs.4,23,356
3. Work order No.AUCPL/GHZ/WO/12/57 dt 14.7.2012 6th RA BILL FINAL BILL AMOUNT BALANCE RECEIVED Rs.2,98,521 Rs.3,54,164 Rs.2,79,910 Rs.74,254
4. Work order No.AUCPL/GHZ/WO/12/52 dt 27.6.2012 4th RA BILL FINAL BILL AMOUNT BALANCE RECEIVED CS (COMM.)/165/2019 Page 12 of 47 Rs.1,08,958 Rs.1,19,952 Rs.1,01,293 Rs.18,659
5. Work order No.AUCPL/GHZ/SERV/WO/15/454 dt 31.8.2015 1st RA BILL FINAL BILL AMOUNT BALANCE RECEIVED Rs.57,568 Rs.79,914 Rs.54,837 Rs.25,078
6. Work order No.AUCPL/GHZ/SERV/WO/12/210 dt 26.11.2015 1st RA BILL & AMOUNT BALANCE FINAL BILL RECEIVED 92857 NIL 92857
7. Work order No.AUCPL/GHZ/WO/13/125 dt 30.11.2013 7th RA BILL FINAL BILL AMOUNT BALANCE RECEIVED Rs.51,69,049 Rs.56,91,045 Rs.54,42,467 Rs.2,48,578
8. Work order No.AUCPL/GHZ/SERV/WO/15/211 dt 26.11.2015 Word Done Amount Balance received NIL NIL 2.12 It is stated that the defendants even failed to make the payment of the running bills (RA Bills), which were even certified by the defendants and the final bills claimed on the basis of certified measurement books. The plaintiff had, on certain occasions, sent emails dated 24.2.2014, 7.3.2014, 29.8.2014 and letter dated 17.8.2015 to the defendants pointing out the delays on their part and also the non payment of the RA bills of the plaintiff and losses suffered by the plaintiff, but despite the same, no action or payment was made by the defendants.
CS (COMM.)/165/2019 Page 13 of 472.13 It is also stated that the plaintiff was also entitled to the escalation with respect to the work performed by the plaintiff in terms of the agreement between the parties. The details of the permitted escalation are mentioned in Para no. 13 of the plaint.
2.14 It is further claimed that in addition to the amount due towards the work completed and escalation, due to acts of breaches and abnormal delay on part of defendants, the plaintiff also suffered losses as the plaintiff had to pay for the salaries of employees deployed exclusively for the work orders, loss of profits, and the rental etc. for extra period as such the plaintiff is entitled to claim the said amount from the defendants. The details of the losses suffered by the plaintiff, which the plaintiff is entitled to claim from defendants, are stated as under:-
2.14.1 In respect of Work order No.AUCPL/GHZ/WO/11/22 dt 14.11.2011, it is stated that with respect to this particular work order, the plaintiff had to employ one Supervisor and one store keeper. Due to acts of delays and breaches as explained above, the plaintiff was burdened with their salaries for extra period from May 2012 to June 2016. The plaintiff was further burdened with tools rent for the extra period from May 2012 to June 2016. The plaintiff paid salary to the CS (COMM.)/165/2019 Page 14 of 47 supervisor @ Rs.10,000/- p.m. for the period from May 2012 to September 2013, @ Rs.12,000/- p.m. for the period November 2013 to March 2014, @ Rs.15,000/- p.m. for the period April 2014 to September 2014, @ Rs.23,000/- p.m. for the period October 2014 to June 2016 in all total Rs.8,15,000/-. Likewise, the plaintiff paid a sum of Rs.4,95,990/-
towards the salary of Store Keeper and further a sum of Rs.1,50,000/- for the period from May 2012 to June 2016 as tools rent. In all, the plaintiff is claiming a sum of Rs.14,60,990/- from the defendants with respect to the above work order towards losses only. It is claimed that the defendants had paid a sum of Rs.2,73,000/- as an interim part payment to the plaintiff in their running bill towards the idling of labour. Hence, the balance claimed amount is Rs.11,87,000/- only.
2.14.2 In respect of Work order
No.AUCPL/GHZ/WO/12/43 dated
10.6.2012, it is stated that with respect to this particular work order, the plaintiff had to employ one Supervisor and one store-keeper. Due to acts of delays and breaches as explained above, the plaintiff was burdened with their salaries for extra CS (COMM.)/165/2019 Page 15 of 47 period from June 2014 to March 2016.The plaintiff was further burdened with room rent for the extra period from June 2014 to March 2016. The plaintiff paid salary to the supervisor @ Rs.15,000/- p.m. for the period from June 2014 to November 2014, @ Rs.25,000/- p.m. for the period from December 2014 to December 2015, in all, total Rs.4,15,000/-. Likewise, the plaintiff paid a sum of Rs.2,16,850/- towards the salary of Store Keeper and further, a sum of Rs.55,000/- for the period from May 2012 to June 2016 towards room rent. In all, the plaintiff is claiming a sum of Rs.6,86,850/- from the defendants with respect to the above work order towards losses only.
(b) Besides the same, the plaintiff is also entitled to claim a sum of Rs.9,06,312/- towards the loss of profits since the expected profits is generally @ 15% which is expected profit of such nature of work, for which any person would undertake work. The total work awarded to the plaintiff was for value of Rs.79,76,151/- and the expected profits @15% on the same, comes to Rs.11,96,423/-, whereas, the defendants could execute work of only Rs.19,34,074/- till 23.7.2016, as the work CS (COMM.)/165/2019 Page 16 of 47 front was not ready as such the plaintiff earned profits of 15% on Rs.19,34,074/- i.e. Rs.2,90,111/- and in this process, the loss of profit comes to Rs.9,06,312/-, had the complete ground work was provided by the defendants to the plaintiff for execution of work for value of Rs.79,76,151/- and on the said value, the plaintiff would have earned 15% as profit.
Therefore, it is stated that in all, the total losses suffered by the plaintiff are Rs.6,86,500/- plus Rs.9,06,312/- i.e. Rs.15,92,812/-, which the plaintiff is entitled to claim from the defendants.
2.15 It is further the case of the plaintiff that due to non-payment of final bills raised by the plaintiff as per the terms of the contract and the escalation amount, the defendants are also liable to pay interest @ 12 % p.a. as per trade practices and in consonance with the normal banking lending rates. A sum of Rs.16,96,759/- has become due towards the interest alone calculated towards the same @ 12 % p.a. for the period of delay, which the defendants are liable to pay to the plaintiff.
2.16 Thus, in view of above, the plaintiff has claimed from the defendants, the following amounts which the defendants are allegedly liable to pay to the plaintiff:-
CS (COMM.)/165/2019 Page 17 of 47S.N Work Amount Escalation Losses Interest order due as peramount insuffered in@ 12% number final bills Rs. Rs. p.a. in Rs.
in Rs.
1 WO/11/22 12,86,569 7,81,249 11,87,000 10,08,993 2 WO/12/43 -4,23,356 4,93,494 15,92,812 5,15,514 3 WO/12/57 74,254 Nil Nil 23,019 4 WO/12/52 18,659 Nil Nil 5,784 5 WO/15/ 25,077 Nil Nil 7,774 454 6 WO/15/ 92,857 Nil Nil 28,786 210 7 WO/13/ 2,48,578 Nil Nil 1,06,889 125 Total 13,22,638 12,74,743 27,79,812 16,96,759 Total Amount 70,73,952 GST @ 18% 12,73,311 Grand Total 83,47,263 2.17 It is further averred that the plaintiff served notice dated 04.04.2019 upon the defendants, thereby calling upon them to make the payment of above said amount of Rs.83,47,263/-, but, the defendants despite service of the same, failed to make any payment. Thus, it is stated that the defendants are liable to pay interest @ 12% p.a. on the said amount during pendency of the present suit and till the time, amount is actually recovered from them.
Hence, the present suit came to be instituted.
CS (COMM.)/165/2019 Page 18 of 473. At this juncture, it may be relevant to note that initially, the present suit was filed as non-commercial suit before the concerned Court of Ld. Additional District Judge-04, PHC, New Delhi and subsequent to direction of Ld. Principal District & Sessions Judge, PHC, New Delhi contained in Order No.81-111/Judl./NDD/PHC/ND dated 06-1-2020, the present case was received by this Court.
4. Summons of the suit were issued to the defendants in terms of relevant order for 04-10-2019. On being served with same, both the defendants put their appearance through counsel namely Rakesh Kumar, Advocate on next date of hearing i.e. 04-10-2019 and vakalatnama came to be filed. The defendants were directed to file written statement within time prescribed under the law and the matter was adjourned for 04-2-2020 for settlement of issues.
5. At this stage, it is worthwhile to note here that due to outbreak of Covid-19 pandemic, the matter get adjourned en bloc in view of directions of Hon'ble Delhi High Court and Ld. Principal District & Sessions Judge, PHC, New Delhi. Subsequently, the matter was taken up for hearing through virtual mode/ hybrid mode, in pursuant to further directions of Hon'ble Delhi High Court and Ld. Principal District & Sessions Judge, PHC, New Delhi.
6. It is also worthwhile to note that an application under Order VIII Rule 10 CPC read with S. 151 CPC was moved on behalf of plaintiff for striking off the defence of the defendants. Reply thereto was also filed on behalf of CS (COMM.)/165/2019 Page 19 of 47 defendants, thereby contesting the same. In the meantime,written statement along with an application seeking condonation of delay in filing written statement were also filed on behalf of the defendants. Besides, an application under Order I Rule 10 read with S. 151 CPC was also filed on behalf of defendant no.2 seeking its deletion from the array of defendants. Reply to aforesaid application for deletion of defendant no.2 was filed by plaintiff, thereby contesting the same.
7. Vide common detailed order dated 29-01-2021, the aforesaid condonation application of defendants was dismissed, however, said application of plaintiff under Order VIII Rule 10 CPC read with S. 151 CPC was allowed, thereby striking of the defence of the defendants.
8. At this stage, it may also be noted here that due to second wave of Covid-19 pandemic, the matter again get adjourned en bloc in view of directions of Hon'ble Delhi High Court and Ld. Principal District & Sessions Judge, PHC, New Delhi. Subsequently, the matter was again taken up for hearing through virtual mode/ hybrid mode, in pursuant to further directions of Hon'ble Delhi High Court and Ld. Principal District & Sessions Judge, PHC, New Delhi.
9. The aforesaid application under Order I Rule 10 read with S. 151 CPC of the defendant no.2 for striking out its name from array of parties, was dismissed, vide detailed order dated 06-10-2021, passed by Ld. Predecessor of this Court. It is apposite here to mention that the defendant no.2 had CS (COMM.)/165/2019 Page 20 of 47 challenged the aforesaid order under Article 227 of the Constitution of India, by way of petition bearing CM (M) 1081/2021 titled as 'Ansal Landmark Township Pvt. Ltd. v. Big Brothers Projects Pvt. Ltd.' filed before Hon'ble Delhi High Court. However, the said petition was dismissed by Hon'ble Delhi High Court, vide order dated 29-11-2021.
10. Thereafter, the defendant no.2 had also preferred an application under Order VII Rule 11 CPC read with S. 151 CPC for rejection of plaint, however, subsequently it made statement regarding withdrawal of said application. Accordingly, the same was dismissed as withdrawn on 07-12-2021.
11. In support of its case, the plaintiff has examined its one of the directors/ AR namely Sh. Prashant Dhyani as PW1, who has deposed on the lines of the averments made in the plaint in his evidence by way of affidavit (Ex.PW1/A). He also relied upon / proved the following documents:-
Sr. Documents Mark/ Exhibit
1. Memorandum & Article of Ex.PW1/1
Association of Plaintiff
Company
2. The extract of Board Resolution Ex.PW1/2 dated 13.4.2019 of plaintiff company
3. Copy of Work Order dated Ex.PW1/3 14.11.2021 with Annexure-I and Special Terms and CS (COMM.)/165/2019 Page 21 of 47 Sr. Documents Mark/ Exhibit Conditions
4. The copy of amended work Ex.PW1/4 order dated 23.7.2013
5. The copy of amended work Ex.PW1/5 order dated 27.1.2014
6. The copy of amended work Ex.PW1/6 order dated 07.11.2015
7. Printout of the 17th RA Bill Ex.PW1/7 dated 12.3.2016
8. Printout of the final bill dated Ex.PW1/8 23.7.2016
9. Copy of work order dated Ex.PW1/9 26.11.2015 with Annexure-I & Terms and conditions
10. Print out of 1st RA/Bill dated Ex.PW1/10 23.7.2016
11. Copy of work order dated Ex.PW1/11 10.6.2012
12. Copy of work order dated Ex.PW1/12 14.1.2014
13. Printout of 6th RA Bill Ex.PW1/13
14. Printout of final bill dated Ex.PW1/14 23.7.2016
15. Copy of Work Order dated Ex.PW1/15 14.7.2012 with terms and condition
16. Copy of Amended Work Order Ex.PW1/16 with Annexures
17. Printout of 6th RA Bill Ex.PW1/17 CS (COMM.)/165/2019 Page 22 of 47 Sr. Documents Mark/ Exhibit
18. Printout of final bill dated Ex.PW1/18 23.7.2016
19. Copy of work order dated Ex.PW1/19 30.10.2013
20. Copy of amended work order Ex.PW1/20 with Annexures
21. Copy of amended work order Ex.PW1/21 with Annexures
22. Print out of 7th RA Bill Ex.PW1/22
23. Print out of the Final Bill dated Ex.PW1/23 23.7.2016
24. Copy of work order dated Ex.PW1/24 27.6.2012 with Annexures and terms and conditions
25. Print out of 4th RA Bill Ex.PW1/25
26. Print out of final bill dated Ex.PW1/26 23.7.2016
27. Copy of amended work order Ex.PW1/27 with annexures
28. Print out of 1st RA Bill Ex.PW1/28
29. Print out of the final bill dated Ex.PW1/29 23.7.2016
30. Copy of amended work order Ex.PW1/30 with annexures
31. Printout showing the summary Ex.PW1/31 of Escalation dated 23.7.2016 and its calculation
32. The statement of Index for WPI Ex.PW1/32 for all commodities from office CS (COMM.)/165/2019 Page 23 of 47 Sr. Documents Mark/ Exhibit of economic advisor and office of Labour Bureau showing consumer price index
33. Printout showing the summary Ex.PW1/33 of Escalation dated 23.7.2016 and its calculation
34. The Printout of Index for WPI Ex.PW1/34 for all commodities from office of Economic Advisor and office of Labour Bureau showing consumer price index
35. Print out of calculation Sheet Ex.PW1/35 showing the losses and interest calculation
36. Calculation sheet showing Ex.PW1/36 salary of the two employees claimed for the period May, 2012 to June, 2016 and tool rent for the said period
37. The statement showing total Ex.PW1/37 wages of Rs.4,83,000/- paid to Mr. Satish Upadhyay, Supervisor by cheque for period 01-11-2014 to 31-7-2016, which were duly encashed by him
38. Copies of vouchers of various Ex.PW1/38 to dates in respect of Work Order Ex.PW1/46 No.AUCPL/GHZ/WO/11/22 CS (COMM.)/165/2019 Page 24 of 47 Sr. Documents Mark/ Exhibit dtd. 14.11.2011
39. Copies of vouchers of various Ex.PW1/47 to dates in respect of Work Order Ex.PW1/72 No.AUCPL/GHZ/WO/11/22 dtd. 14.11.2011
40. Print out of Calculation sheet Ex.PW1/73 showing losses and interest calculation in respect of Work Order No.AUCPL/GHZ/WO/12/43 dated 10.6.2022
41. Calculation Sheet showing Ex.PW1/74 salary of two employees claimed for the peirod May 2012 to June 2016 and tool rent for the said period
42. Statement showing total wages Ex.PW1/75 of Rs.3,25,000/- paid to Mr. Ramesh Pokhiryal, Supervisor by cheque/ cash for the period 13.12.2014 to 9.1.2016 which were duly encashed by him
43. Copies of vouchers of various Ex.PW1/76 to dates in respect of Work Order Ex.PW1/122 No.AUCPL/GHZ/WO/12/43 dated 10.6.2022 CS (COMM.)/165/2019 Page 25 of 47 Sr. Documents Mark/ Exhibit
44. Printouts of emails dated Ex.PW1/123 24.2.2014, 07.3.2014 and to 29.8.2014 Ex.PW1/125
45. Office copy of letter dated Ex.PW1/126 17.8.2015
46. Office copy of Notice dated Ex.PW1/127 04.4.2019, postal receipts and to courier receipts Ex.PW1/131
47. Printout of the ledger account Ex.PW1/132 for the period 01-4-2011 to 23.7.2016
48. Printout of the list of share Ex.PW1/133 holders of defendant no.2 as [De-exhibited] downloaded from the official website of Ministry of Corporate Affairs i.e. www.mca.gov.in
49. Printout of the list of share Ex.PW1/134 holders of defendant no.1 as [De-exhibited] downloaded from the official website of Ministry of Corporate Affairs i.e. www.mca.gov.in
50. Affidavit under S. 65B of Ex.PW1/135 Indian Evidence Act w.r.t. [De-exhibited] Ex.PW1/133 to Ex.PW1/134 CS (COMM.)/165/2019 Page 26 of 47 Sr. Documents Mark/ Exhibit
51. Affidavit under S. 65B of Ex.PW1/136 Indian Evidence Act w.r.t. other electronic evidence.
12. It may also be mentioned that PW1 was cross-examined at length on behalf of defendants, which shall be discussed in subsequent paras of this judgment.
13. Ld. Counsel of plaintiff had made statement regarding closure of plaintiff's evidence on 17-02-2022. However, subsequent thereto, an application under S. 151 CPC was moved on behalf of plaintiff for filing fresh affidavit under Order XI Rule 6 (3) CPC, as applicable to the Commercial Courts Act, 2015 along with additional affidavit in evidence of PW1, which was allowed vide order dated 25.7.2023, passed by Ld. Predecessor of this Court. In view thereof, PW-1 Sh. Prashant Dhyani was further examined by way of additional affidavit Ex.PW1/B, who proved the said affidavit under Order XI Rule 6 (3) CPC as Ex.PW1/37.
14. It may also be noted here that the defendants stopped appearing before this Court, and consequently, they were proceeded against ex parte, vide order dated 16.02.2024, passed by this Court.
15. I have already heard Sh. Rajesh Mahindru, Ld. Counsel for the plaintiff. I have also gone through the material available on record including the plaint and the evidence, oral as well as documentary, led from the side of the plaintiff.
CS (COMM.)/165/2019 Page 27 of 4716. I have duly considered the submissions made on behalf of the plaintiff and have also gone through the judicial precedents filed on behalf of the plaintiff.
ANALYSIS & CONCLUSION Limitation
17. Firstly, I shall decide as to whether or not the suit is filed within period of limitation. In this regard, after referring to the relevant documents i.e. work orders, amended work orders and RA Bills and Final Bills dated 23.07.2016, and evidence of PW1, Ld. Counsel for plaintiff has vehemently argued that the present suit is well within period of limitation. It is submitted that the plaintiff had carried out the work from November, 2011 to 23rd July, 2016 and it being an item rate contract, the payments were to be released in phase manner i.e. 65% of the value of the specific work was to be released at the time of placing the material at site, 10% at installation of material, 10% at testing, 10% at commission and balance 5% was retained as retention amount to be released later on and thus, it is contended that the cause of action is continuing. Ld. Counsel for plaintiff further argued that the plaintiff submitted final bills on 23.7.2016 for all the work orders. The amount claimed under the work orders of Rs.13,22,638/- (after deducting over payment of Rs.4,23,356) consists of remaining 10% of testing, 10% of commissioning and balance 5% of retention amount and the fresh work executed after last running bill submitted for each work order. It is further argued that the claims of escalation were also calculated upto the date of final bill CS (COMM.)/165/2019 Page 28 of 47 dated 23.7.2016. It is also submitted that losses claimed are on account of overstaying till 23.7.2016 and thus, they can be claimed only after 23.7.2016 when the plaintiff demobilized from site as the defendants were promising to pay the same. He further argued that the rest is the interest amount and GST and thus, the period of limitation is to be reckoned from the said date of 23.7.2016, which expires on 22.7.2019. In view there, it is contended by Ld. Counsel of plaintiff that since the plaintiff got instituted the present suit on 22.7.2019 i.e. within period of 3 years and hence, the suit is within period of limitation.
18. This is a suit for recovery of money and limitation is 3 years from the date when the cause of action arises.
19. As already noted above, the defendants failed to file written statement even within the maximum period of 120 days and hence, their defence was struck off. Plaintiff has examined PW1 in order to prove its case. PW-1 has led his evidence by way of affidavit and additional affidavit [Ex.PW1/A and Ex.PW1/B] and deposed on the line of the averments made in plaint, besides proving various documents including final bills dated 23.7.2016 [Ex.PW1/8, Ex.PW1/14, Ex.PW1/18, Ex.PW1/23, Ex.PW1/26 and Ex.PW1/29]. Although, PW1 was cross-examined on behalf of defendants, yet, there is no cross-examination on the point of limitation. Therefore, it is established on record that the plaintiff has submitted final bills dated 23.7.2016 against all the work orders, which are duly proved by PW1 as Ex.PW1/8, Ex.PW1/14, Ex.PW1/18, Ex.PW1/23, Ex.PW1/26 and Ex.PW1/29. In CS (COMM.)/165/2019 Page 29 of 47 view thereof, the period of limitation would commence from 23.7.2016 and would end on 22.7.2019. Admittedly, the suit has been filed on 22.7.2019. Therefore, in the totality of the facts and circumstances of the case and keeping in view evidence led by the plaintiff, this Court is of the opinion that the suit is within the prescribed period of limitation.
Jurisdiction:
20. While pointing out from the record, Ld. Counsel of plaintiff has argued that the defendants carry on and work for gain through its registered office, which is situated at K. G. Marg, New Delhi, which falls within the territorial jurisdiction of this Court. Further, Ld. Counsel of plaintiff has also drawn attention of this Court towards Clause No.29 of the General Conditions in respect of all work orders and stated that it was agreed between the parties that the Court at Delhi shall have jurisdiction in the event of any dispute between the parties and thus, it is contended that this Court has territorial jurisdiction to try and entertain the present suit.
21. In view of aforesaid submission, it would be apposite here to reproduce the relevant clause of General Condition regarding jurisdiction, which reads as under:-
"xxx
29. JURISDICTION The parties unequivocally agree that they waive off their right to sue or be sued, in respect of any matter, claim or dispute arising out of or in any way relating to this Contract, at any place other than Delhi. xxx"CS (COMM.)/165/2019 Page 30 of 47
22. Therefore, in view of the above noted submissions of Ld. Counsel of plaintiff, which is duly substantiated from the record, this Court is of the considered view that this Court has territorial jurisdiction to try and entertain the present suit.
Entitlement
23. Ld. Counsel of plaintiff has argued that the entire testimony of PW-1 has remained unchallenged and unrebutted from the side of defendants and therefore, the plaintiff is entitled to the decree, as prayed for. He also referred to the relevant documents proved by PW1, in order to bring home his point that these documents clearly prove that suit amount of Rs.83,47,263/- was due towards the defendants at the time of filing of the suit. He, therefore, prayed that the suit may be decreed.
24. In support of his contentions, Ld. Counsel of plaintiff has relied upon following judgments:-
24.1 "Utair Aviation v. Jagson Airlines Limited & Anr."
reported as 212 (129) DRJ 630;
24.2 "Bharat Starch Industries Ltd. v. Prudent International Shipping And Trading Co. Ltd.", reported as 1995 (4) AD 343;
24.3 "Gotan Lime Stone Khanij Udyog Pvt. Ltd. v. State of Rajasthan & Ors" reported as 2015 Legal Eagle 787;
CS (COMM.)/165/2019 Page 31 of 4724.4 "Saurabh Exports v. Blaze Finlease" reported as 2006 129 (DLT) 429;
24.5 "Welspun Specialty Solutions Limited (Formerly known as Remi Metals Gujarat Ltd.) v. Oil & Natural Gas Corporation Ltd.", reported as 2022 AIR (SC) 1; and 24.6 "A. T. Brij Paul Singh v. State of Gujarat " reported as 1984 AIR (SC) 1703.
25. The suit amount i.e. Rs.83,47,263/- claimed by the plaintiff is founded on three different heads, which are as under:-
25.1 Rs.13,22,638/- towards outstanding balance against final bills dated 23.07.2016 in respect work done against all six work orders;
25.2 Rs.12,74,743/- towards escalation of costs against first two work orders; and 25.3 Rs.27,79,812/- towards loss of profits in respect of first two work orders;
26. The plaintiff has also claimed Rs.16,96,759/- towards interest calculated @ 12% per annum on the amounts due towards outstanding balance, escalation costs and loss of profits. In this manner, the plaintiff has claimed a sum of Rs.70,73,952/-. Further, the plaintiff has also claimed GST @ 18% on the said amount, which comes to Rs.12,73,311/- and thus, the plaintiff has claimed total sum of Rs.83,47,263/-.CS (COMM.)/165/2019 Page 32 of 47
27. It is the specific case of the plaintiff that the plaintiff was awarded contract for various plumbing and sanitary jobs/ works by defendant no.1, which is a subsidiary of defendant no.2 for their project 'The Group Housing Towers at Aquapolis, Ghaziabad' for the Towers D4, D8, D11 and B2B. Further, the defendants had been changing scope of work by amending the said work orders from time to time, as the ground work for performing sanitary and plumbing work of the project was not ready, which caused undue delay in execution of the work, as a result of which, the plaintiff has suffered losses.
28. As already noted above, the plaintiff has examined PW1 in order to prove its case. PW1 has proved various work orders and amended work orders as Ex.PW1/3 to Ex.PW1/4, Ex.PW1/9, Ex.PW1/15, Ex.PW1/16, Ex.PW1/19 to Ex.PW1/21, Ex.PW1/24, Ex.PW1/27 and Ex.PW1/30. Besides, PW1 has also proved final bills dated 23.07.2016 submitted by the plaintiff against said work orders as Ex.PW1/8, Ex.PW1/14, Ex.PW1/18, Ex.PW1/23, Ex.PW1/26 and Ex.PW1/29, copies of vouchers of different dates in respect of work orders from Ex.PW1/38 to Ex.PW1/72 and ledger account for the period from 01-4-2011 to 23.7.2016 as Ex.PW1/32.
29. As already noted above, the defence of the defendants stands struck off due to non-filing of written statement by them within the prescribed maximum period of 120 days from the date of service of summons of the suit. However, they were permitted to cross-examine PW1 on the limited grounds available under the law. PW-1 was CS (COMM.)/165/2019 Page 33 of 47 cross-examined on their behalf. In his cross-examination, PW1 stated that defendant no.2 neither placed any work order upon the plaintiff, nor the plaintiff supplied any goods to defendant no.2. After issuance of Ex PW1/7 [Printout of 17th RA Bill dated 12.3.2016], there has been balance outstanding payable to the plaintiff by the defendants. Ledger account Ex PW1/132 of defendant no. 1 in the books of plaintiff company finds mention of the work done, payments received, balance outstanding with all details; and therefore, he denied the suggestion that after issuance of Ex PW1/7 i.e. the 17th running bill, there is no clarity in the pleadings and the evidence of the plaintiff with respect to work done and outstanding payments. He admitted that bill amount outstanding does not match with the amount claimed in the suit. However, he clarified that the claim in the suit includes balance outstanding as per Ex PW1/132; escalation, losses suffered due to overstaying, labour losses, interest on balance payments and because of that, the outstanding balance in Ex PW1/132 cannot be the same when compared with the claim in the suit.
30. PW-1 in his further cross-examination has stated that details of losses suffered are mentioned in Para no.31 of Ex PW1/A and Para no. 14 of the plaint also finds mention of the details of the losses suffered by the plaintiff.He also stated that attendance records of work force at site were maintained by plaintiff and even clients maintain them.
31. Thus, from the cross-examination of PW-1 conducted on behalf of the defendants, nothing has been brought on CS (COMM.)/165/2019 Page 34 of 47 record, which could discredit his testimony and/or claim of the plaintiff. Accordingly, it is established on record that there is an outstanding balance amount of Rs.13,22,638/-
against the final bills.
32. As regards amount towards escalation, PW1 has also proved printouts showing summary of Escalation dated 23.7.2016 and their calculation sheets as Ex.PW1/31 and Ex.PW1/33. In this regard, PW-1 in his cross-examination, has stated that the component of escalation is not included in the bills and denied the suggestion that component of escalation is included in the bills. He stated that escalation component starts only after expiry of initial contract period. Details of escalation are mentioned in Para 29 of Ex PW1/A and further details are in Ex PW1/31. He stated that only part payment for claim of escalation was received from the defendants and denied the suggestion that entire payment for claim of escalation was received from defendants and the claim of escalation in the plaint is bogus. As already noted above, not only the witness of plaintiff has successfully withstood the test of cross examination during the trial, but also, there is no iota of evidence from the side of the defendants, their defence being already struck off.
33. Thus, it is established on record that the plaintiff is entitled to recover Rs.12,74,743/- towards escalation costs from the defendants.
34. The plaintiff has claimed Rs.27,79,812/- towards losses of profits. It is the specific case of the plaintiff that the CS (COMM.)/165/2019 Page 35 of 47 plaintiff suffered huge loss due to idling of the resources, men and machinery and burden of overheads and opportunity losses also. On repeated demands by the plaintiff for compensation of their losses, some part payments of Rs.2,73,000/- only towards Idle labour were initially paid in the Running Bills, although, initially the plaintiff was promised by the defendants that it would be properly compensated for the losses suffered by it, but later on, the defendants failed to fulfill their promises and refused to compensate the plaintiff for the delay caused and losses suffered by the plaintiff and due to which, the plaintiff had to demobilize from the site w.e.f. the year 2016. The plaintiff suffered losses as the plaintiff had to pay for the salaries of employees deployed exclusively for the work orders, loss of profits, and the rental etc. for extra period. The plaintiff was burdened with the salaries of 2 employees for extra period from May 2012 to June 2016. In all, the plaintiff is claiming a sum of Rs.14,60,990/- from the defendants with respect to the above work order towards losses only. The defendants had paid a sum of Rs.2,73,000/- as an interim part payment to plaintiff in their running bill towards the idling of labour. The same goes to show that there is an admission on the part of the defendants of their obligation to pay for the losses suffered by it. Hence, the plaintiff is entitled to claim balance claimed amount of Rs.11,87,000/-, from the defendants in respect of first order dated 14.11.2011.
35. In respect of 2nd Work order dated 10.6.2012, it is stated that the plaintiff was burdened with salaries of 2 CS (COMM.)/165/2019 Page 36 of 47 employees for extra period from June 2014 to March 2016. In all, the plaintiff is claiming a sum of Rs.6,86,850/- from the defendants with respect to the above work order towards losses only.
36. Further, the plaintiff has also claimed a sum of Rs.9,06,312/- towards the loss of profit since the expected profits is generally 15% which is expected profit of such nature of work order No.AUCPL/GHZ/WO/12/43 for which any person would undertake work. Therefore, in all, the total losses suffered by the plaintiff are claimed to be Rs.6,86,500/- plus Rs.9,06,312/ i.e. Rs.15,92,812/- towards this work order, which the plaintiff is entitled to claim from the defendants.
37. In this regard, PW1 has proved print out of Calculation Sheet showing the losses and interest calculation as Ex.PW1/35, Calculation Sheet showing salary of the two employees claimed for the period from May, 2012 to June, 2016 and tool rent for the said period as Ex.PW1/36, the statement showing total wages of Rs.4,83,000/- paid to Mr. Satish Upadhyay, Supervisor by cheque for the period from 01-11-2014 to 31-7-2016 as Ex.PW1/37, Calculation Sheet showing salary of the two employees claimed for the period from May, 2012 to June, 2016 and tool rent for the said period as Ex.PW1/74 and the statement showing total wages of Rs.3,25,000/- paid to Mr. Ramesh Pokhiryal, Supervisor by cheque for period from 13-12-2014 to 09-1-2016 as Ex.PW1/75 and copies of vouchers of different dates in respect of work orders as Ex.PW1/38 to Ex.PW1/72.
CS (COMM.)/165/2019 Page 37 of 4738. At this juncture, it would be apposite to reproduce the provision of S.73 of the Indian Contract Act in order to appreciate the submissions raised on behalf of plaintiff. Said provision is reproduced hereunder:-
"73. Compensation for loss or damage caused by breach of contract. - When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract. - When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.--In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account."
39. In "M. C. Luthra v. Ashok Kumar Khanna", reported as 2018 SCC OnLine Del 7462, our own Hon'ble High Court held as under:-
"xxxx
18. In sum and substance what is held by the Constitution Bench of the Supreme Court in the cases of Fateh Chand (supra) and the recent judgment in Kailash Nath Associates (supra) is that whenever there is a breach of contract then earnest money which is forfeited because of the breach, whether by a plaintiff or a defendant in a contract, the forfeiture is of that amount which are in fact liquidated damages specified under a contract and that for claiming damages under a contract, whether liquidated under Section 74 of the Contract Act or unliquidated under Section 73 of the Contract Act, existence of loss is a sine qua non. In other words, if no loss is caused to a seller who has in his pocket monies of buyer, then the seller can only forfeit a nominal amount unless the seller has pleaded and proved that losses CS (COMM.)/165/2019 Page 38 of 47 have been caused to him on account of the breach of contract by the buyer. Once there is no pleading of loss suffered by a seller under an agreement to sell, then large amounts cannot be forfeited though so entitled to a seller under a clause of an agreement to sell/contract entitling forfeiture of 'earnest money' because what is forfeited is towards loss caused, and that except a nominal amount being allowed to be forfeited as earnest money, any forfeiture of any amount, which is not a nominal amount, can only be towards loss if suffered by the seller. Thus if there is no loss which is suffered by a seller then there cannot be forfeiture of large amounts which is not a nominal amount, simply because a clause in a contract provides so.
40. Thus, the principles of law as laid down by Hon'ble High Court with respect to S. 73 and S. 74 of the Indian Contract Act can be summarized as under:-
40.1 Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both the parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both the cases, the liquidated amount or penalty is the upper limit, beyond which the Court cannot grant reasonable compensation.
40.2 Reasonable compensation will be fixed on well-
known principles that are applicable to the law of CS (COMM.)/165/2019 Page 39 of 47 contract, which are to be found inter alia in Section 73 of the Contract Act.
40.3 Since Section 74 provides for award of reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the said Section.
40.4 The Section applies whether a person is a plaintiff or a defendant in a suit.
40.5 The sum spoken of may already be paid or be payable in future.
40.6 The expression 'whether or not actual damage or loss is proved to have been caused thereby' means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.
40.7 Section 74 will apply to cases of forfeiture of earnest money under a contract.
Where, however, forfeiture takes place under the terms and conditions of a public auction before the agreement is reached, Section 74 would have no application.
41. In the case of A. T. Brij Paul Singh (supra), Hon'ble Apex Court has held as under:-
CS (COMM.)/165/2019 Page 40 of 47"xxx
8. Once it is held that the respondent was guilty of breach of works contract, part of which was already performed and for performing which the appellant, a Poona based contractor had transported machinery and equipment from Poona to the work site near Rajkot in Saurashtra, certainly he would be entitled to damages. One of the heads of damages under which claim is made is 'loss of expected profit in the work.' The claim under this head as canvassed before the High Court was in the amount of Rs.4,30,314/-
9. xxx
10. Mr. Aneja, learned counsel for the appellant urged that the appellant was placed at a comparative disadvantage on account of his two appeals arising from two identical contracts inter partes being heard on two different occasions by two different Benches even though one learned Judge was common, to both the Benches. Mr. Aneja pointed out that in the appeal from which the cognate Civil Appeal No. 1998/72 arises, the same High Court in terms held that the claim by way of damages fox loss of profit on the remaining work at 15% of the price of the work as awarded by the trial Court was not unreasonable. The High Court had observed in the cognate appeal that 'the basis adopted by the learned civil Judge in computing the loss of profit at 15% on the value of the remaining work contract cannot be said to be unreasonable'. In fact, the High Court had noticed that this computation was not seriously challenged by the State, yet in the judgment under appeal the High Court observed that actual loss of profit had to be proved and a mere percentage as deposed to by the partner of the appellant would not furnish adequate evidence to sustain the claim. In this connection the High Court referred to another judgment of the same High Court in First Appeal No. 89 of 1965 but did not refer to its own earlier judgment rendered by one of the Judges composing the Bench in First Appeal No. 384 of 1952 rendered on 3/6 July, 1970 between the same parties. When this was pointed out to Mr. Mehta, his only response was that the Court cannot look into the record of the cognate appeal. We find the response too technical and does not merit acceptance. We are not disposed to accept the contention of Mr. Mehta for two reasons: (1) that in an identical contract with regard to another portion of the same. Rajkot-Jamnagar road and for the same type of work, the High Court accepted that loss of profit at 15% of the price of the balance of works contract would provide a reasonable measure of damages if the State is guilty of breach of contract. The present appeal is concerned with CS (COMM.)/165/2019 Page 41 of 47 the same type of work for a nearby portion of the same road which would permit an inference that the work was entirely identical. And the second reason to reject the contention is that ordinarily a contractor while submitting his tender in response to an invitation to tender for a works contract reasonably expects to make profits. What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an unreasonable measure of damages for low of profit. We are therefore, of the opinion that the High Court was in error in wholly rejecting the claim under this head.
11. Now if it is well-established that the respondent was guilty of breach of contract inasmuch as the rescission of contract by the respondent is held to be unjustified, and the plaintiff-contractor had executed a part of the works contract, the contractor would be entitled to damages by way of loss of profit. Adopting the measure accepted by the High Court ha the facts and circumstances of the case between the same parties and for the same type of work at 15% of the value of remaining parts of the works contract, the damages for loss of profit can be measured. xxx"
42. In view of aforesaid facts and circumstances, the evidence available on record, the fact that there is no opposition whatsoever to the evidence of plaintiff from the side of the defendants and the legal position discussed by Hon'ble Apex Court and Hon'ble Delhi High Court in above referred decisions, this Court is of the considered opinion that it is established on record that the plaintiff is entitled to Rs.27,79,812/- towards losses suffered by it from the defendants.
CS (COMM.)/165/2019 Page 42 of 4743. As regards interest, it is argued on behalf of the plaintiff that since the defendants withheld the legitimate payments due and payable by them to the plaintiff, the plaintiff is also entitled to recover interest from them. Keeping in view the submissions and the fact that transactions between the parties are commercial in nature, this Court is in agreement with the submissions made on behalf of the plaintiff regarding its claim of interest @12% per annum as calculated by them on the aforesaid outstanding amounts due and payable by the defendants to the plaintiff. Accordingly, the plaintiff is entitled to recover Rs.16,96,759/- towards interest @ 12 % per annum.
44. Keeping in view the nature of transactions between the parties, the plaintiff is also entitled to recover Rs.12,73,311/- towards GST @ 18% on the aforesaid outstanding amounts.
45. In view of the foregoing reasons and discussions made hereinabove, the Court is of the view that the plaintiff is entitled to Rs.83,47,263/- from the defendants.
46. Since the defendants illegally and without any reasonable ground, withheld the aforesaid amounts due towards the plaintiff company and utilized the said amount for their benefit, the defendants are liable to pay pendent-lite and future interest @ 12% per annum on the said suit amount.
47. As regards the joint and several liability of both the defendants, Ld. Counsel of plaintiff contended that the application under Order 1 Rule 10(2) CPC moved by defendant no.2 has already been dismissed vide detailed CS (COMM.)/165/2019 Page 43 of 47 order dated 06-10-2021 passed by Ld. Predecessor of this Court and even the petition under Article 227 of the Constitution of India, 1950, being CM(M) 1081/2021 preferred before Hon'ble Delhi High Court, has already been dismissed on 29-11-2021. While relying upon S. 182 of the Contract Act, he further submitted that defendant no.1 was acting as an agent of defendant no.2. He pointed out that defendant no.2 is actual owner of the land and building of the 'housing project' and to sell the flats after their completion, whereas, the defendant no.1 was acting on behalf of defendant no.2 to raise construction of flats on its property. He further submitted that defendant no.2 being owner, could have awarded the contract and the defendant no.1, thus, had awarded the work orders in question to the plaintiff only as subsidiary of defendant no.2 and same would show that defendant no.1 was acting on the authority and instructions of defendant no.2 only. He also pointed out that the defendant no.2 owns 50.04% of defendant no.1, which would clearly demonstrate that the actual control of affairs of defendant no.1 rests with defendant no.2. In this regard, it would be apposite to refer to the decision of Hon'ble Delhi High Court in case of Utair Aviation (supra), wherein it is held as under:-
"xxxx
17. It is well established principle of law that a party who is not privy to the contract, cannot sue for enforcement of the said contract and the said principle has been laid down by the English courts from time to time which has been appreciated by the Indian Courts with the well recognized exceptions. There are number of exceptions which have been carved out by the courts to the principle of privy to the contract ever since the said principle was evolved CS (COMM.)/165/2019 Page 44 of 47 by the English Courts. This is due to the reason that the definition of consideration under Section 2(d) of the Indian Contract Act, 1872 is wide enough to encompass a situation wherein contract is entered into between the two parties and the consideration may or may not pass from them and can pass from the third party.
18.xxx
19. It is clear from the aforementioned observations of Division Bench of Calcutta High Court that the doctrine of privity of contract although is applicable even in India but, the same has been applied with well recognized exceptions and the court of equity like in India may not be strictly guided by the said dictum of Twaddle v. Atkinson (supra) in order to defeat the claims of the parties. This was the era to carve out the exceptions to the principle of privity of contract which is that a stranger to a contract cannot sue. From time to time, number of exceptions has been evolved against the rule of privity of contract and more than often quoted exceptions are that a person for whose benefit the contract is entered into, can certainly sue as he is beneficiary in the contract. Similarly, a person who is a trustee of the third party can also sue likewise, even if he is a stranger to a contract. These are not exhaustive exceptions and as seen above from the observations of Division Bench that in a given facts and circumstances.
20.xxx
21. There are other exceptions also which are equally recognized to the said principle of privity to the contract and reference is invited to the case of Jnan Chandra Mukherjee vs Manoranjan Mitra And Ors., decided on 27 June, 1941 reported as AIR 1942 Cal 251 wherein the Division Bench of Calcutta High Court after analyzing the authorities on the aspect of privity to the contract has observed:-
"3. So far as the first point is concerned, the law seems to be fairly well settled. A stranger to a contract which reserves a benefit for him cannot sue upon it either in English or in Indian law even though in India the consideration need not move from the promisee. There are two well-recognised exceptions to this doctrine. The first is where a contract between two parties is so framed as to make one of them a trustee for a third; in CS (COMM.)/165/2019 Page 45 of 47 such cases the latter may sue to enforce the trust in his favour and no ohjection can be taken to his being a stranger to the contract. The other exception covers those cases where the promisor, between whom and the stranger no privity exists, creates privity by his conduct and by acknowledgment or otherwise constitutes himself an agent of the third party." (Emphasis Supplied) xxxx"
48. In view of above mentioned reasons and the discussion made hereinbefore and taking guidance from the above referred decision of Hon'ble Delhi High Court, this Court is of the considered opinion that both the defendants are jointly and severally liable to pay the amount due towards the plaintiff.
RELIEF:
49. In the light of the aforesaid discussion, Court is of the view that the plaintiff has been able to prove its case on the basis of preponderance of probability. Thus, the suit is decreed in favour of the plaintiff and against the defendants and thus, the following reliefs are granted:-
49.1 The plaintiff is entitled to recover Rs.83,47,263/-
(Rupees Eighty Three Lacs Forty Seven Thousand Two Hundred and Sixty Three only );
49.2 Pendente-lite and future interest is awarded @ 12% per annum from the date of filing of the suit till the date of its realisation;
49.3 Cost of the suit is also awarded in favour of the plaintiff.
CS (COMM.)/165/2019 Page 46 of 4750. Decree sheet be prepared accordingly.
51. File be consigned to Record Room, after due compliance.
Digitally signedAnnounced in the open Court VIDYA by VIDYA PRAKASH on16th Day of January, 2025 PRAKASH Date: 2025.01.16 17:15:27 +0530 (VIDYA PRAKASH)
DISTRICT JUDGE (COMMERCIAL COURT)-02 PATIALA HOUSE COURTS, NEW DELHI CS (COMM.)/165/2019 Page 47 of 47