Delhi District Court
Himanshu Jain vs Municipal Corporation Of Delhi on 6 October, 2022
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT04, SHAHDARA,
KARKARDOOMA COURTS, DELHI
CS (Comm) No. 13/2022
In the matter of :
Himanshu Jain, Sole Proprietor of
M/s Premium Builders
Having its Registered Office at:
A32, Vivek Vihar,
Phase II, Shahdara, Delhi 110095 ............Plaintiff
Vs.
Municipal Corporation of Delhi
Through its Commissioners
419, Udyog Sadan
Patpaarganj Industrial Area, Delhi 91
.........Defendant
Date of institution of the case : 11.01.2022.
Date of final arguments : 26.09.2022
Date of judgment : 06.10.2022
JUDGMENT
1. This judgment shall dispose off application under order 12 Rule 6 CPC filed in the instant suit for recovery of Rs. 6,99,090/ filed on behalf of plaintiff against the defendant.
CS (Comm) No. 13/2022 1/72. As stated, plaintiff is the Proprietor of M/s Premium Builders and is indulged in the business of construction in Delhi/NCR, whereas defendant is a statutory body which is engaged in providing civic amenities to the public at large for the assigned area. The defendant time and again has been inviting tenders for its various projects at different locations. As further stated, plaintiff as successful bidder was awarded work of supply of building materials at EDMC Store in Shahdara, South Zone vide work order no. EE[MIISh (S)]267 dated 17.02.2017 with completion time of 3 months. Said work was completed in all respect by 17.06.2017, to the satisfaction of the defendant. After completion of the aforementioned work, plaintiff submitted his final bill for Rs. 4,70,545/ which was passed by the defendant on 10.08.2017. Thereafter plaintiff applied for No Labour Complaint Certificate i.e. "NLCC" vide his letter dated 15.01.2018 to ALO, District East, Delhi and intimation of the same was provided to the concerned Executive Engineer vide letter dated 17.01.2018. However, despite finalization and passing of the final bill by the defendant, it did not make payment to the plaintiff despite various reminders and requests of the plaintiff.
3. Legal notice dated 29.09.2021 sent to the defendant also did not yield any result. Plaintiff, therefore, was constrained to file an application on 18.10.2021 before DLSA, Shahdara, Delhi in terms of Section 12 A of the Commercial Courts Act, 2015, to explore the possibility of settlement between the parties amicably wherein defendant appeared and submitted that it did not want to participate in the process of PreMediation, hence the proceedings were closed by issuing 'NonStarter' Report dated 13.12.2021.
CS (Comm) No. 13/2022 2/74. As further stated, since the transaction between the parties is commercial in nature and defendant failed to make payment due to the plaintiff, defendant is liable to pay interest on the Principal amount after six months from the date of passing of the final bill and 12 months from the date of completion of work upon the Security Deposit till realization. Defendant, is therefore, now liable to pay total amount of Rs. 6,99,090/ to the plaintiff.
5. In written statement on behalf of defendant, award of work order in favour of plaintiff was admitted. The amount payable to the contractor including security however, as stated, was Rs. 4,56,429/. It was also submitted that the documents necessary for making of the payment had not been submitted by the plaintiff. It was also submitted that certain conditions were mentioned in the agreement between the parties with regard to the payment to be made to the contractor after completion of the work. Payment of the passed bill was further dependent upon availability of funds and was strictly to be made on queue basis in terms of clause 9 of the terms and conditions of the agreement.
6. Further, clause 45 of the terms and conditions stipulated that security deposit of the work shall not be refunded till the contractor produces clearance certificate from the labour officer. Clause 17 of the General Conditions of the contract was further referred that the security amount can be paid only after clearance of the final bill. As submitted, the department had introduced a policy for payment vide No. CA/F&G/215/D 145 dated 05.11.2015 and as per the said policy guidelines, the contractor payments were to be made as per first come first serve and on availability of funds. But even after the bills are passed and processed for CS (Comm) No. 13/2022 3/7 payments, many statutory requirements such as EPF, ESI, Labour cess etc. of the employees engaged by the contractor, which are the contractor's obligations, remain unattended for which notices had been received from the respective departments.
7. Application u/o 12 Rule 6 CPC, thereafter was filed on behalf of plaintiff with submission that defendant has admitted with regard to the amount payable to the contractor including security as Rs. 4,56,429/. It was submitted that since the defendant has admitted its liability to pay the claim of the plaintiff, plaintiff was entitled to the judgment/decree in terms of prayer clause on the basis of admissions made by the defendant in written statement.
8. In reply to application under order 12 Rule 6 CPC, it was submitted that payment of bill was to be made strictly on queue basis . Plaintiff after going through and understanding the terms and conditions of agreement as well as tender documents, now cannot agitate against the said terms and conditions. It was also submitted that plaintiff has not even applied for release for security, therefore the claim of plaintiff regarding security was also premature.
9. It is not disputed on record that even the admitted amount has also not been paid to the plaintiff even after passing of the final bill. The contention of defendant with regard to the plaintiff being aware of the rules, therefore cannot agitate with regard to non payment of the dues is unfounded and has rather been dealt with in judgments passed by the higher courts in similar matters . In North Delhi Municipal Corporation Vs. Vipin Gupta, RFA no. 160/2017 decided on 22.3.2018, NDMC Vs. Shishpal, RFA no. 171/2017 decided on 22.03.2018, NDMC Vs. CS (Comm) No. 13/2022 4/7 Gautam Anand, RFA no. 436/2017 and NDMC Vs. M/s R.K. Goel Abhay Kumar Jain, RFA (Comm) 11 of 2021 decided on 22.07.2021, it was interalia observed :
" There are too many contingencies and conditions that are stipulated in order to make payment, namely:
(i) funds should be available with the Corporation
(ii) funds should be available under specific head
(iii) the Contractor's turn to be paid should arise ; and
(iv) Interest would not be paid for the delayed period.
51. These four conditions are so vague and ambiguous into the future that at no point would a contractor, who had executed the work order, be able to demand payment " . (NDMC Vs. Shishpal) xxxxxxxxxxxx " In so far as payment under clause 9 of the General Conditions of Contract is concerned, the Corporation itself specifies the time for payment of the final bills as 6 months and 9 months. Thus, the contract itself considers and specifies the reasonable time. However, the same is sought to be diluted by specifying that this period shall be adhered to ' as far as possible' . The queue system and availability of funds are deemed by the Corporation to override the 6 months and 9 months period. There is no reason as to why the court should consider that the intention was to prescribe no upper limit for making of payment and leave the period for payment as an open ended one".
It was further observed that " in respect of final bills raised by contractors for works executed, that have been approved by Engineerin Charge, the clauses have to be read in the following manner:
CS (Comm) No. 13/2022 5/7a) Reasonable time for making of payments of final bills in respect of work orders up to Rs. 5 lacs shall be 6 months and work orders exceeding Rs. 5 lacs shall be 9 months from the date when the bill is passed by the EngineerInCharge.
b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded while applying the queue system.
c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non payment would attract payment of interest for the delayed periods. (NDMC Vs. Vipin Gupta)
10. In NDMC Vs. Shishpal, RFA no. 171/2017 decided on 22.03.2018, the corporation accordingly was directed to pay interest @ 8% per annum on the bill amount after the expiry of six months period of passing of bill. In case the amount of the passed bill was more than Rs. 5 lacs, then the interest shall be calculated after expiry of nine months.
Similar proposition would apply for delay in return of security amount.
11. In the instant matter, plaintiff has filed claim for sum of Rs. 6,99,090/ which includes principal amount of Rs. 4,70,545/, interest @12% p.a. w.e.f. 09.02.2018 till 30.11.2021 (six months from the date of passing of final bill i.e. 10.08.2017 amounting to Rs. 2,15,033/, earnest money deposit of Rs. 9550/ and interest on earnest money w.e.f. 17.06.2018 till 30.11.2021.
12. Defendant has acknowledged and admitted liability for sum of Rs. 4,56,429/ . Since the amount is less than Rs. 5 lacs, following the ratio of the judgments (Supra), defendant had time of six months i.e. by CS (Comm) No. 13/2022 6/7 10.02.2018 to pay this amount without any interest but no payment has been made till date. Thus, the plaintiff cannot be deprived of the interest for the period from 11.02.2018 onwards till this payment is cleared.
13. Accordingly, application under order 12 Rule 6 CPC is allowed. Plaintiff though had demanded Rs. 4,70,545/ towards principal amount besides amount of earnest money, however defendant has admitted the claim for sum of Rs. 4,56,429/. By way of separate statements recorded on 28.09.2022 and 06.10.2022, plaintiff restricted his claim to the admitted amount of final bill passed i.e. at Rs. 4,56,429/ and did not want to pursue the matter for the remaining disputed amount.
14. Suit is accordingly decreed with cost in favour of plaintiff and against the defendant for an amount of Rs 4,56,429/ (Rs. Four lacs fifty six thousand four hundred twenty nine only) alongwith interest @ 8% p.a. w.e.f. 11.02.2018 till realization.
15. Decree sheet be prepared accordingly.
16. File be consigned to record room.
Digitally signed SAVITA by SAVITA RAO
RAO Date: 2022.10.07
15:01:15 +0530
(SAVITA RAO)
DISTRICT JUDGE (COMMERCIAL COURT)04
SHAHDARA, KKD, DELHI/06.10.2022
CS (Comm) No. 13/2022 7/7