Delhi High Court
K.R. Builders Private Limited vs Delhi Development Authority And Anr. on 28 September, 2007
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
JUDGMENT Sanjay Kishan Kaul, J.
1. The present suit has been filed by the plaintiff, a private limited company, duly incorporated under the Companies Act, 1956 for recovery of a sum of Rs. 35,71,475.43/- against the defendants No. 1 and 2 being Delhi Development Authority, Vikas Sadan, INA, New Delhi and Executive Engineer, Northern Division No. 10, DDA, Ashok Vihar, Phase I, New Delhi respectively. The said suit has been instituted by one Shri K.R. Gupta, managing director of the plaintiff company vide board resolution (Ex. PW1/1).
2. Defendant No. 1 invited tenders for the work of construction of 144 SFS houses Category III including sanitary and water supply installation and internal development in Sector A-5, Pocket 13, at Narela, Delhi. The plaintiff submitted its tender vide its letter which was accepted by defendant No. 2 vide its letter dated 20-04-1993. There upon the plaintiff entered into an agreement with the defendant No. 1 vide agreement No. 01/EE/ND-10/DDA/93-94 dated 27-04-1993 (Ex. D1) (hereinafter referred to as the said agreement) to execute the said work of construction. As per the said agreement the work had to commence on 30-04-1993 and had to be completed by 29-10-1994. The plaintiff applied for extension of time to 29-10-1998 (Ex. D3) which was granted by defendant No. 1 without the levy of compensation as per Clause 2 of the said agreement.
3. It is stated that the plaintiff mobilized all material and labour to complete the aforesaid work within the stipulated period of 18 months, but there were delays on the part of defendant No. 1 due to which the work stood prolonged for a period of 66 months.
4. It is stated that the said work was competed by 29-10-1998 vide completion certificate (Ex. D5) subject to the rectification of defects and balance items of work and the final bill was paid by defendant No. 1 on 15-01-2000. However, the plaintiff claims that various due and payable amounts of the plaintiff were not paid by the defendants which have been detailed in para 11 of the amended plaint. The said claims have been summarized below:
SR No Claim of the Plaintiff Amount
a) Security Amount : By way of
Bank Guarantee of Rs. 1,35,000/- plus Rs. 65,000/-
Bank Guarantee of Rs. 1,00,000/- plus Rs. 3,00,000/-
b) Double Rate Recovery
against cement and bitumen Rs. 28,139.40/-
c) Amount withheld on account of
quality control Rs. 40,000/-
d) Wrongly recovered on account
of Tax Deduction Rs. 9,848/-
e) Welding of Ornamental Grill Rs. 1,38,245/-
f) Cement/concrete shuttering
for holdfast of doors Rs. 19,391.49/-
g) Reduction Item Statement (RIS) Rs. 80,759.45/-
h) Escalation (i.e. Clause 10cc) on (RIS) Rs. 43,504.10/-
i) Escalation on account of
less/under payment under Clause 10cc Rs. 16,01,007.53/-
j) Escalation on claims of
welding of Ornamental
Grills and cement used
under Clause 10cc Rs. 72,780.49/-
k) Amount due and payable
on account of extra work
of finishing edges of electric
board and switch junction Rs. 50,400/-
l) Watch and Ward Charges Rs. 2,90,400/-
m) Unproductive expenditure in
respect of handing over of flats Rs. 1,76,000/-
n) Damages on account of
idle machinery due to
prolongation of work Rs. 7,20,000/-
In addition to the above, Claim of Interest @ 18% per annum on the above said amounts.
5. It is further stated that defendant No. 1 has not been able to allot and hand over the possession of the said constructed flats to the allotees. Due to the aforesaid reason, the last part of finishing i.e. final coat of white wash, paint, fixing of fittings and glasses etc. which is required to be done at the time of physical possession of the said flats has not been undertaken by the plaintiff. It is also stated the ward and watch of the plaintiff is still continuing at the site despite the fact that the work completed on 29-10-1998 and maintenance period of six months lapsed on 28-04-1999.
6. It is averred by the plaintiff that besides the aforesaid, there are various due and payable amounts of the plaintiff which have been withheld by defendant No. 1 on account of wrongful deductions being made by the defendant No. 1 including the security deposit.
7. The plaintiff claims that it has also suffered on account of idle establishment, machinery, tools and plants etc. due to the prolongation of the contract period by 48 months (66 months minus 18 months).
8. The plaintiff further states that in all respects, the possession of said flats should have been taken over by the defendants upon the expiry of the maintenance period, but instead the plaintiff company is being made to hand over possession of the flats in piecemeal. It is stated that the plaintiff is incurring a sum of Rs. 4000/- on account of such unproductive and uncontemplated expenditure.
9. The plaintiff states that various requests and reminders were made to the defendants for the payment of the aforesaid amounts including letter dated 16-01-2002 (Ex. PW1/5) but the defendants failed to pay the said amounts. On 20-08- 2002, the plaintiff served a legal notice upon the defendants (Ex. PW1/6) calling upon the defendants to pay the aforesaid amount, failing which the defendants were made liable to pay aforesaid amount with an interest @ 18% per annum but to no effect.
10. Hence, the plaintiff filed the present suit for recovery on 13-01-2003 for the sum of Rs. 20,39,264/- which was later amended in the plaint to Rs. 35, 71,475.43 by an order dated 14-08-2003 passed by this Court along with pendente lite and future interest @ 18% per annum.
11. The defendant No. 1 in its written statement admits to the fact that an agreement was executed between the plaintiff and the defendant No. 1 for the purposes of construction of the aforesaid flats. Defendant No. 1 states that the delay in the completion of work was as a result of poor planning, negligence, in attention and inadequate resources on the part of the plaintiff. It is the plaintiff who did not comply with the time schedule even after the time was extended by Defendant No. 1.
12. The defendant further states that the plaintiff on various occasions did not adhere to the instructions given in the Site Order Book by the defendant No. 1 including 25-05-1993 and 18-06-1993 and a noting regarding the same dated 19-06-1993 was made in the Site Order Book. It is averred by defendant No. 1 that the plaintiff failed to get the electricity connection restored which further delayed the work.
13. It is the case of the defendants that the Completion Certificate issued to the plaintiff clearly stated that the same was subject to the execution of the balance items of works/deficiencies and rectification of defects which was acknowledged by the plaintiff.
14. As per Clause 17 of the said agreement the plaintiff was responsible for rectification of defects, which may have appeared within six months after the completion of the work. The defendants state that in the present case the work was never completed nor certified by the competent authority to be completed.
15. The defendant in his written statement states that the outstanding works and rectification of defects as undertaken by the plaintiff in the Completion Certificate was not been done by the plaintiff and therefore there were no amounts due and payable to the plaintiff by the defendant No. 1.
16. In respect of the circular No. 520 dated 30-03-1999, defendant No. 1 while referring to condition No. 3 of the same states that the watch and ward charges were payable only when all the liabilities/obligations of the main agreement were fulfillled and the same had to be certified by the Engineer in charge. Since the plaintiff never fulfillled its obligations under the said agreement, no such charges were due and payable to the plaintiff. In addition to this no supplementary agreement was executed between the said parties for such payment therefore the same was not due and payable.
17. Insofar as the security deposit of Rs. 3,00,000/- is concerned, defendant No. 1 states that the same can be released only on the completion of work and in the present case the plaintiff is yet to execute the outstanding works and rectify the defects. Defendant No. 1 has also averred that the plaintiff is not entitled to any amount on account of idle establishment, machinery, tools and plants etc. in relation to delays attributable to defendants. This is so owing to the fact that the plaintiff while applying for an extension of time had specifically stated in its application that it had not suffered any loss and would not claim any damage on account of the delays caused.
18. Defendant No. 1 has contented that the various claims made in para 11 of the plaint by the plaintiff are wrong and hence denied in view of the fact that the plaintiff had not fulfillled its obligations under the said agreement i.e. the outstanding works and rectification of defects as undertaken by the plaintiff in the Completion Certificate and, therefore, there were no amounts due and payable to the plaintiff by the defendant No. 1.
19. Further, defendant No. 1 also states that no notice dated 20-08-2002 under Section 53B of the Delhi Development Act, 1957 was received by defendant No. 1 as so alleged by the plaintiff and that the plaintiff failed to comply with the said provision under the Delhi Development Act.
20. On the basis of the pleadings of the parties, the following issues were framed on 02-08-2005 and 21-11-2005:
1. Whether notice under Section 53-B of the Delhi Development Act was duly served upon the defendant? OPP
2.Whether the suit is bad for mis-joinder of defendant No. 2? OPD
3. Whether the plaintiff has no cause of action? OPD
4. To what amount, if any, the plaintiff is entitled from the defendant? OPP
5. Whether the plaintiff is entitled to any interest, if so, at what rate and from which date? OPP
6. Relief
21. In support of its case, the plaintiff examined one witness, Shri K.R. Gupta (PW1), working as the Managing Director of the plaintiff. Defendant No. 1 has also examined one witness namely Shri S.K. Sharma, working as the Executive Engineer of Defendant No. 1.
22. In the affidavit of evidence, the PW1 affirmed the various averments made in the plaint and proved the documents Ex. P1/1 to Ex. P/38 tendered in evidence. In his cross-examination, PW1 deposed to the fact that it is the plaintiff who applied to the defendant No. 1 for extension of time which was granted by the defendant No. 1. He also stated that the statement made in the application for extension of time, acknowledging the fact that the plaintiff had not suffered any loss due to the delay and that it would not claim any liquidated damages on account of the same, was written and signed by one Shri G.K. Kalra, the executive director of the plaintiff.
23. PW1 also affirmed that the statement, "All points covered under recording of completion certificate from page 5 to 8 are fully gone through and noted pl for compliance for K.R. Bulider (P) Ltd. Director" was written and signed by Shri G.K. Kalra, the executive director of the plaintiff. The PW1 further admitted to the letters (Ex. D7 to Ex. D.13) having being sent to the plaintiff to complete the work in the said flats and stated that the work in the said flats was duly completed but it was the defendant No. 1 who did not take possession of those flats on the plea that it will be directly handed over to the respective allotees. He also stated that the money withheld on this account was not released to the plaintiff on the completion of those flats.
24. On being confronted with the manner of computation of compensation as per Clause 10(cc) in the agreement on page 76 (Ex. D1), the PW1 agreed with the same but stated that there was one page detailing labour to be 25% of the work done and the material to be 75% of the work done on which the plaintiff had demanded 10(cc) acceleration and that the said page was missing.
25. The witness on behalf of the defendant No. 1 in his cross examination deposed that it would be wrong to suggest that all causes of delays mentioned in Ex. D-3 were on the part of DDA only. He further stated that since the volume of work had increased that is why the delay could not be attributed either to the contractor or to the DDA and for the cause of delay on account of rainy season the contractor would have filed the tender anticipating the same. When asked about the legal notice and the postal receipt Ex. PW 1/6 and Ex. PW 1/7, the DW1 stated that the same was incomplete since the address on the postal receipt did not mention Vikas Sadan.
26. He stated that the defects and deficiency in the flats were removed by the plaintiff during the maintenance period of six months and it was only the finishing work which was not done during the maintenance period, required to be done only at the time of handing over the possession to the allottees.
27. The DW1 also deposed to the fact that DDA had not taken possession of site from the plaintiff on account of the continued work (finishing work) on the part of plaintiff.
28. On being asked about the applicability of the ward and watch circulars to the plaintiff, defendant No. 1 stated that the said circulars were not applicable to the agreement of the plaintiff and that no supplementary agreement was entered into between the plaintiff and defendant No. 1.
29. Insofar as the security amount was concerned, DW1 stated that the same had already been given to the plaintiff, Rs. 2, 35,000/- by way of the lapse of the bank guarantee and Rs. 65, 000/- otherwise.
30. The DW1 also deposed that out of the sum of Rs. 40, 000/- withheld by the defendant No. 1 towards quality control, Rs. 16,485 was released vide cheque No. 725294 dated 10-05-2006 and the remaining amount of Rs. 23, 515/- had been adjusted towards reduction item statement No. 4 against the plaint on 04-05- 2005.
31. On perusal of the pleadings, documents and the oral evidence, the findings on the issues are as under:
Issue No. 1 : Whether notice under Section 53-B of the Delhi Development Act was duly served upon the defendant? OPP
32. The plaintiff had served the said notice under Section 53-B of the Delhi Development Act through its advocate on 20-08-2002 (Ex. PW1/6) addressed to the secretary, Delhi Development Authority, Vikas Sadan, INA, Delhi. The postal receipt thereto is marked as Ex. PW1/7.
33. Defendant No. 1 in its written statement has stated that the plaintiff did not comply with the provision of Section 53B of the said Act and failed to leave the statutory notice at the office of Defendant No. 1, 60 days prior to filing of suit.
34. Section 53B of the said Act reads as follows:
[53B. Notice to be given of suits (1) No suit shall be instituted against the Authority, or any member thereof, or any of its officers or other employees, or any person acting under the directions of the Authority or any member or any officer or other employee of the Authority in respect of any act done or purporting to have been done in pursuance of this Act or any rule or regulation made there under until the expiration of two months after notice in writing has been, in the case of the Authority, left at its office, and in any other case, delivered to, or left at the office or place of abode of, the person to be sued and unless such notice states explicitly the cause of action, the nature of relief sought, the amount of compensation claimed and the name and place of residence of the intending plaintiff and unless the plaint contains a statement that such notice has been so left or delivered.
(2) No suit such as is described in Sub-section (1) shall, unless it is a suit for recovery of immovable property or for a declaration of title thereto, be instituted after the expiry of six months from the date on which the cause of action arises.
(3) Nothing contained in Sub-section (1) shall be deemed to apply to a suit in which the only relief claimed is an injunction of which the object would be defeated by the giving of the notice or the postponement of the institution of the suit.]
35. The learned Counsel for defendant No. 1 states that the language used in the statutory notice under the said Act specifically requires notice in writing "in case of Authority, left at its office" as being distinct and narrower in interpretation as to others i.e. "and in any other case, delivered to, or left at the office or place of abode of the person to be sued".
36. The distinction is provided in the clear language of the statute itself, where by contra indication and comparison the broader and more flexible requirements in case of other persons is given in contrast to the only requirement of 'left at the office' in case of DDA.
37. Defendant No. 1 also states that the plaint does not contain a statement that the plaintiff had left the notice dated 20.08.2002 at the office of the DDA. Also that as per the cross examination of PW1, the said notice was issued by post.
38. In my considered view, the plaintiff did serve a notice (Ex. PW1/6) before filing the suit. In this notice the plaintiff referred to the various claims it has made against the defendant. It also called upon the defendant to pay a specific amount and in case of failure to comply with the same, the notice also provided for a suit for recovery for the said purpose to be filed. This notice was sent by the plaintiff through his advocate and gave the name of the plaintiff. In the plaint the plaintiff stated that he had served a legal notice under Section 53B of the said Act calling upon the defendant to make payments for the aforementioned amounts due and payable to the plaintiff but that no reply had been received till the time of filing of the suit. The notice in question explicitly stated the cause of action and the nature of relief sought and the name and place of residence of the plaintiff.
39. In view of the aforesaid, the plaintiff has fully complied with the provisions of Sub-section (1) of Section 53-B of the Act except the fact that instead of leaving the said notice in the defendant's office personally, it was sent by post and was duly received by defendant No. 1. The words "in the case of the Authority, left at its office" should not be given a narrow interpretation and instead of adopting rather an extreme technical approach the purpose of service of notice should be looked at. Also, that the words "left at its office" does not necessarily imply that the said notice should be sent or given personally to the Authority, it means that the said notice should reach the office which may be either by post or be given personally. In the present case, the notice has reached defendant No. 1 by post.
40. Notice has to be seen as a whole and so also the plaint. In State of Madras v. C.P. Agencies and Anr. the Supreme Court following its earlier decision, in Dhian Singh Sobha Singh v. Union of India on the interpretation of Section 80 of the Code observed that though the terms of that section should be strictly complied with but that did not mean that the terms of the notice should be scrutinized in a pedantic manner or in a manner completely divorced from commonsense. The court further observed as under:
THE object of Section 80 is manifestly to give the Government or the public officer sufficient notice of the case which is proposed to be brought against it or him so that it or he may consider the position and decide for itself or himself whether the claim of the plaintiff should be accepted or resisted. In order to enable the Government or the public officer to arrive at a decision it is necessary that it or he should be informed of the nature of the suit proposed to be filed against it or him and the facts on which the claim is founded and the precise relief asked for.
41. The provisions of Sub-section (1) of Section 53-B are similar to Section 80 of the Code, I, therefore, do not find any fault in the notice and in my view it meets the requirements of Sub-section (1) of Section 53-B of the Act.
Issue No. 2 : Whether the suit is bad for mis-joinder of defendant No. 2? OPD
42. The plaintiff with reference to issue No. 1 has stated that defendant No. 2 is the Executive Engineer of defendant No. 1 and that it was defendant No. 2 who accepted the plaintiff's tender and awarded the above said work of construction to the plaintiff. Thus defendant No. 2 is liable to suffer a decree as prayed for in the present suit.
43. Defendant No 1 on the other hand states no cause of action arises against defendant No. 2 since there is no privity of contract. In addition defendant No. 1 states that the plaintiff itself in its replication so filed has stated that if this Court feels that defendant No. 2 is not a necessary party, plaintiff would have no objection to delete its name from the array of parties.
44. In my view, there was no separate contract executed between the plaintiff and defendant No. 2. The defendant No. 2 was acting on behalf of defendant No. 1 while accepting the plaintiff's tender and awarding the above said work of construction to the plaintiff. Hence, it has been rightly pointed out by the learned Counsel for defendant No. 1 that there was no privity of contract between the plaintiff and defendant No. 2 and hence no cause of action arises against the said defendant.
45. The plaintiff can seek relief only against defendant No. 1 and not against the defendant No. 2. The issue is answered accordingly.
Issue No. 3 : Whether the plaintiff has no cause of action? OPD
46.The plaintiff states that the cause of action arose in favor of the plaintiff and against the defendants when the aforesaid work of construction was awarded by the defendants to the plaintiff and the said agreement was executed between the parties. The cause of action arose when there were delays in executing the work. The cause of action further accrued when despite the maintenance period having lapsed on 28-04-1999, the defendants did not take possession of the flats. The cause of action arose when the final bill was paid by defendant No. 1 to the plaintiff on 15-01-2000, but still there were amounts of the plaintiff due and payable by defendant No. 1. The cause of action further accrued when the plaintiff sent repeated reminders to defendant No. 1 and finally served it with a legal notice under Section 53B of the Delhi Development Act dated 20-08-2002 (Ex. PW1/6) but to no effect.
47. The plaintiff states that the cause of action is still continuing in view of non-payment of the amounts by defendant No. 1.
48. In view there of, the plaintiff has sufficient cause of action to file the present suit for recovery.
49. The issue is answered accordingly in favor of the plaintiff and against defendant No. 1.
Issue No. 4: To what amount, if any, the plaintiff is entitled from the defendant? OPP
50. The plaintiff has filed various claims as set-out in para-4 of this judgment. Since the entitlement of the plaintiff would depend on consideration of each of the claims, it would be appropriate to examine each such claims separately. (a) Security Amount: By way of Bank Guarantee of Rs. 1,35,000/- plus Bank Guarantee of Rs. 1,00,000/- plus Rs. 65,000/-
51. Learned Counsel for the plaintiff conceded that since the bank guarantee has been released, thus, the claim did not survive. Learned Counsel for the defendants, in fact, pointed out that the bank guarantee of Rs. 1,35,000/- was returned to Punjab and Sind Bank vide letter dated 10.5.2005. The bank guarantee of Rs. 1.00 lac was returned thereafter and confirmation was received from the same bank on 9.4.2007. The amount of Rs. 65,000/- was returned vide a cheque on 11.6.2004 (b) Double Rate Recovery against cement and bitumen = Rs. 28,139.40/-
52. The plaintiff claims that the aforesaid recovery has been made at double the rate in respect of cement and bitumen while learned Counsel for the defendants seeks to justify such double rate recovery on the basis of Clause 42 of the agreement. In this behalf, a reference to Clause (ii) of Clause 42 would show that the concept of theoretical quantity including various variation of use of cement has been introduced and the difference in the quantity of cement actually used and such theoretical quantity is liable to be returned by the contractor to the defendants failing which recovery at twice the issue rate is liable to be charged.
53. Learned Counsel for the plaintiff, however, relied upon the judgment of the learned single Judge of this Court in Suit No. 136/1991; titled Shri A.K. Jain v. Union of India and Ors. decided on 23.3.1993, which dealt with such a clause. The said Clause has been dealt with in paras 13 and 14 of the judgment. The contention of the contractor was that Clause 42 was by way of penalty and in the absence of having proved any loss, such claim for double the amount could not have been recovered and, thus, the arbitrator had rightly allowed the claim of the contractor. Reliance was placed on the judgment in the case of Maula Bux v. Union of India and the relevant observations reproduced which are as under:
It is true that in every case of breach of contract the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree and the court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract. But the expression "whether or not actual damage or loss is proved to have been caused thereby" is intended to cover different classes of contracts which come before the Courts. In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation, the sum named by the parties if it be regarded as a genuine pre-estimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him.
54. Since the losses had not been computed, the total rate of recovery was held not admissible.
55. Learned Counsel for the plaintiff also referred to the judgment of another learned single Judge of this Court in Suit No. 1092-A/1994; titled R.S. Builders v. Union of India, decided on 24.2.1986. The same Clause 42(ii) came up for interpretation and reliance was once again placed on the observations of the Supreme Court in the case of Maula Bux v. Union of India (supra). The Union of India argued that it was entitled to recover the amount at double the rate without actual proof of damages as contemplated by Section 74 of the Contract Act, 1872 and, thus, the award of the arbitrator had an error of law apparent on its face. Such a plea was rejected. It was held that it was quite possible for the Union of India to prove by leading evidence that it had actually suffered damage over and above the price at which material was actually supplied, such as cost of any increase in the particulars of material supplied during the period from the date of supply to the date of recovery. No such evidence has been led. It was, thus, held that Clause 42(ii) cannot be held to permit such recovery without proving the loss and in this process reference was also made to two other judgments of learned single Judge of this Court.
56. Learned Counsel for the plaintiff has also drawn the attention of this Court to the cross-examination of DW1, Shri S.K. Sharma, at page 152 of the record where the witness has denied the knowledge of any theft or pilferage.
57. In view of the aforesaid two judgments, learned Counsel for the defendants could not seriously dispute the legal position that there could not be any automatic double rate recovery under Clause 42(ii) and that the defendants were liable to prove the loss. No such evidence in the present case has been led. On the other hand, DW1 in his cross-examination has admitted to the lack of knowledge of any theft or pilferage. It is, thus, clear that without examining the aspect of no loss, such recovery was made only on the basis of Clause 42(ii) on a presumption that such a double rate of recovery was automatic without the proof of any loss.
58. The plaintiff is, thus, held entitled to the recovery of the said amount of Rs. 28,139.40, wrongly recovered by the defendants on account of double rate recovery. (c) Amount withheld on account of quality control = Rs. 40,000/-
59. The plaintiff claims recovery of Rs. 40,000/- withheld on account of quality control observations from the running A/c bills. It is the case of the plaintiff that the entire work was completed and the rectification was made within the maintenance period. Learned Counsel for the plaintiff seeks to rely upon the cross-examination of DW1 to the effect that no third party employed to get the work completed and, thus, no cost had been incurred by the defendants.
60. DW1 in his cross-examination has confirmed after checking from the records that the amount of Rs. 40,000/- towards quality control had been released to the plaintiff. The record was also brought to Court. A sum of Rs. 16,485/- was released vide cheque No. 725294 dated 10.5.2005 and the remaining amount of Rs. 23,515/- has been adjusted towards reduction item statement No. 4. The relevant extract from the Measurement Book and the Hand receipts have been exhibited as Ex.DW1/P X and Ex. DW 1/P X 1. The witness further stated that adjustment of Rs. 23,515/- also finds mention in the statement of the plaintiff where the plaintiff has restricted its claim for interest.
61. In view of the aforesaid evidence adduced, I am of the considered view that the amount subsequently stands paid and, thus, the claim of the plaintiff does not survive in this behalf. (d) Wrongly recovered on account of Tax Deduction = Rs. 9,848/-
62. It is the case of the plaintiff that no tax ought to have been deducted and, thus, a wrong recovery was made. However, the defendants have stated that the amount was paid to the Tax authorities and even TDS certificates were issued to the plaintiff. Once such TDS certificate has been issued, the plaintiff would have taken the benefit of the same and, thus, this claim also does not survive in favor of the plaintiff. (e) Welding of Ornamental Grill = Rs. 1,38,245/-.
63. The plaintiff has claimed an amount of Rs. 1,38,245/- being the differential on account of ornamental grill being installed instead of plain grill. It is not in dispute that as per item 6.6 of the agreement, the plaintiff had to install plain grill. The plaintiff, however, claims that in the drawings supplied, there was an ornamental grill and, thus, the said ornamental grill was accordingly installed.
64. In my considered view, a perusal of item 6.6 would be relevant in this behalf. Item 6.6 states that M.S. grill of required pattern by welding the frame of steel windows fabricated with M.S. flat square or round bar, steel frame of windows and ventilators etc. by welding complete as per direction of Engineer-in-Charge plain grill was the task to be performed. No drawings have been produced by the plaintiff to substantiate this claim.
65. In my considered view, the plaintiff has failed to lead any evidence to show that the grill which has been installed was of some special pattern being an ornamental grill for which the plaintiff is entitled to recovery of extra amount. The claim of the plaintiff is, thus, to be rejected. (f) Cement/concrete shuttering for holdfast of doors = Rs. 19,391.49/-.
66. The plaintiff claims the aforesaid amount on account of extra work done which was not provided in the contract. The relevant item 6.8 is as under:
Providing and fixing pressed steel door frames manufactured from commercial mild steel sheet of 1.25 mm thickness including hinges Jamb, lock jamn, bead and of required angle threshold of mild steel angle of Section 50 x 25mm or base ties of 1.25mm pressed mild steel welded or rigidly fixed together by mechanical means adjustable lugs with split and tail each jamb including mils steel butt hinges 2.5mm thick with mortar guards, lock, strike plate and shock absorber as specified and applying a coat of approved steel primer Red Oxide zinc chromate after pretreatment of surface directed by Engineer-in-charge.
67. The defendants, on the other hand, contend that the provision for fixing of steel door is a complete item as per item 6.8 and there is no extra amount liable to be paid for fixing of holdfast of pressed steel chowkhats.
68. In order to deny the aforesaid plea, the plaintiff has relied upon item 6.1 of the agreement, which reads as under:
Providing and fixing T Iron frames for doors, windows and ventilators of M.S. Steel tee sections, joints mitred and welded with 15 x 3 mm lugs 10 cm long embeded in cement concrete blocks 15 x 10 x 10 of 1 : 3 : 6 (1 Cement : 3 Coarse sand : 6 graded stone agg. and 20 mm nominal size) or with a wooden plug and screws or rawl plugs and screws or with fixed clips or with bolts and nuts as required i/c fixing of necessary butt hinges and screws and applying a priming coat of approved steel primer-red oxide zinc chromate.
69. It was, thus, contended that the provision of cement concrete blocks was specifically mentioned as item 6.1.
70. A perusal of the aforesaid two items show that item 6.1 and item 6.8 both fall under the heading "steel work" of Clause 6.00. Item 6.8 provides for fixing of the pressed steel door frames manufactured from commercial mild steel sheet while item 6.1 provides for fixing of T Iron frames for doors with a wooden plug and screws etc. This distinction has been made as to what has to be provided in items 6.8 and 6.1. The persons drawing the contract being technical people would have knowledge as to what bifurcation of the nature of work has to be made. Once a provision is made for two separate works, it cannot be said that item 6.1 should be held redundant and the work performed referable to the said item should be deemed to have been included in item 6.8.
71. In view of the aforesaid, the plaintiff is entitled to this amount. (g) Reduction Item Statement (RIS) = Rs. 80,759.45.
72. The plaintiff is aggrieved of what is alleged to be arbitrary and wrongful recovery from the running A/c bills while the stand of the defendants is that such deduction was made by the Superintending Engineer whose decision was final and binding as per the agreement.
73. In this behalf, a reference may be made to Clause 25B of the agreement, which reads as under:
25B. The decision of Superintending Engineer regarding the quantum of reduction as well as justification there of in respect of rates for sub standard work which may be decided to be accepted will be final and would not be open to arbitration.
74. A reading of the aforesaid Clause shows that the decision of the Superintending Engineer, as per the agreement between the parties, has been made final and binding, thus, when a recovery was made, it cannot be faulted. Further, no objections were filed to such a recovery by the plaintiff within the time stipulated as per Clause 8A of the agreement, which reads as under:
8A. Before taking any measurement of any work as has been referred to in Clause 6, 7 and 8 thereof the Engineer-In-Charge or a subordinate deputed by him shall give reasonable notice to the contractor. If the contractor fails to attend at the measurements after such notice or fails to countersign or to record the difference within a week from the date of measurement in the manner required by the Engineer-in-Charge then in any such event the measurements taken by the Engineer-in-Charge or by the subordinate deputed by him as the case may be shall be final and binding on the contractor and the contractor shall have no right to dispute the same.
75. The aforesaid Clause gives one week's time to the plaintiff to do the needful.
76. In view of the aforesaid, the claim of the plaintiff would be liable to be rejected.
77. The subsequent development, however, is that the plaintiff was asked to carry out the rectifications in respect of various works. It is not in dispute that the plaintiff carried out the rectifications within the maintenance period of six months. In the cross-examination, DW1 has stated, "it is stated that defects and deficiencies in the flats were removed by the plaintiff during the maintenance period. However, the incomplete work in the flats was not done by the plaintiff during the maintenance period and was thereafter to be done. By incomplete work, I mean the last work pertaining to finishing, polishing, painting, fixing of fittings and fixtures whatsoever is referred to in the agreement before handing over possession to the allottee."
78. There is nothing on record to show any subsisting complaints and it is not the case of the defendants that no rectification was carried out by the plaintiff to award the work to a third party and, thus, spending money on it. Result of this is that even if this assumption is taken that there was some sub-standard work, as determined by the Executing Engineer, whose decision was final, the subsequent rectification carried out by the plaintiff would result in the work being completed in all manners and at least thereafter the plaintiff should be held entitled to the amount.
79. The plaintiff is, thus, entitled to a sum of Rs. 80,759.45. (h) Escalation (i.e. Clause 10 (cc) on (RIS) = Rs. 43,504.10.
80. This claim for escalation under Clause 10 (cc) arises on the amount payable in respect of Reduction Items Statement (RIS), which is claim (g). The plaintiff claims that the escalation must be paid as the deduction on account of sub-standard work was erroneous. On the other hand, the stand of the defendants is that once claim (g) itself is not payable, there would be no question of escalation.
81. Claim (g) has been analysed above and it has been found that there is substance in the case of the defendants to the extent that the amount was rightly deducted on account of sub-standard work as the decision of the Superintending Engineer was final in this behalf and the same was not challenged within the time stipulated under Clause 8A of the agreement. However, since subsequent rectifications have been carried out and the evidence has come on record that within the maintenance period all the needful was done, the amount has been held liable to be paid.
82. Insofar as the question of escalation of the said amount is concerned, in my considered view the same would not be payable for the reason that it has been held that the amount was rightly deducted on account of sub-standard work. Subsequent rectification of sub-standard work would not entitle the plaintiff to escalation on the same. The claim, thus, has to be rejected. (i) Escalation on account of less/under payment under Clause 10(cc) = Rs. 16,01,007.53
83. The parties are ad idem that escalation is payable to the plaintiff as per Clause 10(cc) of the agreement. In order to appreciate the submissions of the learned Counsel for the parties, it would be necessary to reproduce the said clause:
Clause 10 (cc) - If the prices of materials (not being materials supplied or services rendered at fixed prices by the department in accordance with Clauses 10 and 34 hereof) and/or wages of labour required for execution of the work increase, the contractor shall be compensated for such increase as per provisions detailed below and the amount of the contract shall accordingly be varied, subject at the condition that such compensation for escalation in prices shall be available only for the work done during the stipulated period of the contract including such period for which the contract is validly extended under the provisions of Clause 5 of the contract without any action under Clause 2 and also subject to the condition that no such compensation shall be payable for a work for which the stipulated period of completion is 6 months or less. Such compensation for escalation in the prices of materials and labour, when due, shall be worked out based on the following provisions:
1) The base date for working our such escalation shall be the last date on which tenders were stipulated to be received.
2) The cost of work on which escalation will be payable shall be reckoned as 85% of the cost of work as per the bills, running or final and from this amount the value of materials supplied under Clause 10 of this contract or services rendered at fixed charges as per Clause 34 of this contract, and proposed to be escalation is worked out. In the case of materials brought to site for which any secured advance is included in the bill, the full value of such materials as assessed by the Engineer-in-charge (and not the reduced amount for which secured advance has been paid) shall be included in the cost of work done for operation of this clause. Similarly when such materials are incorporated in the work and secured advance is deducted from the bill the full assessed value of the materials originally considered for operation of this Clause should be deducted from the cost of the work shown in the bill, running or final. Further, the cost of work shall not include any work for which payment is made under Clause 12 or 12(a) at prevailing market rates.
3) The components of materials, labour, P.O.L. etc. shall be predetermined for every work and incorporated in the conditions of contract attached to the tender papers and the decision of the Engineer-in-charge in working out such percentage shall be binding on the contractor.
FLY LEAF No. 10:
The component of materials, labour and P.O.L. as indicated in para-3 of the Sub-clause 10(CC) have been predetermined as below:
a) Material Seventy five Percent 75
b) Labour Twenty Five Percent 25
c) P.O.L. NIL Percent X
--------------------------------------
TOTAL HUNDRED - 100
4) The compensation for escalation for materials and P.O.L. Shall be marked out as per the formula given below.
i) VM = W x X x (MI-MI) 100 MI VM = Variation in material cost i.e. Increase or decrease in the amount in rupees to be paid or recovered.
W = Cost of work done worked out as indicated in sub para 2 above.
X = Component of materials expressed as per cent of the total value of work.
MI and MI = All India whole sale index for all commodities for the period under reckoning as published by the Economic Adviser to Government of India, Ministry of Industry and Commerce, for the period under consideration and that valid at the time of receipt of tenders, respectively.
ii) VF = W x Z x (FI-FI) 100 FI VF = Variation in cost of fuel, oil and lubricant, increase or decrease in rupees to be paid or recovered.
W = Value of work done, worked out as indicated in sub para 2 above.
Z = Component of P.O.L. expressed as a per cent of total value of work as indicated under the special conditions of contract.
FI and FI = Average index number of wholesale prices for group (fuel, power, light and lubricants) as published weekly by the Economic Adviser to Government of India, Ministry of Industry for the period under reckoning, and that valid at the time of receipt of tenders, respectively.
The following principles shall be followed while working out the indices mentioned in para above.
a) The compensation for escalation shall be worked out at quarterly intervals and shall be with respect to the cost of work done during the three calendar months of the said quarter. The first such payment shall be made at the end of three months after the month (excluding) in which the tender was accepted and thereafter at three months' interval. At the time of completion of the work, the last period for payment might become less than three months, depending on the actual date for completion.
b) The index (MI/FI etc.) relevant to any quarter for which such compensation is paid shall be the arithmetical average of the indices relevant to the three calender months. If the period up to the date of completion after the quarter covered by the last such Installment of payment is less than three months, the index MI and FI shall be average of the indices for the months falling within that period.
c) The base index, MI, FI etc. shall be the one relating to the month in which the tender was stipulated to be received.
6) The compensation for escalation for labour shall be worked out as per the formula given below
i) VL = W x 1 x (LI-LI) 100 LI VL = Variation in labour cost i.e. amount of increase or decrease in Rupees to be paid or recovered.
W = Value of work done, worked out as indicated in Sub = para 2 above.
Y = Component of labour expressed as a percentage of the total value of the work.
LI = Minimum daily wage in Rupees of an unskilled adult make mazdoor, as fixed under any law, statutory rule or order as on the last date on which tenders for the work were to be received.
LI = Minimum wage in rupees of an unskilled adult male mazdoor, as fixed under any law, statutory rule or order as applicable on the last day of the quarter previous to the one during which the escalation is being paid.
7) The following principles will be followed while working out the compensation sub para 6 above.
a) The minimum wage of an unskilled male mazdoor mentioned in sub para 6 above shall be the higher of the following two figures: namely, those notified by Government of India, Ministry of Labour and those notified by the local administration, both relevant to the place on work and the period of reckoning.
b) The escalation for labour also shall be paid at the same quarterly intervals when escalation due to increase in cost of materials and/or POL is paid under this clause. If such revision of minimum wages takes place during any such quarterly intervals, the escalation compensation shall be payable for work done in all quarters subsequent to the quarter in which the revision of minimum wages takes place.
c) Irrespective of variations in minimum wages of any category of labour, for the purpose of this clause, the variation in the rates for an unskilled adult male mazdoor alone shall form the basis for working out the escalation compensation payable on the labour component.
8) In the event the price of materials and/or wages of labour required for execution of the work decrease/s, there shall be downward adjustment of the cost of work so that such price of materials and/or wages of labour shall be deductible from the cost of work under this contract and in this regard the formula herein stated under this Clause 10(cc) shall mutates mutants apply, provided that.
i) no such adjustment for the decrease in the price of materials and/or wages of labour aforementioned would be made in case of contracts in which the stipulated period of completion of the work in six months or less.
ii) the Engineer-in-Charge shall otherwise be entitled to lay down the principles on which the provision of this sub-clause shall be implemented from time to and the decision of the Engineer in charge in this behalf shall be final and binding.
Provided always that the provision of the proceeding Clause 10(c) shall not be applicable for contracts where provisions of this Clause are applicable but in cases where provisions of this Clause are not applicable, the provisions of Clause 10(c) will become applicable.
84. The aforesaid Clause deals with the escalation both for material and labour. The component of material and labour is pre-determined as 75% for material and 25% for labour. The escalation is payable only for the period of the contract and for the period validly extended under the contract. The cost of the work on which escalation is to be payable is to be reckoned as 85% as the cost of the work as per the bills. Thus, if Clause 10(cc) applies and the cost of works as per bills is 100, the cost of escalation would be 85. It is further provided that from such amount calculated would be deducted the value of the material supplied under Clause 10 of the contract or service rendered at fixed charge as per Clause 34 of the contract. A formula has thereafter been given for calculation of the escalation defining each element of the formula.
85. It is the case of the plaintiff that the formula should be worked in a manner where the gross work is to be multiplied by 85% to work out the escalation. To the same should be added the secured amount and thereafter 75% of the same should be taken as the pre-determined share of escalation of material. From this amount should be deducted the cost of the material supplied.
86. On the other hand, it is the contention of the learned Counsel for the defendants that the formula has to be worked as it is and if what the plaintiff claims is accepted, it would amount to altering the formula. It is stated that the methodology for working out the formula is that the gross work should be multiplied by 85% and thereafter secured amount added. From the total of this, material supplied should be deducted first and it is only thereafter 75% should be taken as the pre-determined escalation of material. Naturally the labour escalation would be 25%.
87. In the nutshell, the difference is that whereas the plaintiff seeks to substract the cost of material supplied after working out the pre-determined amount of 75% towards escalation of material, the defendants, on the other hand, seek to deduct the material supplied first before calculating 75% of the pre-determined escalation of the material cost. The two modes of calculations give rise to different results and that is the reason why the total is varying on the basis of the two different methodologies of calculations.
88. The bedrock of the submission of the learned Counsel for the plaintiff is that since the component of the cost of material supplied is related to the escalation in respect of material, it is only from that component of the escalation of material that the material supplied should be deducted as in the alternative it would imply that the deduction of material supplied would have an impact even on the 25% pre-determined escalation of labour and would even reduce the same.
89. The two modes of calculations are explained hereinafter as an illustration to explain the rival contentions:
Defendants' calculation As per DDA, the rate of material and labour are as under:
Assume the work done as = 100
85% of work done = 100 x 85/100 = 85
Deduct cost of material (say) = 30
[(85 - 30 = 55) is the work done for 10 c.c.)
Escalation for material = 55 x 75/100 = 41.25
Escalation for labour = 55 x 25/100 = 13.75
----------------------
TOTAL 55.00
----------------------
Plaintiff's calculation
Assume the work done as = 100
85% of work done = 100 x 85/100 = 85
work done for escalation of
material = 85 x 75/100 = 63.75
Less cost of material = 30.00
33.75
Work done for escalation
of labour = 85 x 25/100 = 21.25
------------------------------------------
TOTAL 55.00
------------------------------------------
Note: Pre determined ratio for material and labour is 75% and 25% respectively as per agreement.
90. In the mode of calculation of the plaintiff, the escalation for labour works out more and since the revision of wages has been more, the net impact is more beneficial to the plaintiff.
91. Learned Counsel for the plaintiff contended that a contract must be worked out in its true letter and spirit. The work consisted of two components vis-a-vis material and labour. The percentage of these components were pre-determined by the defendants at 75% for material and 25% for labour. The 75% component fixed for material includes the cost of material issued by the defendants at fixed rates. No escalation is payable on this material and, therefore, the deduction of material supplied can be made only after bifurcating the component of material and labour from the total work done for escalation.
92. Learned Counsel for the plaintiff further submitted that the mode and manner of calculation suggested by the plaintiff is what was adopted by the arbitrator and approved by the Court in P.C. Sharma and Co. v. Delhi Development Authority . In para 12 of the judgment, the reasoning of the arbitrator, in what is really the case of the plaintiff herein, has been given in the following manner:
The claimant in support of their claim has submitted detailed calculations vide Annexure I, statements 1 to 18. A perusal of these calculations shows that the claimants have applied the pre-determined percentage of labour and material before subtracting the cost of material issued by the department from 85% of the value of work done. The respondents during oral hearings argued that as per provisions of Clause 10CC of the agreement, the cost of materials issued by the department at fixed rate has to be deducted from 85% value of the work done before applying the pre-determined percentages of material and labour in the work and that they had done their calculations accordingly.
The work consists of two components viz. material and labour. The percentages of these components as pre-determined by respondents are 75% for material and 25% for labour. The 75% component fixed for materials includes the cost of materials issued by respondents at fixed rates. No escalation is payable on this material. However, in handing and incorporating these materials in work, labour is engaged and utilised and escalation on this labour cost is to be paid. The calculations for escalation payments as ad oped by respondents result in denying this admissible escalation on labour. At the same time, escalation on materials gets accounted for on the higher side. This discrepancy is eliminated in the calculations submitted by claimants.
If the value of work done is considered as 'X' and the cost of material issued by respondents recoverable at fixed cost is taken as 'Y', the value of work done on which escalation is payable as per respondents calculations, works out to
(i) For materials Part = 0/6375 X - 0.75y
(ii) For labour part = 0.2125 X ? 0.25y Clause 10CC lays stress that full cost of materials issued by department should be deducted from 85% value of work done. While as per (i) and (ii) above, through full cost of materials is getting deducted yet 75% is being deducted from materials part and 25% from the labour part. This discrepancy is eliminated in claimants calculations where the escalation on material and labour part works out as below for same connotation of and y:
(iii) On material part = 0.6375 X-Y
(iv) On labour part = 0.2125X In above (iii) above full value of material issued by the respondents at fixed cost (y) is getting deducted from the material element of work and no deduction for material issued is occurring in labour element.
It thus clear that in the spirit of Clause 10(cc), the calculations as submitted by claimants are more rational and to the point compared to respondents calculations. I consider the claim as just and fully established and award to claimants a sum of Rs. 2,28,082 for this claim as per details furnished by claimants in Annexure I to the statement of facts of the claimants.
93. The challenge to the aforesaid, as made by the DDA, has been rejected in the following terms:
14. The Arbitrator, it could be seen, had only taken for calculation the formula in the Clause 10cc and he has only amplified the contents of the formula and has arrived at the figure. I do not find any substance in the argument of the learned Counsel for the DDA that the Arbitrator has gone beyond the formula in Clause 10(cc). Therefore, I confirm the award on this claim.
94. Learned Counsel for the plaintiff has also referred to an award passed by Justice (Retd.) P.K. Bahri dated 13.12.1997 in P.C. Sharma and Co. v. DDA where a similar view has been taken.
95. Learned Counsel for the defendants, on the other hand, contended that once the escalation Clause incorporates a particular formula, the formula must be adhered to in strict sense since that is the agreed method for grant of escalation. Learned Counsel, thus, relied upon the observations made in Salwan Construction Co. v. Union of India where it has been held that an escalator is an index and can be a convenient measure of damages. Such given escalator can be adopted by the court as a true measure of damages if it is available at hand.
96. Learned Counsel for the defendants emphasised by reference to the judgment of the Apex Court in Delhi Development Authority v. Durga Chand Kaushish that in construing the document one must have regard, not to the presumed intention of the parties, but to the meaning of the words they have used. It would be useful to extract the relevant paragraphs, being Nos. 19 and 20, which are as under:
19. Both sides have relied upon certain passages in Odgers' 'Construction of Deeds and Statutes' (5th ed. 1967). There (at pages 28-29), the First General Rule of Interpretation formulated is: ?The meaning of the document or of a particular part of it is therefore to be sought for in the document itself.? That is, undoubtedly, the primary rule of construction to which Sections 90 to 94 of the Indian Evidence Act give statutory recognition and effect, with certain exceptions contained in Sections 95 to 98 of the Act. Of course, 'the document' means 'the document' read as a whole and not piecemeal.
20. The rule stated above follows logically from the Literal Rule of Construction which, unless its application produces absurd results, must be resorted to first. This is clear from the following passages cited in Odgers' short book under the First Rule of Interpretation set out above:
Lord Wensleydale, in Monypenny v. Monypenny (1861) 9 HLC 114 at p.146 said:
the question is not what the parties to a deed may have intended to do by entering into that deed, but what Is the meaning of the words used in that deed: a most important distinction in all cases of construction and the disregard of which often leads to erroneous conclusions.
Brett. LJ in Re Meredith ex. P. Chick (1879) 11 Ch. D. 731 at p.739 observed:
I am disposed to follow the rule of construction which was laid down by Lord Denman and Baron Parke. They said that in construing instruments you must have regard, not to the presumed intention of the parties, but to the meaning of the words which they have used.
97. Learned Counsel for the defendants further contended that interestingly the plaint, as originally filed, did not contain what the plaintiff now claims. This claim is based on an amendment. The plaintiff amended only claim (i) and did not amend claims (h) and (j). Learned Counsel, thus, contended that merely because the component of the present claim would become high by reason of the mode and manner of calculation of the plaintiff, it would not give a right to the plaintiff to adopt the said methodology. Not only that, it was contended that the claim is also contrary to the legal notice sent by the plaintiff.
98. On the basis of the submissions of the learned Counsel for the parties, the plea put-forth by the plaintiff at first blush appears to have merit. This is so since the principle which underlines it is that the impact of any grant of escalation on the material supplied by the defendants should be deducted only from the escalation in respect of the material. This is so since the amount is being deducted on account of the fact that the escalation and material cost would not be to the debit of the plaintiff as it is the defendants who had supplied the material.
99. However, on giving a deeper thought to the matter, the aforesaid plea of the plaintiff cannot be accepted. It cannot be lost sight of the fact that Clause 10(cc) para 2 stipulates that the cost of the work on which escalation will be payable shall be reckoned as 85% of the cost of work as per the bills, running or final bill 'the value of material supplied under Clause 10 of this contract or service rendered at fixed charges as per Clause 34 of this contract' proposed to be recovered from the particular bill would be deducted before the amount of compensation for escalation is worked out. The basic concept, thus, is that where the material is supplied by the defendants or service rendered at fixed charges of labour, the plaintiff should naturally get the escalation. No doubt it was open to the defendants to have provided in the Clause that this amount should be separately deducted in the formulas. This is, however, not known how the formula has been worded. In the present case there is no fixed charged labour provided but that would not make a difference to the working of the formula. Para 4 of Clause 10(cc) states that the compensation of escalation 'shall be worked out as per formula given below.' The 'W' in the formula states that it is the cost of the work done worked out as indicated, in sub-para (ii) above. Thus, 'W' has to be worked out only as per sub-para (ii). On the other hand, if the contention of the plaintiff was to be accepted, then this 'W' would not be worked out in the manner as given in the formula. The 'W' is the same in the formula for escalation of material in para-4 and for the escalation of labour in para 6. In the methodology of the plaintiff, the 'W' would be different for the escalation in material cost as compared to the 'W' in the escalation for labour cost. So, this would be contrary to the stipulation in the contract where even in respect of the escalation of labour, 'W' is stated to be the value of work done worked out as indicated in sub-para (ii).
100. The parties in their wisdom have specified a formula where the methodology of working out of 'W' is same both for escalation of material as well as for escalation of labour. The 'W' has to be worked out strictly as per para 2 of Clause 10(cc). If this is done, the defendants have correctly worked out the amount payable to the plaintiff as escalation under Clause 10 (cc).
101. In support of this plea, one can but not refer to the words of Lord Wensleydale, in Monypenny v. Monypenny (supra) that the question is not of the parties intended to do by entering into the contract but what is the meaning of the words used in the contract. Any disregard to this principle would lead to erroneous conclusions. A liberal construction has to be applied in considering such instruments. We must have regard not to presume intent of the parties, but to the meaning of the words that have been used, as held by the Apex Court in Delhi Development Authority v. Durga Chand Kaushish (supra). In a different context where the question was whether the escalation should be given only as per Clause 10(cc) or some other methodology, it has been held in Bedi Construction Co. v. DDA and Anr. CS(OS) 2822/1994, decided on 10.11.2005 that once the formula of Clause 10(cc) forms part of the agreement and it is agreed upon, no other methodology will be adopted for the said purpose. These observations have been relied upon by this Court in Pt. Munshi Ram and Associates (P) Ltd. v. DDA . The judgment in P.C. Sharma and Co. (supra) was only considering an award passed by an arbitrator. The learned single Judge did not deem it appropriate to take another view in view of the interpretation put-forth by the learned arbitrator. There is no discussion in the judgment in respect of the interpretation of the Clause and, thus, the said judgment can hardly be said to be of any binding nature.
102. In view of the aforesaid, there is no option but to reject the claim of the plaintiff in this behalf. (j) Escalation on claims of welding of Ornamental Grills and cement used under Clause 10(cc) = Rs. 72,780.49.
103. This claim for escalation under Clause 10(cc) is on claims (e) and (f) towards welding of ornamental grill and cement/concrete shuttering for holdfast of doors. Since claim (e) has been rejected, no escalation on the same is payable. However, claim (f) is held to be payable and, thus, the escalation on the same would also be payable. The escalation has been made in terms of Clause 10(cc) as per the methodology of the defendants. The escalation on claim (f) component is approximately Rs. 8,896/- which the plaintiff is entitled to recover. (k) Amount due and payable on account of extra work of finishing edges of electric board and switch junction = Rs. 50,400/-
104. The claim of the plaintiff is based on extra work in respect of completion of electricals which has been denied in the written statement. A specific question in this behalf was posed to the DW1 who has categorically stated that no such amount is payable to the plaintiff since the plaintiff has not carried out any such work. The plaintiff has not led any positive evidence to substantiate this work done and, thus, the claim is liable to be rejected. (l) Watch and Ward Charges = Rs. 2,90,400/-.
105. The plaintiff claims the amount on account of watch and ward charges as the plaintiff has continued to maintain the flats even after the maintenance period was over. The plaintiff claims that even if no separate supplementary agreement for ward and watch has been executed and the same is not included in the maintenance agreement between the parties, such ward and watch charges are liable to be paid in pursuance to circular Nos.510 dated 2.5.1997 and 520 dated 30.3.1999 (Ex. P1 and P2).
106. In the cross-examination of DW1, these circulars were put to the witness, who admitted to the existence of the circulars, but stated that the same were not applicable to the agreement of the plaintiff. The submission of the learned Counsel for the defendants in this behalf was that the circulars providing for ward and watch would apply only on completion and fulfilllment of all obligations/liability of the main agreement and the circulars did not apply as outstanding defects were not removed. Separate guards/chowkidars were stated to have been engaged at the cost of defendant No. 1. Learned Counsel for the plaintiff drew the attention of this Court to the cross-examination in respect of the aforesaid. DW1 stated that no supplementary agreement was entered into. The witness, however, admitted that the actual date of expiry of maintenance period was 20.4.1999. The testimony referred to aforesaid of DW1, at the cost of repetition, may once again be mentioned to the effect that the defects and deficiency in the flats were stated to be removed by the plaintiff during the maintenance period, but the finishing, polishing, painting, fixing of fittings and fixtures were not done by the plaintiff during the maintenance period and had to be thereafter done. No expenses were incurred by the defendants as no part of work was awarded to a third party.
107. It was the claim of DW1 during cross-examination that generally the flats are kept under the lock and key of the defendants and the possession is handed over by the DDA. The DDA keeps the security guards at site. However, it was admitted that no such record was filed. On being asked whether such record could be brought, the witness stated that the attendance register of the staff was maintained and he could produce the same, if traceable. On a specific query as to how many security personnel were engaged by the DDA as on 29.10.1998 month-wise at the site in question till possession of flats were handed over to the allottees, all that the witness stated that he could produce the records. However, when the testimony was next recorded, no such records had been produced.
108. In my considered view, the testimony does give an impression that the period for execution of the contract was initially extended without levy of penalty which would only arise if the plaintiff was not at fault. There were some defects found but the testimony shows that the defects were removed during the maintenance period. Thereafter it was the responsibility of the defendants to have looked after the site. The plaintiff claims watch and ward charges as per formula provided by the defendants themselves in Ex. P1 and P2. The only real plea raised is that the circulars do not apply as defects were not removed but DW1 himself has stated that defects were removed during maintenance period and no monies have been spent by the defendants for carrying out rectification.
109. The plaintiff is, thus, entitled to the amount of Rs. 2,90,400/- as watch and ward charges worked out as per formula of the defendants. (m) Unproductive expenditure in respect of handing over of flats = Rs. 1,76,000/-.
110. The plaintiff's claim is really based on the delay in handing over possession of the flats. It has already been held that the plaintiff is entitled to watch and ward charges as per formula provided by the defendants vide their circulars Ex.P1 and P2. The plaintiff has led no further evidence to establish the aforesaid unproductive and uncontemplated expenditure, as alleged. The expense is really for keeping the personnel at site for watch and ward for the delayed period of handing over the flats.
111. In view thereof, this claim is rejected. (n) Damages on account of idle machinery due to prolongation of work = Rs. 7,20,000/-
112. This claim again is predicated on the plea of the prolongation of the contract during which the machinery of the plaintiff is alleged to have remained idle. Whatever the allegation and counter allegation of the delay, but the fact remains that the period was extended by the defendants without compensation. However, the plaintiff has already been compensated for escalation for cost of material and labour under Clause 10(cc).
113. Learned Counsel for the defendants also relied upon the cross-examination of DW1, who denied the suggestion that the delay was on the part of the DDA and it was stated that the volume of work had increased and that is why the delay could not be attributable to either of the parties and so far as the delay on account of rainy season was concerned, the contractor was required to take that aspect into consideration while submitting the tender. Reliance is also placed on the endorsement made by the plaintiff in the application for extension (Ex. D3) to the effect that they had suffered no loss and would claim no amount on account of delay insofar as the liquidated damages were concerned.
114. In view of the aforesaid facts and circumstances and in the absence of specific evidence led on behalf of the plaintiff, I do not find any merit in this claim, which is rejected.
Issue No. 5: Whether the plaintiff is entitled to any interest, if so, at what rate and from which date? OPP
115. The last aspect is of the claim of interest. The plaintiff has claimed interest @18% per annum pendente lite and future interest. No specific evidence has been led about the rate of interest, but taking into consideration the prevalent rates of interest, I deem it appropriate to grant the plaintiff interest @12% per annum, simple interest, pendente lite and future till date of recovery on the claims found due and payable to the plaintiff.
Issue No. 6: Relief
116. In view of the findings aforesaid, the plaintiff is entitled to the following amounts:
SR No Claim of the Plaintiff Amount (Rs.)
b) Double Rate Recovery against
cement and bitumen 28,139.40
f) Cement/concrete shuttering for
holdfast of doors 19,391.49
g) Reduction Item Statement (RIS) 80,759.45
j) Escalation on claims of
welding of Ornamental Grills
and cement used under
Clause 10(cc) 8,896.00
l) Watch and Ward Charges 2,90,400.00
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TOTAL 4,27,586.34
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117. A decree is passed in favor of the plaintiff and against defendant No. 1 for the sum of Rs. 4,27,586.34 along with pendente lite and future interest @12% per annum simple interest till the date of recovery. The plaintiff would also be entitled to proportionate costs. Decree sheet be drawn up accordingly.
118. In the end, it must be placed on record that the present suit is one of claims arising from an award to a contractor and are best suited to be decided in arbitral proceedings where often technical persons familiar with the nature of the work are available to act in that capacity. Suits are being filed in view of the fact that the arbitration Clause which used to earlier exist in the standard terms and conditions has been deleted. In my considered view, it is appropriate that the DDA should expeditiously consider incorporation of a suitable arbitration Clause in their contracts so that such matters are considered by the technical experts in the field. In fact, it would have been open for this Court to have invoked Section 89 of the Code of Civil Procedure, 1908 for reference of these disputes to arbitration. However, since evidence had already been led and the matter was at the final hearing stage, I refrained from doing so.
119. A copy of this judgment be forwarded to the Vice-Chairman, DDA for necessary action.