Delhi District Court
Charanjeet Arora Thru Poa Holder And ... vs Municipal Corporation Of Delhi on 3 July, 2024
IN THE COURT OF SH. ANIL KUMAR SISODIA DISTRICT
JUDGE (COMMERCIAL COURT)-04,CENTRAL, TIS HAZARI
COURTS, DELHI
CS (Comm.) No. 1205/2023
SH. CHARANJEET ARORA
Sole Proprietor of M/s. Arora Construction
Through its brother and POA Holder Sh. Harpreet Arora,
having office at 3035/37, Beadon Pura,
Karol Bagh, New Delhi-110005
...PLAINTIFF
Versus
MUNICIPAL CORPORATION OF DELHI
Formerly North Delhi Municipal Corporation
Through its Commissioner
Civic Center, Minto Road,
New Delhi-110002
....DEFENDANT
Date of filing of the suit : 29.08.2023
Date of reserving judgment : 03.07.2024
Date of judgment : 03.07.2024
Judgment
1.This is a suit filed by the plaintiff for recovery of Rs.30,35,584/- (Rupees Thirty Lacs Thirty Five Thousand Five Hundred and Eighty Four only) along with interest against the defendant.
Plaintiff's case
2. The plaintiff is a Contractor and sole proprietor of M/s. Arora CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 1/19 Construction. The plaintiff is duly registered with the defendant corporation.
3. It is averred in the plaint that the work orders no.EE (M- KBZ)-I [EE I]/SYS/2019-2020/99 and EE (M-KBZ)-I [EE I]/SYS/2019-2020/100 dated 06.01.2020 were awarded to the plaintiff for the contractual amount of Rs.12,48,101/- and Rs.12,58,811/- respectively by the defendant. It is stated that at the time of submission of tender, an amount of Rs.21,500/- and Rs. 21,700/- were deposited by plaintiff as earnest money. The works were required to be completed within 3 months. It is stated that the plaintiff started the works and completed the same on 27.08.2020 to the satisfaction of the department with some delay which was not attributable to the plaintiff. It is stated that instead of preparing and passing the final bill, the defendant prepared and passed 1 st RA Bill under clause 7 of the GCC on 22.10.2020 for gross amount of the contractual amount i.e. Rs.12,48,101/- in respect of work order no.99 and Rs.12,58,811/- in respect of work order no.100 and illegally withheld amount of Rs.65,000/-each from both the bills thereby reducing the same to Rs.11,83,101/-for work order no.99 and Rs.11,93,811/- for work order no.100. It is stated that defendant also deducted an amount of Rs.85,688/- towards security after adjusting the earnest money of Rs.21,500/- in respect of work order no.99 and deducted Rs.86,408/- towards security after adjusting the earnest money of Rs.21,700/- in respect of work order no.100. After making necessary statutory deductions, defendant passed the 1 st RA CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 2/19 bill for an amount of Rs.10,38,258/- in respect of work order no.99 and Rs.10,47,713/- in respect of work order no.100.
4. It is submitted that defendant is also liable to refund the security amount which also includes earnest money i.e. Rs.1,07,188/- in respect of bill no.99 and Rs. 1,08,108/- in respect of bill no.100 and further defendant is liable to refund a sum of Rs.65,000/- towards each bill which has been withheld illegally. It has been submitted that since the works were completed on 27.08.2020, therefore, the defendant is further liable to refund the security amount including earnest money after the expiry of one year on 26.08.2021 as no defect in the works executed by the plaintiff has been pointed out by the defendant and there were no labor complaints pending against the plaintiff as per clause 45 of GCC.
5. It is averred that following amounts are payable by the defendant to the plaintiff as per details given below:
S.No. Bill No Refund of Amount of Withheld Total the amount 1st RA Bill amount (in Rs) of security (in Rs.) (in Rs.) deposit inclusive of earnest money (in Rs) CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 3/19 1 EE (M-KBZ)-I 1,07,188/- 10,38,258/- 65,000/- 12,10,446/-
[EE I]/SYS/2019- 2020/99 2 EE (M-KBZ)-I 1,08,108/- 10,47,713/- 65,000/- 12,20,821/-
[EE I]/SYS/2019- 2020/100
Total 24,31,267/-
6. Thus the total principal amount is due and payable to the plaintiff is Rs.24,31,267/-. Despite repeated personal visits and requests, the defendant failed to make the payment. Thereafter the plaintiff has sent legal notice dated 16.07.2022 to the defendant. Despite service of notice on the defendant, defendant failed to make the payment. Then the defendant is also liable to pay the interest @ 12% per annum on the amount of Rs. 24,31,267/-. Now the defendant is liable to make the payment of Rs.30,35,584/-( Rs. 24,31,267/- + interest @ 12% per annum i.e. Rs.6,04,317/-).
7. The plaintiff has prayed for a decree of Rs. 30,35,584/- and also pendente lite and future interest @ 12% per annum on the amount due of Rs.24,31,267/- from 01.08.2023 till its realization along with cost against the defendant.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 4/19 Defendant's case
8. In the written statement, the defendant has taken preliminary objections that the suit of the plaintiff is liable to be dismissed in view of provisions of Order VII Rule 11 of CPC for want of cause of action. The suit has not been signed, verified and filed by a duly authorized and competent person, suit is pre-mature, without any cause of action and therefore, deserves to be rejected at the threshold. It is stated that plaintiff has approached this court with unclean hands and has concealed that it is in material breach of the agreement between the parties that dis-entitles him from any relief as sought. The plaintiff is also not entitled to refund of the security deposit as he has failed to comply with the clauses 17 and 45 of the GCC. The plaintiff has neither applied for nor obtained necessary labour clearance certificate nor he has applied for no objection certificate from the legal department of the defendant.
9. It is also stated that plaintiff has failed to submit bills as he was contractually required to. In the absence of any bill, no amount can be said to be due or payable to the plaintiff. On merits the contents of the plaint have not been denied as regards award of work contract to the plaintiff and completion of work by the plaintiff is concerned. It was also stated that the execution of the work orders were delayed and the plaintiff was given liberty to apply for extension of time with satisfactory explanation to the defendant but plaintiff never applied for the extension of time nor CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 5/19 submitted any documents of completion or labor clearance certificates. It was submitted that plaintiff has failed to comply with clause 17 and 45 of GCC. All other contents of the plaint were denied and prayer has been made for dismissal of the plaint.
10. Plaintiff has filed replication to the written statement of the defendant and has reiterated the contents of the plaint.
Issues
11. After completion of pleadings, following issues were framed:-
1. Whether the plaintiff has not complied with the clause 7 and 9 of GCC and clause 4 of the work order and the suit is pre mature? (OPP)
2. Whether the plaintiff is entitled for recovery of the suit amount?(OPP)
3. Whether the plaintiff is entitled for the interest on the suit amount, if so, at what rate and for which period?(OPP)
4. Relief.
Plaintiff's Evidence
12. Plaintiff examined AR of plaintiff Mr. Harpreet Arora as PW-1. PW-1 filed affidavit by way of evidence Ex.PW-1/A and relied upon the following documents Ex.PW-1/1 to PW-1/7.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 6/19 DOCUMENTS RELIED UPON BY THE PLAINTIFF:-
Sr. No. Document Exhibit
1 Power of Attorney dated 28.07.2023 Ex.PW-1/1
2 Work order no. 99 dated 06.01.2020 Ex.PW-1/2
3 1st RA Bill of work order no. 99 Ex. PW-1/3
4 Work order no. 100 dated 06.01.2020 Ex.PW-1/4
5 1st RA Bill of work order no. 100 Ex.PW-1/5
6 Legal notice dated 16.07.2022 Ex.PW-1/6
7 Non-starter report dated 14.07.2023 Ex.PW-1/7
13. Plaintiff also examined Sh. Charanjeet Arora as PW-2. PW-2 has filed affidavit by way of evidence Ex.PW-1/B. He had executed the power of attorney dated 28.07.2023 in favour of his brother Sh. Harpreet Arora.
14. Defendant has examined Sh. Lokesh Sharma, Asst. Engineer I, Karol Bagh Zone, MCD, Delhi as DW1, who tendered his affidavit Ex.DW1/A and relied upon the following documents.
Sr. No. Document Exhibit
1 Notice Inviting Tender (NIT) no.15 and 17 DW-1/1 and
both dated 01.10.2019 DW-1/2
2 Work orders no.99 and 100 both dated Already
06.01.2020 exhibited as
PW1/2 and
PW-1/4
3 Copy of GCC DW-1/5
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 7/19
15. I have heard Ld. counsel Sh. Vikas Sharma for the
plaintiff and Ld. counsel Mr. Mohit Sharma for the defendant and perused the written submissions filed by them and the judicial record carefully.
FINDINGS Issue no.1.
Whether the plaintiff has not complied with the clause 7 and 9 of GCC and clause 4 of the work order and the suit is pre mature?(OPD)
16. The onus of proving this issue has been cast on the defendant. Counsel for the defendant has argued that the plaintiff has not submitted the bills, interim or final, which he was contractually required to submit and he is in breach of agreement between the parties. It was argued that as per clause 7 and 9 of GCC and clause 4 of the work order, the contractor shall not be entitled for any payment, if he does not submit the certificate of completion and further plaintiff was required to submit final bill within one month of the date of the final certificate of completion furnished by the Engineer-in-charge or within three months of physical completion of the work. He argued that the plaintiff has admittedly not submitted any bills after completion of the work. PW-1 Harpreet Arora in his cross examination also admitted that he does not have the receiving of the RA bills with measurement as the same were put to the JE and the JE had done the measurement and recorded in the bills.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 8/19
17. Per contra counsel for the plaintiff has argued that the defendant had passed the bills which have been exhibited as Ex.PW-1/3 and PW-1/5. The plaintiff had accepted these bills by counter signing the same and hence, there was no requirement of furnishing fresh bills by the plaintiff and the plaintiff is entitled for the amount of the bills as claimed by him. He has argued that in North Delhi Municipal Corporation Vs. Barahi Construction RFA (COMM) 6/2021 (Neutral citation:
2021/DHC/958-D) Hon'ble Division Bench of High Court of Delhi upheld the judgment of Ld. Single Judge in North Delhi Municipal Corporation Vs. Vipin Gupta RFA 160/2017. He further relied upon the judgment of Mr. Rajnish Yadav proprietor of M/s. Bharat Construction Company Vs. North Delhi Municipal Corporation, RFA (OS) (COMM) 1/2021 (Neutral citation: 2023/DHC/000174) to argue that once the defendant had accepted the execution of the work by the plaintiff, the defendant was under the liability to pay the amount to the plaintiff and the mere fact that plaintiff has not sought extension of time for completion of work, it cannot be a ground to deny the payment as MCD had not raised any claim on account of alleged delay in completion of works.
18. Perusal of clause 7 of GCC shows that in the event of failure of the contractor to submit the bills, Engineer-in-Charge shall prepare or cause to be prepared such bills in which event no CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 9/19 claims whatsoever due to delays on payment including that of interest shall be payable to the contractor. This clearly shows that non submission of the interim or final bills cannot be a ground to deny the payment to the contractor where the work has been completed by the contractor. In such cases, the contractor cannot claim interest for the delayed payments.
In the present case, it is not in dispute that the plaintiff had completed the work orders. Although there was some delay in completing the work orders but there has been no objection or claim by the MCD for such delay. PW-1 in his cross examination has explained that delay was due to out break of covid pandemic which was beyond the control of the plaintiff and the work was completed within the period after situation had become normal. DW-1 Lokesh Sharma,Asst. Engineer in his cross examination has admitted that as per the records, the plaintiff had done the complete work in respect of the aforesaid work orders. He also admitted that the payment of the bills Ex.PW-1/3 and PW-1/5 is still due and outstanding and the payments have not been made to the plaintiff.
19. In view of the aforesaid discussions, I am of the considered opinion that the plaintiff has failed to discharge the onus cast on him and has failed to prove that the suit filed by the plaintiff is pre-mature. The issue is accordingly decided in favour of the plaintiff and against the defendant.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 10/19 Issue No.2:
Whether the plaintiff is entitled for recovery of the suit amount?(OPP)
20. The onus to prove this issue was cast on the plaintiff. The plaintiff has prayed for recovery of Rs.24,31,267/- for the work done against the work orders no.99 and 100. The plaintiff has also claimed interest of Rs.6,04,317/- on the aforesaid amount from 01.01.2021 and on security amount from 26.08.2021.
21. As already noted above, there is no dispute with regard to the fact that plaintiff was awarded work orders no. 99 and 100 on 06.01.2020. The plaintiff completed the works on 27.08.2020. The bills Ex.PW-1/3 and PW-1/5 were prepared and passed by the defendant on 22.10.2020 but the payment was not made by the defendant. It is further the case of the plaintiff that defendant had illegally deducted Rs.1,30,000/- from the bills and have also withheld the security amount of Rs.1,07,188/- and Rs.1,08,108/- in respect of the aforesaid work orders.
22. Defendant has taken a defence that plaintiff is not entitled for the amount as he had not complied with the contractual obligations and had failed to submit the final bills as required under clause 7 and clause 9 of GCC and clause 4 of the work order. It was also submitted that the plaintiff also failed to comply with clause 17 and 45 of GCC for refund of the security CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 11/19 deposit and did not apply for the labor clearance certificate. Counsel for the defendant relied upon the judgment of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Sanjeev Kumar (RFA 430/2016) in support of his arguments. It was also argued that unless the provision of clause 17 and 45 of GCC are complied with, the claim for refund of the security deposit is pre-mature and untenable. He also argued that there was a delay in completion of works and plaintiff failed to apply for extension of time.
23. As already held in the foregoing paras, the suit is not pre- mature as admittedly the plaintiff had completed the work awarded to him and mere non filing of the final bills does not entitle the defendant to deny the payment of the work done by the plaintiff more particularly when defendant has admitted its liability by preparing and passing the bills Ex.PW-1/3 and PW- 1/5 which were counter signed by the plaintiff in token of its correctness.
24. As regards the amount of Rs.1,30,000/- withheld by the defendant in the bills Ex.PW-1/3 and PW-1/5, DW-1 Lokesh Sharma in his cross examination has admitted that this amount was withheld in both the work orders against final report of quality checking. He further admitted that the plaintiff had no role in obtaining the final report of quality checking as it was inter departmental procedure and generally the final report of CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 12/19 quality checking is received in 2-3 months. It is now more than 3 years that the work has been completed and defect liability period has also expired and there is no complaint qua the work done by the plaintiff. Hence, in my considered opinion, the plaintiff is entitled for recovery of Rs.1,30,000/- (Rs.65,000/- in each work order) withheld by the defendant.
25. The plaintiff has also claimed refund of the security deposit of Rs.1,07,188/- and Rs.1,08,108/- against the two work orders. PW-1 Harpreet Arora in his cross examination admitted that he has not obtained any certificate from the Labor Department, MCD as there were no complaints of the labor, whereas defendant has opposed the refund of the security amount citing non compliance of clause 17 and 45 of GCC.
26. Perusal of clause17 of GCC makes it clear that plaintiff cannot claim the security deposit before the expiry of 12 months after the issue of the final certificate of completion of the work or till the time final bill has been prepared and passed, whichever is later. Clause 45 of the GCC also provides that security deposit of the work will not be refunded till the contractor produces a clearance certificate from the labor office. However, it further says that if no complaint is pending on record till after three months after completion of the work and/or no communication is received from the labor officer to this effect till 6 months after the date of completion, it will be deemed to have received the CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 13/19 clearance and the security deposit will be released, if otherwise due.
27. In the present case, the works were completed by the plaintiff on 27.08.2020 and the bills were prepared and passed by the defendant on 22.10.2020. A period of more than 12 months has expired from the date of completion of work. Admittedly, there is no complaint regarding the quality of work done by the plaintiff nor there is any complaint against the plaintiff regarding any labor dispute in respect of the aforesaid work orders. A considerable time has expired since the contract was completed and admittedly there is no claim made by the defendant on account of any acts of commission or omission on the part of the plaintiff. DW-1 Lokesh Sharma has also admitted in his cross examination that there are no labor complaints in respect of the work orders Ex.PW-1/2 and PW-1/4. Hence, there are no grounds for the defendant to appropriate the security amount. Accordingly, in my opinion the same is required to be refunded to the plaintiff.
28. DW-1 Lokesh Sharma has further admitted that the payment of the bills Ex.PW-1/3 and PW-1/5 is still due and outstanding and no payment has been made to the plaintiff despite the fact that plaintiff has done the complete work in respect of the work orders Ex.PW-1/2 and PW-1/4. Hence, in my considered opinion, the plaintiff is entitled for the recovery of CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 14/19 the bill amount of Rs.12,10,444/- against work order no.99 and Rs. 12,20,821/- against work order no. 100 totaling to Rs.24,31,267/-.
29. So far as the claim of interest by the plaintiff against the aforesaid outstanding bills is concerned, I am of the considered opinion that since the plaintiff failed to submit the interim/final bills and the bills Ex.PW-1/3 and PW-1/5 were prepared and passed by the defendant, in view of clause 7 of GCC, the plaintiff is not entitled for interest on account of delay in the payment.
30. In view of the aforesaid discussions, the issue is decided in favour of the plaintiff and against the defendant and it is held that plaintiff is entitled for recovery of Rs.24,31,267/- from the defendant against the work orders Ex.PW-1/2 and PW-1/4.
Issue no.3:
Whether the plaintiff is entitled for the interest, if any. If so, at what rate and which period?(OPP)
31. The onus to prove this issue was on the plaintiff. The plaintiff has claimed pendente lite and future interest @ 12% per annum on the due amount of Rs.24,31,267/- from 01.08.2023 till its realization.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 15/19
32. Counsel for the plaintiff has argued that defendant has illegally withheld the amount of bills. It is further argued that the plaintiff has suffered financial losses as defendant failed to release the payments within a period of 9 months as required under clause 9 of GCC and hence, the plaintiff is entitled for the interest on the delayed payment.
33. Counsel for the defendant has argued that plaintiff is claiming the decreetal amount without submitting the requisite documents and compliance of terms and conditions of GCC. It has also been submitted that plaintiff is not entitled for any interest or refund of deposit as it has failed to adhere to the terms and conditions of the GCC.
34. Counsel for the plaintiff has not submitted on what basis the interest is being claimed @ 12% per annum by the plaintiff. In NDMC & Others Vs. Shish Pal MANU/DE/1200/2018, it was observed:-
45. In the present case, the combined effect of the Clauses and the Circular and amendments, set out above, is that if the Corporation does not procure funds, it is not liable to even pay the Contractor any interest and the Contractor has no remedy.
This by itself would mean that such a Clause could be read as leading to a contract without consideration and hence unlawful under Section 23 of the Contract Act. The Corporation being an CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 16/19 instrumentality of State, such a contract would also be opposed to public policy under Section 23 of the Contract Act. Section 46 of the Contract Act is also clear that if no time for performance of a contract is specified, it has to be performed within a reasonable time. Reading these provisions together, it is clear that an open ended Clause which in effect says that the payment shall be made at an undetermined time in the future, subject to availability of funds, in a particular head of accounts is wholly unreasonable and such a term would also be unfair.....
71. A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the Contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment.
Such a condition exists only in Clause 7.
Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
72. In view of the question of interest having been gone into detail and non-
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 17/19 payment having been held to be illegal by various Single Judges of this Court, in cases involving the Corporations, it is held that non-payment of interest beyond the period of 6 months and 9 months, as stipulated in Clause 9 of the General Conditions of Contract, would be contrary to law. Hence, the Contractors are entitled for payment of interest after a period of 6 months - 9 months respectively.
35. The award of interest is discretionary as the contract nowhere mentions about the rate of interest, each case has to be adjudged on its own merit. Keeping in view the facts and circumstances of this case, this court is not inclined to grant pre suit interest to the plaintiff.
36. However, this court is of the considered opinion that the interest of justice would be subserved if the plaintiff is awarded simple interest @ 9% per annum on the amount of Rs.24,31,267/- from the date of filing of the suit till its realization. Issue is accordingly decided in favour of the plaintiff and against the defendant.
Relief
37. In view of my findings on the aforesaid issues, the suit is decreed in favour of the plaintiff and against the defendant for a sum of Rs.24,31,267/-. The plaintiff shall also be entitled to simple interest @ 9% per annum from the date of filing of the CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 18/19 suit till its realization. The plaintiff shall also be entitled to the cost of the suit.
Decree sheet be prepared accordingly.
File be consigned to Record Room after due compliance. Digitally signed by ANIL KUMAR ANIL KUMAR SISODIA SISODIA Date: 2024.07.03 16:31:14 +0530 (ANIL KUMAR SISODIA) District Judge(Commercial Court)-04 Central/Delhi Announced in open court on 03.07.2024.
CS (COMM) NO. 1205/23 Charanjeet Arora Vs. MCD Page No 19/19