Delhi District Court
M/S Ram Niwas Goel vs Municipal Corporation Of Delhi on 22 February, 2025
CNR No. DLCT01-005502-2022
IN THE COURT OF MS. ILLA RAWAT
DISTRICT JUDGE (COMMERCIAL COURT)-03, CENTRAL,
TIS HAZARI COURTS (EXTENSION BLOCK), DELHI
CS (COMM) No. 995/2022
In the matter of :-
M/s Ram Niwas Goel
Office at D-33, Prithvi Raj Road,
Adarsh Nagar, Delhi-110033,
Through its Partner
Mr. Kamal Goel
S/o Sh. Ram Niwas Goel
Email: [email protected]
Mob: 9958664413 ......Plaintiff
Versus
Municipal Corporation of Delhi
Office at:- Dr. SPM Civic Centre,
4th Floor, Pt. JLN Marg,
P.S. Kamla Market,
New Delhi-110002
Through its Commissioner
Email: [email protected]
and [email protected] .......Defendant
Date of Institution : 28.03.2022
Date on which Judgment reserved : 18.01.2025
Date on which judgment pronounced : 22.02.2025
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 1 of 73
Digitally
signed by ILLA
ILLA RAWAT
Date:
RAWAT 2025.02.22
12:21:55
+0530
SUIT FOR RECOVERY AND PERMANENT INJUNCTION
AND DECLARATION
JUDGMENT
1. Vide this judgment I shall dispose off the suit for Recovery, Permanent Injunction and Declaration, filed by plaintiff against the defendant.
2. Briefly stated facts of the case as averred in the plaint are that the plaintiff is a registered partnership firm and has been doing work as Contractor in the defendant Corporation and other Government Departments since a long time. The plaintiff was awarded the civil and electrical work for 'Construction of 20 classrooms, 2 Nursery Room, 1 Computer room, 1 Library Room, 1 Staff Room, 1 Hall etc. in M.C. Pry. School B-2 Block, Ashok Vihar in C-73N/KPZ' by the defendant vide work order no. EE(Pr.)/KPZ/SYS/2019-20/14 dated 03.01.2020 for total contractual amount of Rs.4,02,20,253/-.
3. It is further averred in the plaint that the contract was to be completed within a period of 12 months from the date of award of the said work order and the stipulated date of completion was 02.01.2021. The plaintiff mobilized all its resources with intention to execute the work and constructed labours hutments, store etc. and asked the concerned officer of the project to handover the complete site for execution of the work, however, the concerned officers and officer of the Education Department stopped the demolition work stating that the said old building of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 2 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:22:06 +0530 the school was to be used in Delhi Election 2020 proposed to be held on 07.02.2020. After election of Delhi Government, the site was handed over to the plaintiff by the defendant for demolition in the first week of March, 2020. The plaintiff thereafter started demolition work and submitted a letter dated 13.03.2020 to the defendant stating the above facts and made request to consider the date of start of work from the date of handing over of the site after elections.
4. It is further averred that due to onset of Covid-19 pandemic and lockdown declared pursuant thereto from Central Government from 23.03.2020, all construction activities were stopped. The said lockdown was lifted in May/June 2020. The plaintiff then submitted letter dated 31.07.2020 to the office of concerned Executive Engineer submitting hindrances faced by it and sought proportional extension of time till date of removal of the hindrances. It is further averred that during the course of execution of work, the plaintiff found that some trees came within the scope of work and were required to be removed and therefore vide letter dated 31.07.2020, plaintiff requested defendant for removal of trees. Thereafter plaintiff submitted another letter dated 21.09.2020 requesting for removal of the hindrances intimated through earlier letter dated 31.07.2020 and for extension of time as per Government orders, in light of Covid-19, but no reply was received from the defendant.
5. It is further averred in the plaint that a letter dated 09.03.2021 was received from defendant thereby alleging that during site visit it was observed that the work had been held up CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 3 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:22:16 +0530 for so many days without any reasons with directions to the plaintiff to start the work immediately. The defendant vide another letter dated 09.03.2021 granted the provisional extension of time upto 30.06.2021 to plaintiff. The agreement came to an end due to afflux of time on 02.01.2021 and therefore, all the work executed thereafter by the plaintiff was with day-to-day consent of the defendant and provisional extension, granted vide letter dated 09.03.2021, had no meaning in eyes of law and time was not the essence of this contract.
6. It is further averred that the plaintiff had submitted a letter dated 16.06.2021, vide diary no.D-120, in reply to defendant's letter dated 09.03.2021 stating that the hindrances intimated by plaintiff vide earlier letters dated 31.07.2020 and 21.09.2020 were not removed till that date and that the amount of Rs.1,01,83,222/- of 1st RA Bill, which was passed in October, 2020, was not paid to it despite oral request and persuasion of the plaintiff. The plaintiff had also submitted 2 nd RA Bill in January 2021 for a sum of Rs.6,70,555/- which was not processed and passed.
7. It is further averred in the plaint that instead of discharge of reciprocal premises and releasing the passed bill amount, the Executive Engineer of the defendant issued a show cause notice under clause 2 vide letter dated 15.06.2021 (received by plaintiff on 17.06.2021). The plaintiff sent reply dated 22.06.2021, to the office of defendant on 23.06.2021, thereby explaining the reasons for delay in execution of work and requested for release of the amount of passed bill and to verify CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 4 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:22:26 +0530 and pass the 2nd RA bill submitted by plaintiff, so that the work could be started and completed as soon as possible.
8. It is further averred that the defendant illegally withheld the amount of passed bill under the garb of releasing the passed bill amount in terms of clause of agreement which says that the payment of bill will depend on availability of funds in particular heads of account from time to time in MCD and that the payment of bills shall be made strictly on queue basis. Referring to case titled as North Delhi Municipal Corporation vs. Shish Pal, Manu/DE/1200/2018, it is averred that certain guidelines have been given for execution of work with directions to release the amount in terms of clause 7 and 9 of GCC, failing which the contractor would be entitled for interest. It is thus claimed that the work could be started by plaintiff only after release of the arrears of dues and any coercive action taken under any clause of GCC by the defendant against the plaintiff would be null and void.
9. It is further averred that as there was no response from defendant, plaintiff sent a legal notice dated 25.08.2021 U/s 478 of DMC Act, 1957 by speed post and email which was neither replied to nor acted upon by the defendant despite receipt. The plaintiff has given break up of its claims as under:-
Claim No. Particular Amount (Rs.)
st
1. 1 RA Bill passed 1,01,83,222/-
2. 2nd RA Bill 6,70,500/-
3. Interest @ 14% p.a. 19,82,988/-
(a) on claim no.1 w.e.f. 13.11.2020 to
10.03.2022 (483 days)=18,86,546/-
(b) on claim no.2 w.e.f. 01.03.2021 to
10.03.2022 (375 days)= 96,442/-
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 5 of 73
Digitally signed
by ILLA
ILLA RAWAT
Date:
RAWAT 2025.02.22
12:22:34
+0530
4. Loss of profit @ 10% on the unexecuted 29,36,653/-
amount i.e. Rs.2,93,66,531/-
5. Refund of earnest money with interest 13,57,700/-
6. Interest @ 14% p.a. on claim no.4 & 5 i.e. 3,26,135/-
Rs.42,94,353/- w.e.f. 25.08.2021 to
10.03.2022 (198 days)
Total 1,74,57,198/-
7. Cost Actual
(a) Court Fee + Misc. Expenses
Rs.15,000/-
(b) Advocate Fee= 5% on decreetal
amount
10. It is further averred that despite passing of 1 st RA bill on 29.10.2020, the defendant has failed to release the amount of passed bill and to verify/process the 2 nd RA bill submitted in January 2021. Instead of complying with request made by plaintiff vide letter on 16.06.2021 to release the payment, the defendant issued show cause notice under clause 2 of GCC on 15.06.2021, and hence the plaintiff is entitled for claim no.1 and 2. It is further stated that due to non-payment of the dues by the defendant, plaintiff has been put to loss of investment and interest, thus the plaintiff is entitled for interest, loss of profit on the unexecuted contractual amount of work, refund of earnest money already submitted by plaintiff as well as costs of suit.
11. It is further averred that plaintiff had filed an application for pre-institution mediation before Central District Legal Services Authority on 01.11.2021 but defendant failed to participate therein despite service of process and a Non-Starter Report dated 20.12.2021 was issued on 31.01.2022.
12. Thus aggrieved, plaintiff has filed the present suit CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 6 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:22:44 +0530 praying for a decree for recovery of Rs.1,74,57,198/- alongwith interest @ 14% per annum w.e.f. 11.03.2022 and a decree of permanent injunction to restrain the defendant, its officers, agents etc. from taking any coercive action in furtherance of a show cause notice dated 15.06.2022 or under any clause of the contract.
13. Pursuant to issuance of summons of suit, defendant filed its written statement.
14. Subsequently, an application U/o VI Rule 17 r/w Section 151 CPC for amendment of plaint was filed by plaintiff alongwith another application U/o XI Rule 5 r/w Section 151 CPC as plaintiff wanted to bring on record events that had taken place subsequent to filing of the suit, in particular, facts which emerged from the correspondence exchanged between the parties during the pendency of the suit. Both the above applications were allowed vide order dated 11.04.2023 and plaintiff was permitted to amend the plaint and to place on record additional documents.
15. Plaintiff filed the amended plaint on 11.04.2023 wherein besides the facts mentioned in original plaint, as detailed in foregoing paras, plaintiff amended the title of the plaint by reducing the amount of recovery from Rs.1,74,57,198/- to Rs.1,58,77,360/- and added relief of declaration. The amended break up of the claims of the plaintiff was given as under:-
Claim No. Particular Amount (Rs.)
st
1. 1 RA Bill passed 1,01,83,222/-
2. 2nd RA Bill 6,70,500/-
3. Interest @ 14% p.a. 19,82,988/-
(a) on claim no.1 w.e.f. 13.11.2020 to
10.03.2022 (483 days)=18,86,546/-
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 7 of 73
Digitally signed
by ILLA RAWAT
ILLA Date:
RAWAT 2025.02.22
12:22:54
+0530
(b) on claim no.2 w.e.f. 01.03.2021 to
10.03.2022 (375 days)= 96,442/-
4. Loss of profit @ 5% on the unexecuted 14,68,327/-
amount i.e. Rs.2,93,66,531/-
5. Refund of earnest money with interest 13,57,700/-
6. Interest @ 14% p.a. on claim no.4 & 5 2,14,623/-
i.e. Rs.28,26,027/- w.e.f. 25.08.2021 to 10.03.2022 (198 days) Total 1,58,77,360/-
7. Cost Actual
(a) Court Fee + Misc. Expenses Rs.15,000/-
(b) Advocate Fee= 5% on decretal amount
16. Further, it was also averred that the Executive Engineer of defendant had sent letter dated 08.04.2022 thereby fixing a personal hearing on 12.04.2022, however, the plaintiff did not attend the said meeting as suit had already been pending before this Court with respect to the work awarded to the plaintiff. It is alleged that the defendant had not given any letter intimating plaintiff that the trees which were coming within layout plan of site of the work were removed or that the layout plan of work was revised prior to the date of filing of the written statement i.e. June 2022. The defendant in its written statement and in letter dated 30.06.2022 stated that it had removed five trees from the Government property, however, the defendant deliberately concealed this material fact by not disclosing that five trees, existing between Grid A to D of structural drawing provided to the plaintiff with work order, had been removed by the Forest Department. The plaintiff had already executed the work in that area and also raised the columns and plinth beam therein even while trees were existing there. The partner/authorized signatory of plaintiff firm took photographs of the site on 06.07.2022 in his CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 8 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:23:03 +0530 mobile showing the existing trees within the constructed column and plinth. The defendant did not file the letters through which the extension of time was granted upto 30.09.2021, 31.12.2021 and 31.03.2022 to plaintiff not were the said letters served upon the plaintiff.
17. It is further averred that the Executive Engineer of the defendant department issued a show cause notice under clause 3 of agreement on 12.05.2022, without complying with the request of the plaintiff to remove the hindrances, existing at the site. The said notice was replied to by the plaintiff on 24.05.2022 stating all the facts mentioned in the previous representations and making request for removal of existing trees and also not to take any coercive action against the plaintiff. The observations made by Hon'ble High Court in order dated 26.04.2022 passed in OMP (COMM) 185/2022 titled as "North Delhi Municipal Corporation vs. IJM Corporation Berhad" have also been referred to by the plaintiff in its reply dated 24.05.2022.
18. It is further averred that despite having knowledge of the pendency of the suit and application, the defendant without taking any permission from the Court, illegally and arbitrarily passed the order under clause 2 of GCC thereby imposing levy of compensation of Rs.40,22,025/- vide letter dated 30.06.2022. Further vide letter dated 04.07.2022, the defendant intimated that the earnest money deposited by plaintiff was forfeited and the portion which was unexecuted would be given to another contractor at risk and cost of the plaintiff and fixed a date for final measurement of the work on 18.07.2022. The defendant failed to CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 9 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:23:12 +0530 approve and intimate the period of delay in execution of work in terms of clause 5 of GCC and Section 29 of CPWD Works Manual and did not file the hindrances register. Further no notice U/s 55 of the Contract Act, giving particulars of the period of delay, was given during the execution of work. Even the show cause notice under clause 2 of GCC was not issued by the defendant during the currency of the contract or even thereafter till the date of filing of suit, hence the letters/order dated 30.06.2022 and 04.07.2022 were legally untenable and are liable to be set aside. Relevant portion of Section 29 of CPWD Works Manual had been reproduced in para 19(xi) of the plaint.
19. It is further averred that the defendant vide its letter dated 15.12.2022, which was in continuation of its letter dated 19.09.2022, intimated to plaintiff that the competent authority vide dated 24.11.2022 had approved following action in the above work:-
(i) closure of contract,
(ii) forfeiture of earnest money, security deposit and
performance guarantee as per contract clause 3(a) & 3(b)
(iii) recall of tender for balance work at risk and cost of present contractor i.e. M/s Ram Niwas Goel
(iv) recommendation of disciplinary action against the contractor as per the conditions of the Enlistment Rules
(v) Not allowing to plaintiff to participate in the re-
tendering process for the instant work.
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 10 of 73 Digitally signedILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:23:20 +0530
20. It is further averred that all actions taken through letter dated 15.12.2022 were illegal, arbitrary and against the terms of the contract. Thereafter, defendant issued show cause notice dated 15.02.2023 under Revised instructions for Enlistment/Revalidation of Contractor 2016 illegally and with ulterior motive. The plaintiff had submitted reply to show cause notice dated 15.02.2023 on 14.03.2023 vide diary no.280. It is further averred that although defendant had sent letter for joint measurement on 01.08.2022 but till date the defendant neither sent the copy of the measurement of work recorded in the measurement book by the defendant to the plaintiff nor filed the same before the Court.
21. Thus aggrieved, plaintiff had prayed for :-
(a) a decree for recovery in sum of Rs.1,58,77,360/-
alongwith interest @ 14% per annum w.e.f. 11.03.2022 till date of judgment/decree and thereafter at the same rate on decreetal amount and award of cost w.e.f. date of judgment/decree till the date of actual payment of the amount to the plaintiff, in favour of the plaintiff and against the defendants;
(a-1) a decree of declaration thereby declaring the letter/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dated 04.07.2022, letter bearing ref. No. D/257/EE (PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref. No.D/6/EE/PR./KPZ/2022-23 dated 15.02.2023 passed by CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 11 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:23:30 +0530 the defendant as null and void and/or;
(b) a decree of permanent injunction thereby restraining the defendant to enforce/implement the letters/orders bearing no.SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dated 04.07.2022, letter bearing ref. No. D/257/EE (PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref. No.D/6/EE/PR./KPZ/2022-23 dated 15.02.2023 against the plaintiff and/or
(b)(i) a decree of recovery of the amount, if any, recovered by the defendant department on the basis of letter/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022 or other clauses of contract from the payable amount of the plaintiff in other works during the pendency of the suit and/or
(c) award of the cost of the suit in favour of the plaintiff and against the defendant
22. Defendant has contested the amended suit by filing detailed amended Written Statement. Preliminary objections as to maintainability of the suit have been taken inter alia on the ground that suit filed by the plaintiff is premature and that plaintiff has approached the Court with unclean hands by concealing material facts. The authorization of Sh. Kamal Goel, one of the partners of plaintiff firm, who also instituted the suit on behalf of plaintiff firm M/s Ram Niwas Goel, has been challenged. It is alleged that SPA in favour of Sh. Kamal Goel does not authorize him to CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 12 of 73 Digitally signed by ILLA RAWAT ILLA Date:
RAWAT 2025.02.22
12:23:41
+0530
institute the suit on behalf of the plaintiff.
23. It is stated that the Notice Inviting Tender (NIT) sets out relevant terms and conditions and make it clear that the General Conditions of Contract (hereinafter referred to as 'GCC') as well as special conditions of contract would be applicable. The plaintiff was awarded work by way of work order no.EE(Pr.)KPZ/SYS/2019-20/14 dated 03.01.2020 based on tender process. As per said agreement and GCC, more particularly Clause 7 and 9 of GCC and Clause 4 of work order, contractor is required to submit and present bills - both interim and final, to defendant, for payment which plaintiff has failed to do and hence no amount can be said to be due or payable to the plaintiff. The plaintiff seeks to rely upon internal noting only which do not constitute bills for the purposes of payment and hence do not entitle plaintiff to recover the same from the defendant. The defendant has also relied upon observations made by Hon'ble High Court in judgment dated 22.03.2018 titled as North Delhi Municipal Corporation Vs. Sanjeev Kumar [RFA 430/2017] in this regard.
24. Another objection taken by defendant, regarding the maintainability of the suit filed by the plaintiff, is on the ground that since the plaintiff has failed to comply with the Clauses 17 and 45 of GCC he is not entitled for refund of the security deposit. It is stated that as per Clause 17 of GCC, contractor is required to wait for a period of 12 months from the date of submission of the final bill to reclaim security amount. He is also required to submit a labour clearance certificate. Since plaintiff neither submitted CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 13 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:23:50 +0530 final bill nor submitted Labour Clearance Certificate, he is not entitled to the refund of the security amount. The observations made by Hon'ble Delhi High Court in judgment in case of North Delhi Municipal Corporation vs. Sanjeev Kumar (RFA 430/17) have been relied upon in support of this objection.
25. The claim of plaintiff has also been challenged on the ground that plaintiff is seeking interest on interest, which cannot be granted as per law. It is further stated that there was not only immense delay in execution of work but also abandonment of the awarded work mid-way by the plaintiff. The defendant had removed five trees from the site after getting permission from the forest department under DPTA 1994 and saved two trees as per the revised plan approved by the department on 08.11.2019. It is stated that during the visit at the site it was observed that the work at the site had been held up for so many days without any reason. Despite directions to start the work at site immediately and to complete it, vide letters dated 09.03.2021 and 07.06.2021, the plaintiff failed to comply with the same and hence defendant had issued show cause notice dated 15.06.2021 under clause 2 of the GCC for wrongful delay, suspension of work and non completion of the work within extended time given by department which rendered the plaintiff liable for compensation. It is further averred that in reply to show cause notice dated 15.06.2021, plaintiff submitted a letter and made unnecessary excuse of hindrance at partial site regarding the trees which were removed after getting permission from the forest department as per the revised site plan on 10.12.2020. Thereafter the SE-II/KPZ had fixed a personal hearing to resolve the issue on 12.04.2022 but the plaintiff neither CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 14 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:23:58 +0530 attended the hearing nor given any intimation. The plaintiff was informed through speed post as well as through whatsapp to start the work within 07 days and that in case the progress of the work was not proportionate to the time elapsed, necessary penalty would be imposed on it. Since the plaintiff failed to start the work, after statutory hearing order was passed by defendant department, a show cause notice dated 12.05.2022 under clause 3 was issued to plaintiff. The plaintiff failed to complete the work within the reasonable time granted by the defendant department and therefore defendant had issued a statutory order against the plaintiff thereby closing the contract, forfeiting the earnest money, security deposit and performance guarantees as per the contract clause 3(a) and (b); recalled tender for balance work at risk and cost of the present contractor; took disciplinary action against the contractor as per the conditions of the enlistment rules and not allowing plaintiff to participate in the re-tendering process for the instant work.
26. On merits, award of work order to the plaintiff is admitted, however, it is reiterated that plaintiff was bound by the terms and conditions contained therein which required the plaintiff to submit bills to the defendant for payment. The plaintiff, however, failed to abide by said terms. It is denied that plaintiff made necessary arrangements for execution and completion of the work within the stipulated time at full pace. It is stated that the proposed school building was to be constructed after demolition of the existing pre-fab classrooms, however the elections were announced and the site was handed over for demolition after the elections i.e. on 11.02.2020. Vide letter dated CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 15 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:24:06 +0530 19.06.2020, plaintiff was apprised for speeding up the work and to provide proper barricading at site to avoid any untowards incident as the school was functional in the remaining part of the premises.
There were curbs on construction activities but the same were soon restarted. The plea taken by plaintiff that all throughout post March 2020 there was a complete prohibition on construction was not only factually wrong but also misleading.
27. It is stated that during inspection of site, it was noticed that the work was held up and physical progress of work was not commensurate within time as stipulated in the work order even though there was no hindrance on complete site. The plaintiff was granted reasonable time to complete the work which he never refuted till show cause notice dated 15.06.2021 was issued to it to start the work immediately. The work order and the GCC make it clear that a contractor is required to submit bills and intention to complete the work at the same time, however, plaintiff did not submit any bills as per the GCC. It is stated that the plaintiff did not complete the work within the stipulated time or the extended reasonable time granted by the defendant and kept making excuses and ultimately abandoned the work unfinished and under such compelling circumstances, the defendant was constrained to issue a show cause notice. The plaintiff failed to give any satisfactory reply to the said notice. Further the plaintiff was called upon to finish the work which he refused to do. Without submitting bills, the plaintiff has alleged that he was unable to complete the work due to non-payment. The issuance of legal notice would not absolve plaintiff of his legal and contractual duty to furnish the bills. It is further stated that suit CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 16 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:24:18 +0530 was filed by plaintiff in March 2022 and that no order had been passed by the Court prohibiting the defendant department from taking any action against the plaintiff.
28. It is further denied that the agreement came to an end on 02.01.2021 due to efflux of time since the plaintiff applied for the extension of time on 21.09.2020 and the same was granted by the defendant as provisional extension to time and the same was never refuted by the plaintiff. It is submitted that the approval for removal of trees from the concerned department is time taking process and therefore the defendant had given part hindrance free site to the plaintiff to complete part site and same was agreed to by the plaintiff. The structural drawing were also provided to the plaintiff with the work order. The plaintiff was granted reasonable extension of time several times. It is denied that the letters dated 30.09.2021, 31.12.2021 and 31.03.2022 were not served upon the plaintiff.
29. It is further submitted that as per department procedure before filing of the present suit, the defendant department had initiated process against the plaintiff and passed the order under clause 2 of GCC thereby imposing levy of compensation of Rs.40,22,025/-, as intimated to plaintiff through letter dated 30.06.2022. The plaintiff had agreed to record the joint measurement and same was to be recorded in site register but the plaintiff never agreed to sign on site register as the plaintiff was working on instruction basis. The plaintiff did not ask for copy of the measurement book of the work recorded. Rest of the averments made in the plaint are denied and it is again reiterated CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 17 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:24:29 +0530 that plaintiff is not entitled to any payment as alleged for want of submission of the final bill and labour clearance certificate and it is prayed that suit of the plaintiff be dismissed.
30. Plaintiff filed replication reiterating the averments made in the plaint and denying contra averments made in the Written Statement. It is denied that the SPA does not grant Mr. Kamal Goel power to institute the present suit. It is stated that Mr. Kamal Goel is a partner of the plaintiff firm which consists of two partners and that Mr. Kamal Goel has been duly authorized by Mr. Ram Niwal Goel, the other partner of plaintiff firm. It is denied the purported bills are internal proceedings of the department. It is submitted that the bills are prepared on the basis of joint measurement recorded by the concerned officer of defendant with assistance of the plaintiff and verified and passed by the Engineer- in-Charge. From the date of passing the bill, the defendant is liable to pay the passed bill amount within 10 days and in case of final bill within 3 months or 6 months as per Section 30 of CPWD Works Manual and in case of failure to release the passed bill amount within above time, the plaintiff is entitled for interest. It is submitted that delay in execution of work was not attributable to the plaintiff. The plaintiff was always ready to execute the work and to complete it, however, he could not do so as the defendant withheld the payment of passed 1st RA bill amounting to Rs.1,01,83,222/- w.e.f. 29.10.2020 and 2nd RA bill submitted on January, 2021. Despite intimating vide letter dated 22.06.2021, the defendant failed to release the amount and started taking illegal action under clause 2 and 3 of GCC against the plaintiff. It is denied that defendant had removed 05 nos. of trees from the site CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 18 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:24:38 +0530 after getting permission/approval from the forest department under DPTA 1994 and saved 02 Nos. of trees as per revised plan approved by the department on 08.11.2019. It is stated that the plaintiff had requested for removal of trees which were coming in the given layout plan vide its letter dated 21.09.2020 and 16.06.2021 which proves that the trees were not removed on 08.11.2019 or thereafter. It is reiterated that work was delayed due to the hindrances at site and that the defendant department had not removed the hindrances in spite of requests made by the plaintiff through its letters. Rest of the averments made in the written statement are denied and it is prayed that suit of plaintiff be decreed as prayed for.
31. From the pleadings of parties, following issues were framed:-
1) Whether the plaint has been signed and verified and suit has been instituted by a duly authorized person? (OPD)
2) Whether the plaintiff is not entitled to suit amount for want of submitting final bills for payment? (OPD)
3) Whether the plaintiff is not entitled to refund of security deposit/earnest money for want of compliance with Clauses 17 &45 of GCC? (OPD)
4) Whether plaintiff is entitled to decree of recovery of Rs.1,58,77,360/- against the defendant, as prayed for? (OPP)
5) Whether the plaintiff is entitled to decree of declaration thereby declaring the letters/order CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 19 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:24:47 +0530 bearing no.SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by defendant are null and void? (OPP)
6) Whether the plaintiff is entitled to decree of permanent injunction thereby restraining the defendant to enforce/implement the letters/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022 and D/98/EE(Pr.)/KPZ/2022-23 dated dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/ KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 against the plaintiff? (OPP)
7) Whether the plaintiff is entitled to decree of recovery of amount, if any, recovered by the defendant department on the basis of letter/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022 or other clauses of contract from the payable amount of the plaintiff in other works during the pendency of the suit? (OPP)
8) Whether plaintiff is entitled for interest. If yes, at what rate and for which period? (OPP) CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 20 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:24:58 +0530
9) Relief.
32. In order to prove its case, plaintiff has examined Sh. Kamal Goel, its partner/son, as PW1. He has reiterated the facts averred in the plaint in his affidavit Ex.PW-1/A and relied upon following documents:-
S.No. Details of documents Exhibit
1. Form A containing name of the present partners Ex.PW-l/1
2. Form B issued by the Registrar of Partnership Ex.PW1/2 Firms disclosing the number and registration date of this partnership firm as ROF/North/55 of 2017 dated 18.01.2017
3. Photocopy of work order Ex.PW1/3 No.EE(Pr)/KPZ/SYS/2019-20/14 dated 03.01.2020 for a sum of Rs.4,02,20,253/-
4. Received copy of letter dated 13.03.2020 issued Ex.PW1/4 by plaintiff
5. Letter of plaintiff dated 31.07.2020 along with Ex.PW1/5 office memo dated 13.05.2020
6. Letter of plaintiff dated 21.09.2020 Ex.PW1/6
7. Photocopies of 2 letters of defendant both dated Ex.PW1/7 & 09.03.2021 Ex.PW1/8
8. Photocopy of letter of plaintiff dated 16.06.2021 Ex.PW1/9
9. Show Cause Notice dated 15.06.2021 Ex.PW1/10
10. Reply of plaintiff dated 22.06.2021 qua said Ex.PW1/11 show cause notice
11. Received copy of Legal notice dated 25.08.2021 Ex.PW1/12
12. Original postal receipts Ex.PW1/13 & Ex.PW1/14 respectively
13. Print-out of email dated 25.08.2021 Ex.PW1/15
14. Photocopy of Ist RA Bill Ex.PW1/16
15. Non-starter Report dated 31.01.2022 Ex.PW1/17
16. Structural drawing provided to the plaintiff with Ex.PW1/18 work order
17. Print-out of 11 colour photographs showing Mark "A" to existing trees within the constructed column and Mark "K". plinth CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 21 of 73 Digitally signed ILLA by ILLA RAWAT Date:
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18. Letter of defendant dated 28.03.2022 along with Ex.PW1/19 & its envelope Ex.PW1/20
19. Show cause notice under clause 3 of GCC dated Ex.PW1/21 12.05.2022
20. Reply of plaintiff dated 24.05.2022 qua said Ex.PW1/22 show cause notice
21. Original postal receipt and acknowledgment Ex.PW1/23 & Ex.PW1/24
22. Original letter dated 30.06.2022 Ex.PW1/25
23. Letter dated 04.07.2022 Ex.PW1/26
24. Extract of Section 29 of CPWD Works Manual, Ex.PW1/27 2014
25. Letter of defendant dated 15.12.2022 Ex.PW1/28
26. Show Cause Notice dated 15.02.2023 Ex.PW1/29
27. Reply of plaintiff qua said show cause notice Ex.PW1/30
28. Legal notice dated 25.09.2023 Ex.PW1/31
29. Certificate under Section 65 B of the Indian Ex.PW1/32 Evidence Act
33. During his cross-examination, PW1/plaintiff deposed that he had been working as MCD Contractor for more than 20 years. He had filed the present suit for recovery of amount in respect of work order No.14 dated 03.01.2020. He started the work in respect of said work order in the month of March, 2020. The work was stopped for sometime due to Covid-19 pandemic and thereafter he again started work in the month of June, 2020. He had written letter to the department regarding the same.
34. During his further cross-examination, PW1 admitted that the date of completion of work of the said work order was 02.01.2021 as per agreement. He was well aware of all the terms and conditions of the agreement. He got to know about the hindrance of trees at the site after verifying from the layout plan in the month of July, 2020. He had completed demolition work at CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 22 of 73 Digitally signed by ILLA RAWAT ILLA Date:
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the site in the month of March, 2020. He was unable to recall as to how many rooms and floors were to be constructed as the work order was very old. He was also unable to recall the percentage of the hindrance of trees at the site. He further depose that there was no other hindrance except trees at the site. He admitted that partly hindrance free site was handed over to him for execution of the work order. He, however, stated that he could not have completed the work at site till the time hindrance was removed from there. He had written a letter to the department to inform them how he had been impacted by the Covid and was unable to execute the work pertaining to the work order. The department did not hand over the layout plan and architectural drawing to him before execution of the work order and handed over the same to him in the month of May/June, 2020. The PW1 admitted that he continued to execute the work even after expiry of date of completion of work order as per agreement. He volunteered to state that he had written a letter to the department regarding the same.
35. When asked to explain as to what was the hindrance due to which he was unable to complete the execution of the work, the PW1 responded by stating that there were 3-4 trees at the work site due to which work could not be completed. He volunteered to state that he had already filed photographs of the site on Court record.
36. During his further cross-examination, PW1 deposed that he was given extension of time 2 - 3 times by the defendant but could not complete the work despite extension of time as trees CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 23 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:25:30 +0530 were not removed from the site by the defendant. Since the trees were in middle, he could not lay ground floor roof to progress further with the work.
37. When asked to explain why he had commenced work at site when he did not have hindrance free site, the PW1 deposed that he was assured by officials of MCD that hindrance would be cleared but unfortunately the said trees were not removed by the officials of defendant.
38. The PW1 admitted that the security is not return till such time that contractor completes work and period of defect liability gets over. He was unable to recall if there was a clause in the contract for payment of interest by defendant, in the event there is a delay in clearing the dues of the contractor. The PW1 admitted he was called for personal hearing on 08.04.2022 and that he did not attend the same. The PW1 volunteered to state that he had attended other subsequent personal hearings. He had not agreed during said personal hearings to complete the work. He volunteered to state that till such time trees were removed, he could not have completed the work.
39. During his further cross-examination, PW1 deposed that he had replied to all the show cause notices issued to him by the officials of defendant. His work was being supervised by officials of defendant daily. He admitted that a joint meeting had taken place on 01.08.2022 for measurement of the executed work. The record of measurement was kept by the officials of MCD with assurance that he would be supplied copy of the same.
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40. The PW1 denied that he could have completed the work other than that falling in the site where trees were causing obstruction or that he deliberately did not complete the same. He further denied that he failed to complete the work despite extension of time. The PW1 volunteered to state that the obstructions were never removed by the officials of defendant. The PW1 also denied that he was not entitled to claim anything from defendant as he had failed to complete the work or that defendant had taken proper action by closing the incomplete work contract to assign work to some other contractor.
41. No other witness was examined on behalf of plaintiff.
42. In order to prove their defence, defendant has examined Sh. Gulshan Kumar Nim, Jr. Engineer (Proj.), Keshav Puram Zone, MCD, as DW1. He has reiterated the facts averred in the written statement in his affidavit Ex.DW-1/A and relied upon following documents:-
S.No. Details of documents Exhibit
1. Photocopy of General Condition of Contract Ex.DW-l/1
2. Photocopy of Architectural Drawings Ex.DW-1/2
3. Photocopy of letter dated 10.12.2020 from Forest Ex.DW-1/3 Department
4. Photocopy of letter dated 09.03.2021 Ex.DW-1/4 (already exhibited as Ex.PW1/8)
5. Photocopy of letter dated 07.06.2021 Ex.DW-1/5
6. Photocopy of letter dated 15.06.2021 Ex.DW-1/6 (already exhibited as Ex.PW1/10) CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 25 of 73 Digitally signed ILLA by ILLA RAWAT Date:
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7. Photocopy of letter dated 12.04.2022 Ex.DW-1/7
8. Photocopy of letter dated 12.05.2022 Ex.DW-1/8 (already exhibited as Ex.PW1/21)
9. Photocopy of relevant pages of Hindrance Book Ex.DW-1/9
43. During his cross-examination, the DW1 deposed that the date of completion work order No.14 dated 03.01.2020 was 02.01.2021. The plaintiff had mobilized his resources to the site for execution of the work on 03.01.2020. Since elections were due in February, 2020, they handed over site to plaintiff, orally and not in writing, in February, 2020, after election, and he remained in possession of the site till completion of work. The DW1 was unable to state the exact date till which site remained in possession of the plaintiff. The DW1 admitted that at the time of handing over the work order No.14, it was mandatory duty of the defendant department to open the site order book, Hindrance Register, Cement Register, Steel Register and Measurement Book. The said registers/books were issued by Engineering Department of concerned Division of defendant. The issuance is of Measurement Book while other registers/book were purchased from the market as per need. The receipt of purchasing the abovesaid registers / books are not kept in the record. The DW1 denied that the registers/books pertaining to present case were purchased during the pendency of the case and so its receipt was deliberately not produced before this Court. The DW1 admitted that the defendant department had not written any letter to the concerned Division for issuance of the required registers / books.
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44. During his further cross-examination, DW1 deposed that as per agreement/work order, Ex.PW-1/3, the date of completion of work was 02.01.2021. In response to question whether any show cause notice under clause 2 and 3 of GCC issued to plaintiff prior to 02.01.2021, the DW1 replied in negative. The DW1 was then asked if any approval of extension of time, in terms of clause 5 of GCC, was issued to plaintiff prior to 02.01.2021, as per hindrances intimated by the plaintiff through letters dated 31.07.2020 Ex.PW-1/5 and dated 21.09.2020 Ex.PW-1/6. The DW1 replied stating that extension of time is given only after expiry of the original time. Since both the letters referred to by plaintiff were prior to expiry of the time for execution of contract, no extension of time was given pursuant to said letters but was given later on. As regards hindrances referred to by plaintiff, there were three blocks in which construction was to be done, two blocks were free of hindrance while there were two trees in the third block. No time was fixed for removing the two trees which were causing hindrance and that the said two trees had not been removed till date. The DW1 volunteered to state that it was so since the drawings at the site had been changed due to the hindrance caused by the trees. When asked to specify the date, the DW1 after refreshing his memory from the file deposed that it was on 08.11.2019 and that the said drawings were changed before work order was issued to plaintiff on 03.01.2020 and were supplied to plaintiff along with work order. No receiving was taken from the plaintiff when he was supplied copy of changed drawings along with work order. The DW1 denied that no modified/changed drawings/site plan was provided to plaintiff CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 27 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:26:09 +0530 along with work order Ex.PW-1/3.
45. At this stage, the DW1 was asked whether defendant had replied to plaintiff's letter dated 31.07.2020, Ex.PW-1/5, and letter dated 21.09.2020, Ex.PW-1/6, to point out the fact that modified / changed drawing had already been supplied to him with the work order. The DW1 replied in negative. He admitted that layout plan Ex.PW-1/18 was provided to plaintiff after giving him work order. He further admitted that architectural drawing Ex.DW-1/2A at pages 58, 60 to 67 were given to plaintiff. He volunteered to state that they were given with the work order. He further deposed that CPWD Works Manual is applicable to work contract issued by MCD. There is only one agreement and no copies thereof are prepared. He admitted that all pages of agreement including GCC are required to be signed by both the parties.
46. When the DW1 was put Ex.DW-1/1 i.e. the copy of GCC, he admitted that page No.7 of GCC was missing. At this stage, the DW1 was directed to place copy of page 7 and Schedule F on record for perusal of the Court.
47. Based on Clause 5 of GCC and the schedule F to agreement/ work order, the DW1 was suggested that he had falsely stated that no extension of time was granted during subsistence of the original period of work order in view of Clause 5 of GCC and schedule F to the agreement / work order. The DW1 persisted with his earlier reply.
48. The DW1 admitted that as per Clause 5 of GCC, CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 28 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:26:17 +0530 1/4th of the work is to be completed within 1/8th period of the total contractual period under the work order. In response to question regarding action taken by MCD in the event contractor failed to complete 1/4th of the work within 1/8th period of the total contractual period under the work order, the DW1 replied that he was given a letter to speed up work and in case contractor does not speed up the work then he is issued a show cause notice under Clause 2 and 3 of GCC.
49. The DW1 admitted that the total tenure of the contract under the work order in the instant case was 12 months and that contractor was required to complete 1/4th work in three months but failed to do so in first three months and even in next three months. In response to question that the plaintiff had asked for extension of time as per Clause 5.2 vide letters Ex.PW1/5 & Ex.PW1/6 in view of the hindrances at the site, the DW1 stated that no extension of time was given to plaintiff. The DW1 admitted that he had not filed any proof of identity of his post in the defendant's department and had also not filed the authority letter issued by defendant to authorize him to give evidence. He volunteered to state that he could produce circular of MCD in this regard.
50. During his further cross-examination, the DW1 deposed that the revised / changed drawings were given to the plaintiff on 08.11.2019. He admitted that the work order was issued after 08.11.2019. Copy of the same had been placed on record and were pointed out at page no. 58 to 64 of documents filed with written statement. The DW1 denied that the drawings CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 29 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:26:26 +0530 from page no. 58 to 64 were not of changed / revised drawings. He admitted that in the work order Ex.PW1/3, the enclosure of the supply of drawings to the plaintiff is not mentioned. The concerned officer of the defendant was aware of about the existence of trees in the alignment of execution of work at site before the issuance of work order. He volunteered to state that there were trees existing in some part of layout plan within the alignment of work area of execution of work. He admitted that CPWD work manual of relevant period is applicable on all the work orders issued by MCD.
51. When asked to specify how many tress were there in the work area and when they were removed, the DW1 deposed that there were 5 trees and that the said trees were removed on 10.12.2020 and that the relevant document in this regard was at page no. 57 of the documents filed by the defendant alongwith the written statement.
52. At this stage, the DW1 was asked to specify the actual date when the trees were removed since vide document at page 57, MCD had only been granted permission by the forest department to remove the trees. The DW1 expressed his inability to state the exact date and stated that it must have been about one month after permission was granted by the forest department. He clarified that the permission was forwarded to horticulture department of MCD and hence he was unable to give the correct date on which trees were removed. He, however, admitted that the five trees in question were between grid 1 to 13. In response to question whether there were any other tree(s) in the work area CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 30 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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besides the referred five trees, the DW1 deposed, that there was no other tree in the work area, except the five trees in question which were removed by MCD.
53. During his further cross-examination, the DW1 admitted that the plaintiff had executed the work of erecting columns and plinth beams upto first floor height from grid1 to 23. He further admitted that maximum measurement of the work done by plaintiff was taken in the first running bill Ex.PW1/16. He also admitted that there were still two trees in the work area of the plaintiff. The DW1 further admitted that defendant had removed the trees after the lapse of the period of completion of work order i.e. from 03.01.2020 to 02.01.2021.
54. In response to question as to whether defendant had approved and granted extension for completion of work order in terms of clause 5 of GCC, when MCD itself had failed to remove the trees, the DW1 deposed that the plaintiff was granted extension on 09.03.2021 in terms of clause 5 of GCC and pointed out Ex.PW1/8 at page no. 33 of the documents filed by plaintiff. The DW1 admitted that Ex.PW1/8 pertained to provisional extension of time only and was not in terms of clause 5 of GCC. Though DW1 stated that provisional extension of time was granted to plaintiff under clause 5.2 of GCC, after going through the said clause, he admitted that there was no reference to 'provisional extension of time' in clause 5.2.
55. During his further cross-examination, the DW1 denied that he was not duly authorized to appear and to depose on CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 31 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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behalf of defendant or that there was no circular issued by defendant authorizing Junior Engineer to depose on behalf of the department. He volunteered to state that since he was supervising the execution of the work order he was capable of deposing on behalf of the department. He admitted that copy of circular referred to in Para 1 of his affidavit Ex.DW-1/A had not been placed on record.
56. At this stage, the DW1 was put Ex.PW-1/16 i.e. the first running bill dated 29.10.2020 in respect of work done by the plaintiff. He admitted that the amount reflected from Ex.PW-1/16 had not been paid to plaintiff till date. The DW1 denied that plaintiff had worked at site from 29.10.2020 upto January, 2021 and stated that he had worked at site till 16.11.2020. When asked if the second running bill submitted by plaintiff had been verified / certified, the DW1 answered in negative stating that it had not been as contractor refused to accept the measurement book and the bill.
57. Written communications dated 04.07.2022 and 26.07.2022 were given to contractor to accept the measurement book and the bill. The said communications had not been filed on record. As the witness produced the original file with communications during his deposition, he was directed to file photocopy of the communications on record and thereafter the same were exhibited as Ex.DW-1/P-1 and Ex.DW-1/P-2 respectively. The DW1 admitted that Ex.DW-1/P-1 and Ex.DW-1/P-2 were dated after filing of the instant suit by the plaintiff. He denied that communications Ex.DW-1/P-1 and CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 32 of 73 Digitally signed by ILLA RAWAT ILLA Date:
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Ex.DW-1/P-2 were never given to the plaintiff or that the same were fabricated later on.
58. During his further cross-examination, the DW1 admitted that the measurements conducted by the department with respect to second bill prepared by the department as well as the second bill had not been placed on Court record. He, however, denied that no measurements were conducted or recorded in the measurement book or that the plaintiff was forced to accept the second bill prepared by the department and to give no objection with respect to the same.
59. At this stage, the DW1 was asked to give details of the status of work at site, which was assigned to plaintiff but was terminated vide letter dated 04.07.2022, as on date. The DW1 deposed that the process of recall of tender given to plaintiff was in process and thereafter the same would be assigned to some other contractor as per due process. The DW1 denied that the process of recall of tender and reassignment had not been done till date as the work site was not free from hindrances. When asked to explain why tender had not been recalled till date, the DW1 clarified that the process of recall of tender is detailed. The file was required to be vetted by the Commissioner MCD and the site inspection was also to be carried out. Hence the process of recall of tender had not taken place though the the budget for recall of tender had been sanctioned by the Commissioner MCD. The DW1 admitted that he had not filed any document on record from which it could be concluded that there was sufficient budget with the department for recall of tender. He denied that there was no CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 33 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:27:00 +0530 budget sanctioned for recall of tender in the instant case.
60. At this stage, the DW1 was put photographs Mark "A" to Mark "K", of the site, from judicial file and admitted that the same were of the site of work after which the said photographs were exhibited as Ex.DW-1/P-3 (colly). When put Ex.PW-1/25, whereby penalty was imposed on the plaintiff, the DW1 admitted that he had not placed on record any document from which it could be ascertained that MCD had suffered loss in the sum of Rs.40,22025/- due to delay in completion of work by the plaintiff. The DW1 admitted that earnest money and security money deposited by the plaintiff when he was awarded tender had not been refunded to him. He volunteered to state that the same had been forfeited. He admitted that besides forfeiting the earnest money and security money, the penalty has also been imposed on plaintiff. He admitted that there was nothing placed on record from which it could be ascertained that defendant department suffered loss to the extent of security money and earnest money deposited by the plaintiff.
61. The DW1 denied that on 04.07.2022 MCD neither had budget nor hindrance free site for plaintiff to complete the work. He clarified that the MCD not only had the budget for work but also two out of three grids were free from hindrance for plaintiff to complete work as on 04.07.2022. When asked to clarify why plaintiff's first RA bill had not been cleared despite the fact that MCD had budget for work, the DW1 responded by stating that it was a matter of finance department of HQ.
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signed by ILLA
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62. During his further cross-examination, DW1 deposed that he had not filed any document on record from which it could be ascertained that department had budget for completion of work. He was unable to admit or deny if the plaintiff was to be given complete site in one go for completion of work. He volunteered to state that nothing was mentioned in this regard in the official file.
63. No other witness was examined on behalf of the defendant.
64. Arguments were addressed by Sh.A.K. Trivedi, counsel for plaintiff as well as Sh.Sanjeet Malik, counsel for defendant who reiterated averments made in plaint and written statement respectively in support of their arguments. Written submissions and judgments were also filed on behalf of plaintiff.
65. Counsel for plaintiff has contended that the plaintiff was awarded civil and electric work for construction as detailed in para 3 of the plaint vide work order bearing no.14 dated 03.01.2020 for total contractual amount of Rs.4,02,20,253/- on 03.01.2020. The stipulated date of completion of work was 02.01.2021. The plaintiff intimated about hindrances, namely trees, falling in the work area to defendant vide his letters dated 13.03.2020, 21.07.2020 and 21.09.2020. No reply was given by defendant to plaintiff's communications. The plaintiff submitted 1st RA bill, which was passed in October, 2020 and also submitted 2nd RA bill in January 2021 which was neither verified nor passed by the defendant.
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66. It is further contended that instead of releasing sum of Rs.1,01,83,222/- towards passed 1st RA Bill and a sum of Rs.6,70,555/- towards 2nd RA Bill, the defendant vide its letter dated 09.03.2021, directed plaintiff to start work and also granted provisional extension of time upto 30.06.2021 to complete the work. The plaintiff replied to defendant's letter requesting for release of passed amount of 1st RA Bill and also brought to its notice hindrances which were preventing him to complete work as had already been communicated by plaintiff vide his earlier letters. On 15.06.2021, defendant issued a show cause notice under Clause 2 of GCC to plaintiff which was duly replied to by the plaintiff vide reply dated 22.06.2021. Since defendant failed to respond to plaintiff's repeated requests to clear the withheld amount of passed bill and to process and pass the 2nd RA bill submitted by plaintiff, the plaintiff sent a legal notice dated 25.08.2021 U/s 478 of DMC Act, 1957 to defendant. The plaintiff also filed an application for pre-institution mediation before Central District Legal Services Authority on 01.11.2021. The defendant failed to participate in mediation proceedings despite service of notice of mediation proceedings. The plaintiff thus proceeded to file the present suit on 28.03.2022. On 28.03.2022 itself defendant granted provisional extension of time till 30.06.2022 to plaintiff to complete the work.
67. It is contended that as soon as summons of suit were served upon defendant, defendant started taking arbitrary and illegal actions against plaintiff under clause 2 & 3 of GCC. A show cause notice dated 12.05.2022 was issued to plaintiff which was duly replied to by the plaintiff on 24.05.2022. The defendant CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 36 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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also levied penalty of Rs.40,22,025/- under clause 2 of GCC on plaintiff on 30.06.2022. Further, clause 3 of GCC was invoked against plaintiff on 04.07.2022. Vide its letter dated 15.12.2022 defendant informed plaintiff regarding closure of contract under clause 3 of GCC and that it would be taking further action against the plaintiff. Another show cause notice dated 15.02.2023 was issued to plaintiff under revised instructions for enlistment/revalidation which was also replied to by the plaintiff.
68. It is further contended that from the written statement filed by defendant to the original plaint, plaintiff came to know that the Forest Department, pursuant to defendant having taken permission, had removed five trees existing from Grid A to D of structural drawing, from the site on 08.11.2019 which was not correct and that the said trees were on the site itself when the plaintiff had filed the present suit.
69. It is stated that in view of the facts brought from the written statement filed by the plaintiff as well as the action of proceeding against plaintiff under clause 2 and 3 of GCC, plaintiff was compelled to amend its plaint. The defendant is taking advantage of its own wrong and has caused wrongful loss to plaintiff by its repeated acts of omission. While failing to remove the hindrances at the spot and turning blind eye to the situation arising pursuant to Covid-19 pandemic, the defendant failed to proceed as per the terms of contract and gave provision extensions of time to plaintiff to complete the contractual work. It deliberately did not release the amount of passed 1 st RA bill and also failed to process the 2nd RA bill thereby causing considerable CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 37 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:28:44 +0530 financial crunch upon the plaintiff. Rather, it imposed penalty upon plaintiff and also closed the contract while forfeiting the security amount and earnest money deposited by the plaintiff with the defendant at the time of grant of the work order. The plaintiff is entitled to relief(s) as prayed for.
70. The counsel for plaintiff has relied upon following judgments in support of contentions raised by him:-
(i) North Delhi Municipal Corporation vs. IJM Corporation, MANU/DE/1441/2022;
(ii) Shripati Lakhu Mane vs. The Member Secretary, Maharashtra Water Supply and Sewerage Board & Ors. MANU/SC/0382/2022.
(iii) Harcharan Dass Gupta Construction Pvt. Ltd. vs. MCD & Ors., MANU/DE/4011/2018;
(iv) North Delhi Municipal Corporation & Ors. vs. Shish Pal, MANU/DE/1200/2018
(v) DSIIDC vs. Rama Construction Co. OMP 774/2013 dated 12.02.2014 (DHC)
(vi) DSIIDC vs. M/s Rama Construction Co, 2014 (3) ArbLR 116 (Del) (DB)
(vii) DSIIDC vs. Rama Construction Co., SLP (C) No.35154 decided on 09.01.2015 It is thus prayed that suit of plaintiff be decreed as per prayers made in the prayer clause of the plaint.
71. Per contra, counsel for defendant has contended that the plaintiff was to commence work within seven days of award of work order dated 03.01.2020. The plaintiff commenced work at the site only in March, 2020. The work was to be completed by CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 38 of 73 Digitally signed ILLA by ILLA RAWAT Date: RAWAT 2025.02.22 12:28:53 +0530 plaintiff in four phases, however, the plaintiff failed to submit time and progress chart. The work at site remained suspended for some time due to prohibition order during Covid-19 pandemic. The plaintiff commenced work again at site in June, 2020 but at a very slow pace and continued to write letters/communications to defendant to create some background for future claims. If the version given by plaintiff is believed to be correct that he had received layout plan much later. In these circumstances, the plaintiff could not have commenced demolition work at the site as claimed by him. Even assuming that the trees were causing hindrance at some portion of the site, the plaintiff could have continued to complete work at other portions of the site but he failed to do so. The trees in question had already been removed before award of work contract to the plaintiff. Copy of layout plan was given to plaintiff alongwith the work contract. The plaintiff himself did not have sufficient labour and material to complete the work pertaining to work order due to Covid-19 pandemic and therefore he stopped work at the site of his own accord. Though the concerned senior officials of defendant tried to resolve the issue by giving opportunity of personal hearing to the plaintiff, the plaintiff failed to attend the said meetings. The plaintiff deliberately and willfully delayed the completion of work at the site. The plaintiff is trying to take advantage of his own wrong and is not entitled to any relief from the Court. It is prayed that suit filed by plaintiff be dismissed.
72. In rebuttal counsel for plaintiff has contended that though the work order was awarded to plaintiff on 03.01.2020, the first entry of Ex.PW1/9 i.e. the Hindrance Register makes it clear CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 39 of 73 Digitally signed by ILLA RAWAT ILLA Date:
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that the site itself was not available to plaintiff from 03.01.2020 to 22.02.2020 due to Assembly Elections. Thus, at initial stage itself there was 51 days delay as the school was being used for Assembly Elections. The plaintiff had informed the concerned Executive Engineer regarding the same vide his letter Ex.PW1/4. This has also been admitted by DW1 during his cross- examination. It is admitted that a layout of the site was given to the plaintiff with the work order, however, the structural drawings were not made available. Further the architectural drawings were also not given to plaintiff. Since the layout plan was available with the plaintiff, he could start with demolition at site.
73. The plaintiff had started work of construction on two other grids. As per CPWD Manual, plaintiff was to be given a clear site alongwith architectural/ structural drawings. Since the same were not given to plaintiff, plaintiff could not have proceeded with the work. Even the defendant could not have helped the plaintiff for the defendant itself was dependent on other departments to procure architectural/structural drawings. The proposed site plan was not approved and hence plaintiff could not have proceeded with work at site. Besides these basic issues, failure on the part of defendant to release funds with respect to passed 1st RA bill and 2nd RA Bill which was neither processed nor passed posed considerable financial difficulties for plaintiff who was already suffering losses on account of paucity of labour and hike in prices of material etc. due to onset of Covid-19 pandemic. It is stated that instead of taking a sympathetic view the defendant decided to punish the plaintiff for approaching the Court for redressal of his grievances. The defendant cannot wriggle out of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 40 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:29:08 +0530 its own responsibility and penalize the plaintiff. It is again prayed that suit of plaintiff be decreed as prayed for.
74. I have heard learned counsels for parties and my findings on aforesaid issues is as under:-
ISSUE NO.1:-
Whether the plaint has been signed and verified and suit has been instituted by a duly authorized person? (OPD)
75. Onus of proving this issue was on plaintiff. The defendant has challenged the suit filed by plaintiff on the ground that SPA executed in favour of Sh. Kamal Goel by Sh. Ram Niwas Goel, the other partner, is not proper and does not authorize Sh. Kamal Goel to file the present suit.
76. Per contra, counsel for plaintiff has contended that Sh. Kamal Goel, being one of the partners of the plaintiff firm is fully competent to sign and verify the plaint and to institute the suit on behalf of plaintiff firm. He has relied upon Form-A & B of plaintiff partnership firm which have been exhibited as Ex.PW1/1 and Ex.PW1/2. It is contended that name of Sh. Kamal Goel is mentioned as one of the partners of the plaintiff firm and hence it sufficiently entitles him to institute the suit and to proceed with it on behalf of plaintiff firm.
77. As per Order 30 Rule 1 CPC, any two or more persons claiming to be partners may sue in the name of firm of which such persons were partners at the time of accruing of cause of action. Further in such a case it would suffice if pleading or CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 41 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:29:17 +0530 other document in the said case is signed, verified or certified by anyone such person.
78. Admittedly, the plaintiff has filed Form A & B issued by Registrar of Firms. The name of Sh. Kamal Goel, who has signed and verified the plaint and instituted the suit on behalf of plaintiff appears at serial no.2 in the list of partners reflected from Form-A issued by Registrar of Firms to the plaintiff firm. Thus there is no infirmity in the plaint filed on behalf of plaintiff firm by its partner Sh. Kamal Goel. Even otherwise at the time of empanelment of the plaintiff firm and subsequently at the time of grant of work contract defendant must have verified the status of the plaintiff firm as well as name of persons who were at the helm of affairs of the firm. Thus defendant is not permitted to take a plea and object to the maintainability of the present suit on the ground that Sh. Kamal Goel is not legally authorized to file the present suit. Though the SPA was filed on record by plaintiff and finds mention of four partners instead of two partners in the plaintiff firm, the same has not been relied upon by plaintiff and is even otherwise not required in view of provisions of Section 30 of CPC. This issue is decided in favour of plaintiff and against the defendant.
ISSUE NO.2:-
Whether the plaintiff is not entitled to suit amount for want of submitting final bills for payment? (OPD) AND ISSUE NO.4:-
Whether plaintiff is entitled to decree of recovery of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 42 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:29:24 +0530 Rs.1,58,77,360/- against the defendant, as prayed for? (OPP) AND ISSUE NO.8:-
Whether plaintiff is entitled for interest. If yes, at what rate and for which period? (OPP)
79. All these issues are being taken up together as they are inter connected. It is a matter of record that plaintiff was awarded work order No.EE(Pr)/KPZ/SYS/2019-20/14 dated 03.01.2020 for a sum of Rs.4,02,20,253/-, Ex.PW1/3, pursuant to tender documents submitted by defendant in response to Notice Inviting Tender (hereinafter referred to as NIT), part of Ex.DW1/1, for construction of 20 Classrooms, 2 Nursery Room, 1 Computer Room, 1 Library Room , 1 Staff Room, 1 Hall etc. in M.C. Primary School, B-2 Block, Ashok Vihar in C-73N/KPZ. The clause 9 of said NIT, part of Ex.DW1/1, is very relevant and reads as under:-
"9. The description of the work as follows:-
Construction of 20 Classroom, 2 Nursery Room, 1 Computer Room, 1 Library Room, 1 Staff Room, 1 Hall etc. in M.C. Pry. School B-2 Block, Ashok Vihar in C-73N/KPZ. Copies of other drawings and documents pertaining to the works will be open for inspection by the tenderers at the office of the above mentioned officer. Tenderers are advised to inspect and examine the site and its surrounding and satisfy themselves Before submitting their tenders as to the nature of the ground and sub-soil (so far as is practicable). The form and nature of the site, the means of access to the site, the accommodation they may require and in general shall themselves obtain all necessary information at to risks, contingencies and other Circumstances which may influence or effect their tender. A tenderer shall be deemed to have full knowledge of the site whether he inspects it or not and no extra charges consequent on any miss-under standing or otherwise shall be allowed. The tenderer shall be responsible for arranging and maintaining at his own cost all materials, tools & CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 43 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:29:31 +0530 plants, water electricity access, facilities for workers and all other services required for executing the work unless otherwise specifically provided for in the contract documents. Submission of a tender by a tenderer implies that he has read this notice and all other contract documents and has made himself aware of the scope and specifications of the work to be done and of conditions and rates at which stores, tools and plant etc. will be issued to him by the department and local conditions and other factors having a bearing on the execution of the work."
80. From plain reading of above noted clause, it is apparent that plaintiff ought to have equipped itself and gained full knowledge of the site in question even before it made its bid for grant of tender. Since plaintiff made a bid and was successful in obtaining work contract, he is presumed to have complete knowledge of the site and hindrance(s), if any, which may have or could have hampered commencement and/or progress and/or completion of work at the site. The whole purpose of clause 9 in NIT appears to be that any contractor who applied for work contract by filing bid ought to be aware of the scope of the work he/it was to carry out and to deal with hindrances, if any, he it may come across, in course of discharge of work, appropriately and to be equipped to deal with existing hindrances by having appropriate action plan while commencing, carrying out and/or completing the assigned work. Assuming that in the instant case the work site posed hindrances in the form of trees within the work area, the plaintiff in the first instance is presumed to have complete knowledge regarding the same, by virtue of clause 9 of NIT, with some action plan to overcome them when he made bid pursuant to NIT and was awarded work in question.
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 44 of 73 Digitally signed by ILLA ILLA RAWAT
Date:
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81. Admittedly the plaintiff was awarded tender on 03.01.2020 and the stipulated date of completion of work awarded to plaintiff was 02.01.2021. The plaintiff claims that it had mobilized all its resources with intention to execute the work and constructed labour hutments, store etc. and asked the concerned officer of the project to handover complete site for execution of the work. The site was not handed over to him by the concerned officers and the officers of the Education Department as the old building of the school was to be used in Delhi Election-2020, proposed to be held on 07.02.2020. The Hindrance Register, Ex.DW1/9, placed on record by defendant finds recorded that site was not available to contractor from 03.01.2020 to 22.02.2020 i.e. for a period of 51 days. Thereafter, from 22.03.2020 till May/June 2020 also, work could not be conducted at site due to onset of Covid-19 Pandemic and lockdown declared pursuant thereto. The entries in Hindrance Register, Ex.DW1/9, again support the averment in the plaint that work could not take place from 22.03.2020 to May/June 2020 due to Covid-19 Pandemic. Since the work site was not available to the plaintiff upto 22.02.2020 and from 22.03.2020 till May/June 2020, under no circumstances the contract could have been completed by the contractor by 02.01.2021. The contractor i.e. the plaintiff ought to be entitled to the benefit of period during which he was unable to carry out work at site due to reasons which were beyond his control.
82. There are no further entries in the Hindrance Register maintained by the Defendant Corporation and plaintiff's contention that he was unable to carry out work at the site due to CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 45 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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hindrance posed by 5 trees which fell in work area do not find mention in the Hindrance Register.
83. From the cross-examination of Sh.Kamal Goel, AR/partner of plaintiff, it is brought out that he had completed demolition work at the site in the month of March 2020 itself. At the same time, he states that he got to know about the hindrance of trees at the site after verifying from the layout plan in the month of July 2020. He admitted that there was no other hindrance except trees at the construction site and that the site handed over to him for execution of work included partly hindrance free site. In his cross-examination, PW1 deposed that he was handed over layout plan and architectural drawing of the site in the month of May/June 2020. If the statement given by PW1 is to be believed then it is difficult to comprehend how it could carry out demolition work at the site and completed the same in the month of March 2020 itself without having any layout plan or architectural drawing of the site.
84. As per deposition of PW1, he came to know about the hindrance of trees at the site after verifying from the layout plan in the month of July 2020. Thus, it is apparent that despite the fact that PW1 had received layout plan and architectural drawing in the month of May/June 2020, the PW1 and/or other employees/partners etc. of plaintiff did not inspect the site to find out if any hindrances existed at the site which may prevent plaintiff from carrying out work. As already observed in foregoing paragraph, as per clause 9 of NIT, part of Ex.DW1/1, this exercise ought to have been carried out by plaintiff before CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 46 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:29:57 +0530 filing bid for tender. Moreover, the statement given by PW1 during his cross-examination, is in contradiction with averments made in para 19(iii) of amended plaint, incorporated pursuant to application U/o VI Rule 17 r/w Section 151 CPC filed on behalf of plaintiff on 21.07.2022, for he has stated therein that "the structural drawings provided to plaintiff with work order is enclosed with the list of document as Document No.19". Thus, there is a clear attempt on the part of PW1 to improve upon the case pleaded in the plaint. The plaintiff was provided structural drawing with the work order itself as its brought out from averments made in the replication. On one hand, PW1, one of the partners of plaintiff, claims that the work of demolition at site was completed in March, 2020 itself yet for reasons best known to plaintiff and/or its partners neither they nor any of their employees were actually aware of the status of the site viz. alleged trees which were hampering the work till 31.07.2020 when letter, Ex.PW1/5, was written by plaintiff to the officials of defendant.
85. Thus the first communication from the plaintiff to defendant, after allocation of work order on 03.01.2020, was vide letter dated 31.07.2020 i.e. Ex.PW1/5. He again wrote letter dated 21.09.2020, Ex.PW1/6, to the concerned Executive Engineer requesting for removal of trees from the site of work. When PW1 was asked during cross-examination as to why he had commenced work at site when he did not have hindrance free site, PW1 deposed that he was assured by the official of MCD that hindrances from the site would be cleared but unfortunately the said trees were not removed by the officials of the defendant. There is no reference to any such oral assurance by the officials of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 47 of 73 Digitally signed by ILLA ILLA RAWAT Date:
RAWAT 2025.02.22
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defendant to plaintiff in the plaint nor has he named any such official who may have given him assurance regarding removal of trees. Considering the total value of the work order which was Rs.4,02,20,253/-, it does not stand explained why plaintiff proceeded to commence work at site on ostensible oral assurance of some officials of defendant when there was no possibility of him progressing with the work let alone completing the same, without removal of trees which posed hindrance at the site and that too within stipulated period of 02.01.2021.
86. The first communication received by plaintiff from defendant was letter dated 09.03.2021, Ex.PW1/7, whereby he was asked to start work at the site immediately and to complete it without fail. He was also granted provisional extension of time to complete the work at site upto 30.06.2021 vide another letter dated 09.03.2021, Ex.PW1/8.
87. It appears that plaintiff responded to letter dated 09.03.2021 vide his letter dated 16.06.2021, Ex.PW1/9, wherein he asked defendant to pay sum of Rs.1,01,83,222/- towards 1st RA bill which had been verified and passed and also to remove the hindrances at the site. He further asked defendant to verify his 2 nd RA bill. In the meantime, defendant issued a show cause notice dated 15.06.2021, Ex.PW1/10, under Clause 2 whereby plaintiff was informed that since it was unlikely to complete work entrusted to it within extended date of completion due to wrongful delay or suspension of work or slow progress of work or because of reasons within its control, it had rendered itself liable to pay compensation and action under clause 2 was contemplated against CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 48 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:30:16 +0530 him. The said letter was responded to by plaintiff vide his letter dated 22.06.2021, Ex.PW1/11, wherein he again pointed out that he had not been granted proportional extension of time till the date of removal of hindrances and requested consideration for it. He also requested for payment of amount due to be paid to him qua his 1st RA bill and to verify and pass his 2 nd RA Bill. Thereafter, a legal notice dated 25.08.2021, Ex.PW1/12, was got issued to defendant by the plaintiff. Immediately thereafter plaintiff commenced pre-institution mediation proceedings before Central District Legal Services Authority and since defendant failed to participate in said proceedings despite service of notice, the plaintiff was issued non-stater report dated 31.01.2022. the plaintiff then filed the present suit on 28.03.2022. Pursuant to summons issued to defendant, a written statement was filed by the Corporation on 07.06.2022 and thereafter plaintiff amended the plaint to incorporate subsequent events.
88. It was alleged that Executive Engineer of plaintiff had sent letter dated 08.04.2022 thereby calling plaintiff for personal hearing on 12.04.2022 which was not attended to by plaintiff and/or its partners as it had already filed instant suit. It is the case of the plaintiff that from written statement filed by the defendant, it came to know that out of the five trees which had been causing hindrance at the site, the trees existing between Grid A to D of structural drawings provided to plaintiff with work order had been removed by the Forest Department. The defendant also failed to serve letters dated 30.09.2021, 31.12.2021 and 31.03.2022, whereby extension of time was granted, to plaintiff nor filed copy thereof in the Court. Rather a show cause notice CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 49 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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dated 12.05.2022 under clause 3 of the GCC, Ex.PW1/21, was issued to plaintiff. The plaintiff replied to said notice on 24.05.2022 vide Ex.PW1/22. The defendant then sent a letter dated 30.06.2022, Ex.PW1/25, whereby a levy of compensation of Rs.40,22,025/- was made against plaintiff in garb of order under clause 2 of GCC. This was followed by letter dated 04.07.2022, Ex.PW1/26, vide which earnest money deposited by plaintiff was forfeited and it was informed that unexecuted work would now be given to another contractor at risk and cost of plaintiff. Date of 18.07.2022 was fixed for final measurement of work. Lastly defendant wrote a letter dated 15.12.2022, Ex.PW1/28, which was in continuation of its letter dated 19.09.2022, whereby plaintiff was informed of actions approved against him by the competent authority. A show cause notice dated 15.02.2023, Ex.PW1/29, was also issued under revised instruction for inlistment/revalidation of contractor, 2016.
89. From the cross-examination of DW1, it is brought out that plaintiff's letter dated 31.07.2020, Ex.PW1/5, and letter dated 21.09.2020, Ex.PW1/6, were never replied to by the defendant Corporation. The DW1 explained that it was so as extention of time is granted only after expiry of the original period prescribed in the work order. Regarding the trees referred to by the plaintiff, it was stated by him that there was three blocks in which construction was to be done. Two blocks were free of hindrance while there were two trees in the third block. There was no time fixed for removing the two trees which was causing hindrance and that the same had not been removed till date. He, however, volunteered to state that it was so since the drawings of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 50 of 73 Digitally signed by ILLA ILLA RAWAT Date:
RAWAT 2025.02.22
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the site were changed due to hindrance caused by the trees and that the same were changed on 08.11.2019, before work order was issued to plaintiff on 03.01.2020 and were supplied to plaintiff alongwith work order. Although it was attempted to be brought out from cross-examination of DW1 that plaintiff was not provided structural drawing, Ex.PW1/18 or the architectural drawings, Ex.DW1/2, the plaintiff was not successful in doing so.
90. It was also attempted to be brought out from cross-
examination of DW1 that certain timelines were required to be followed by the contractor, in particular it was put to DW1 and he also admitted that as per Clause 5 of GCC, 1/4th of the work was to be completed within 1/8 period of the total contractual period under the work order. In the event, contractor failed to complete 1/4th of the work within 1/8th period of the total contractual period under the work order, a letter to speed up the work was given and if contractor still failed to do so he was issued show cause notice under clause 2 and 3 of GCC. Admittedly, in the instant case, no extension of time as per clause 5.2 was given to plaintiff despite letters, Ex.PW1/5, Ex.PW1/6 and Ex.PW1/11. This was despite the fact that contractor failed to complete 1/4th work in three months (total contract duration being 12 months). However, as already observed in foregoing paragraphs, since defendant failed to reschedule the period of contract despite the fact that site was handed over late by 51 days due to election and even thereafter due to suspension of construction activities till May/June, 2020 due to Covid-19 pandemic, hence following of specific timelines or completion of 1/4th of the work within 1/8th period of the total contractual period was not longer relevant.
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 51 of 73 Digitally signedILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:30:46 +0530
91. From further cross-examination of DW1, it is also brought out that there were five trees between Grid 1 to Grid 13 in the work area. The letter, Ex.DW1/3, dated 10.12.2020 issued by the Forest Department to Chief Engineer -II, MCD (North) only granted permission for removal of the five trees and did not indicate in any manner that the trees in question had been removed. The DW1 could not specify the dates when the trees were actually removed and stated that the permission received from Forest Department was forwarded to Horticulture Department of MCD. During his subsequent cross-examination, he however admitted that defendant had removed the trees after a lapse of period of the completion of the work i.e. after 02.01.2021.
There were still two trees in the work area of the plaintiff. In the meantime, plaintiff had executed the work of erecting columns and plinth beams upto first floor height upto 1 to 23. The maximum measurement of the work done by plaintiff qua first running bill, Ex.PW1/16 had already been done. As regards the 2nd Bill, he stated that measurements qua the 2 nd Bill had been done and that the contractor was asked to accept the measurement book and the bill. He denied that plaintiff was being forced to accept the 2nd Bill and to give no objection regarding the same.
92. From the brief discussion of the material on record i.e. from the pleadings of the parties, testimony of PW1/Sh.Kamal Goel and DW1/Sh. Gulshan Kumar Nim, witnesses examined on behalf of plaintiff firm and defendant Corporation respectively and the documents relied upon by them, it can be safely concluded that plaintiff had applied for award of work order vide NIT, part of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 52 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:30:53 +0530 Ex.DW1/1, and as per clause 9 thereof the plaintiff was presumed to have equipped himself with knowledge regarding the site which was subject matter of the work order and hence the hindrances namely the trees which subsequently hampered progress and completion of work by him are deemed to have been within his knowledge and he is presumed to have applied for work order knowing that his work space was not free of obstructions/hindrances. The plea taken by plaintiff that it came to know of these hindrances in the month of July, 2020 and informed about them to officials of defendant vide his letter dated 31.07.2020, Ex.PW1/5, is misplaced specially in view of the fact that he had already been provided layout plan and architectural drawings of the site alongwith the work order and claims to have commenced and completed demolition work of the site in the month of March 2020 itself. The claim of plaintiff that he had commenced work at site upon assurance of officials of defendant that said hindrances would be removed does not carry any weight, more particularly considering the quantum of the work order and clause 9 of NIT.
93. It is, however, also apparent from the record that defendant allowed plaintiff to commence work at site and did not respond to communications sent by him vide Ex.PW1/5 and Ex.PW1/6 i.e. letters dated 31.07.2020 and 21.09.2020 respectively. The first communication sent by defendant to plaintiff was on 09.03.2021, Ex.PW1/8, followed by Show cause notice dated 15.06.2021, Ex.PW1/10. The DW1 has admitted that plaintiff had carried out work at site after which defendant had carried out measurements and prepared 1st RA Bill, Ex.PW1/16, CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 53 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:31:01 +0530 which bears the signatures of partner of plaintiff firm and thus stand accepted by the plaintiff. In these circumstances, 1 st RA Bill, Ex.PW1/16, cannot be termed as a mere internal noting for its contents were fully brought to the knowledge of plaintiff. The said bill had already been passed. Further, as per judgment in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (supra), it is not necessary that plaintiff has to submit bill(s) only on his letterhead and in his handwriting for consideration by defendant. Accordingly, 1st RA bill, Ex.PW1/16, is deemed to have been submitted by plaintiff in terms of directions given in the above noted case. No defect was found or pointed out in the work carried out by plaintiff at site in respect of which 1 st RA bill, Ex.PW1/16 was submitted. Accordingly, the plaintiff is entitled to the amount of Rs.1,01,83,222/- towards 1st RA Bill irrespective of the fact that he had not submitted bills on his letterhead.
94. As regards the 2nd Bill for Rs.6,70,500/-, admittedly the measurements prepared by the defendant department have not been accepted by the plaintiff till date. Plaintiff has disputed that communication dated 04.07.2022 and 26.07.2022 were given to him to accept measurement book and the bill. Notwithstanding the fact that plaintiff may or may not have received said communications from defendant, the plaintiff had option of submitting bill on his letterhead to the officials of defendant corporation to claim his dues but has failed to do so. Even copy of 2nd RA bill, which plaintiff claims was submitted to official of defendant, has not placed on record. In these circumstances, by virtue of clause 7 and 9 of GCC and Clause 4 of work order, plaintiff is not entitled to amount recoverable on the 2nd Bill.
CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 54 of 73 Digitally signed by ILLA ILLA RAWAT
Date:
RAWAT 2025.02.22
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95. The plaintiff has claimed a sum of Rs.14,68,327/- on account of loss of profit @ 5% on the unexecuted contractual amount of work. As already observed in foregoing paragraphs, the plaintiff failed to act with necessary caution despite existence of Clause 9 in NIT, part of Ex.DW1/1, and hence cannot be absolved of responsibility for events which led to failure in completion of the work pertaining to work order, Ex.PW1/3. Even otherwise, in case of Unibros vs. All India Radio, MANU/SC/1176/2023 it has been held as under:-
"19. The law, as it should stand thus, is that for claims related to loss of profit, profitability or opportunities to succeed, one would be required to establish the following conditions: first, there was a delay in the completion of the contract; second, such delay is not attributable to the claimant; third, the claimant's status as an established contractor, handling substantial projects; and fourth, credible evidence to substantiate the claim of loss of profitability. On perusal of the records, we are satisfied that the fourth condition, namely, the evidence to substantiate the claim of loss of profitability remains unfulfilled in the present case."
96. The judgments in case of DSIIDC vs. Rama Const Co. (supra) relied upon by counsel for plaintiff are not applicable in the light of aforesaid judgment passed by Hon'ble Apex Court.
97. In the instant case also, no evidence has been placed on record by plaintiff to substantiate the claim of loss of profitability and hence on this ground also plaintiff is not entitled to claim a sum of Rs.14,68,327/- on account of loss of profit.
98. In these facts and circumstances, plaintiff is held entitled to payment of sum of Rs.1,01,83,222/- towards amount of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 55 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:31:17 +0530 passed 1st RA bill alongwith simple interest @ 8% per annum on the said amount w.e.f. 29.07.2021 i.e. after lapse of period of nine months from the date of passing of bill by the officials of defendant till realization of the amount in terms of judgment in case of North Delhi Muncipal Corporation & Ors. vs. Shish Pal (supra) relied upon by counsel for plaintiff. All these issue are decided accordingly in terms of foregoing observations.
ISSUE NO.5:-
Whether the plaintiff is entitled to decree of declaration thereby declaring the letters/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by defendant are null and void? (OPP) AND ISSUE NO.6:-
Whether the plaintiff is entitled to decree of permanent injunction thereby restraining the defendant to enforce/implement the letters/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022 and D/98/EE(Pr.)/KPZ/2022-23 dated dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/ KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 against the plaintiff? (OPP) CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 56 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:31:24 +0530 AND ISSUE NO.7:-
Whether the plaintiff is entitled to decree of recovery of amount, if any, recovered by the defendant department on the basis of letter/order bearing no.SE/KPZ/2022/D.105 dated 30.06.2022 or other clauses of contract from the payable amount of the plaintiff in other works during the pendency of the suit? (OPP)
99. All these issues are being taken up together as they are inter connected. It is the case of the plaintiff that it was unable to complete work since hindrances at the site of work were not removed by defendant despite repeated written communications by plaintiff. Further, the defendant failed to release the amount payable towards 1st RA bill despite having verified and passed the same and also failed to verify and pass 2 nd RA bill due to which defendant came under considerable financial difficulty which coupled with reduction of work and loss of labour on account of Covid-19 pandemic put undue pressure on plaintiff. To compound the difficulties of the plaintiff, defendant issued a notice dated 15.06.2021 under clause 2 of GCC. When the plaintiff approached the Court, defendant issued show cause notice under clause 3 of GCC followed by other notices to pressurize plaintiff not to pursue its legal remedies. The plaintiff repeatedly requested for for extension of time despite which the defendant granted it only provision extension of time, from time to time, and that too after lapse of period of contract on 02.01.2021, vide letters dated 30.09.2021, 31.12.2021 and 31.03.2022. Hence the time was not the essence of contract and defendant is not entitled to invoke clause 2 and 3 of GCC and should not have imposed penalty upon CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 57 of 73 Digitally signed by ILLA RAWAT ILLA Date:
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the plaintiff.
100. On the other hand, counsel for defendant has contended that plaintiff is a habitual defaulter. He takes work orders of large quantums and thereafter tries to wriggle out of them on one pretext or the other. The plea taken by plaintiff that construction site was having hindrances is not correct for only part of construction site was hindered by tree while the remaining was free for carrying out construction work despite which plaintiff failed to do so. Instead of completing work, plaintiff wrote letters to defendant to create false defence and the same were thus not replied by the defendant. The defendant, on the other hand, was serious about the execution of the work, more particularly, as it involved construction of school building and class rooms and hence extended the time for completion of project provisionally several times while retaining right to impose levy. The plaintiff initially made some attempt to continue with the work but thereafter completely abandoned the same. The responsibility for delaying the project lie solely with the plaintiff. The terms and conditions specified in GCC are applicable to the parties and the plaintiff would have to compensate the defendant for delay and abandonment of the work. In view of Clause 2 of GCC, defendant is fully justified in imposing the levy. It is further contended that even if time is extended by the defendant provisionally of its own, it is still entitled to impose penalty for delay and subsequent abandonment of work by the plaintiff. None of the judgments relied upon by counsel for plaintiff are applicable in the facts and circumstances of the present case.
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101. Since the controversy in the present case revolves around clauses 2, 3 and 5 of GCC, it would be relevant to refer to them:-
CLAUSE 2 Compensation for Delay If the contractor fails to maintain the required progress in terms of Clause 5 or to complete the work and clear the site on or before the contract or extended date of completion, he shall without prejudice to any other right or remedy available under the law to the MCD on account of such breach, pay as agreed compensation the amount calculated at the rates stipulated below or such smaller amount as the Superintending Engineer (Whose decision in writing shall be final and binding) may decide on the amount of tendered value of the work for every completed day/ week (as applicable) that the progress remains below that specified in Clause 5 or that the work remains incomplete. This will also apply to items or group of items for which a separate period for completion has been specified.
(i) Completion period (as originally stipulated) @ 1% per Day not exceeding 3 months
(i) Completion period (as originally stipulated) @ 1% per Week exceeding 3 months Provided always that the total amount of compensation for delay to be paid under this Condition shall not exceed 10% of the Tendered Value of work or of the Tendered Value of the items or work for which a separate period of completion is originally given. The amount of compensation may be adjusted set-off against any sum payable to the Contractor under this or any other contract with the M.C.D. CLAUSE 3 When Contract can be Determined Subject to other provisions contained in this clause the Engineer-in-Charge may, without prejudice to his any other rights or remedy against the contractor in respect of any delay, inferior workmanship, any claims for damages and/or any other provisions of this contract otherwise, and whether the date of completion has or has not elapsed, by notice in writing absolutely determine the contract in any of the following cases:
(i) If the contractor having been given by the Engineer-in-
Charge a notice in writing to rectify, reconstruct or replace any defective work or that the work is being performed in an ineffective or otherwise improper or CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 59 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:31:44 +0530 unworkmanlike manner shall omit to comply with the requirement of such notice for a period of seven days thereafter.
(ii) If the contractor being a company shall pass a resolution or the court shall make an order that the company shall be wound up or if a receiver or a manager on behalf of a creditor shall be appointed or it circumstance shall arise which entitle the court or the creditor to appoint a receiver or a manager or which entitle the court to make a winding up order.
(iii) If the contractor has, without reasonable cause, suspended the progress of the work or has failed to proceed with the work with due diligence so that in the opinion of the Engineer-in-Charge (which shall be final and binding) he will be unable to secure completion of the work by the date for completion and continues to do so after a notice in writing of seven days from the Engineer-in-Charge.
(iv) If the contractor fails to complete the work within the stipulated date or items of work with individual date of completion, if any stipulated, on or before such date(s) of completion and does not complete them within the period specified in a notice given in writing in that behalf by the Engineer-in-Charge
(v) If the contractor persistently neglects to carry out his obligations under the contract and/or commits default in complying with any of the terms and conditions of the contract and does not remedy it or take effective steps to remedy it within 7 days after notice in writing is given to him in that behalf by the Engineer-in-Charge.
(vi) If the contractor commits any acts mentioned in Clause 21 hereof: When the contractor has made himself liable for action under any of the cases aforesaid, the Engineer-in-Charge on behalf of the M.C.D. shall have powers:
(a) To determine or rescind the contract as aforesaid (of which termination or rescission notice in writing to the contractor under the hand of Engineer-in-Charge shall be conclusive evidence). Upon such determination or rescission the full security deposit recoverable under the contract shall be liable to be forfeited and shall be absolutely at the disposal for the M.C.D. if any portion of the Security Deposit has not been paid or received it would be called for and forfeited.
(b) to employ labour paid by the Department and to supply materials to carry out the work or any part of the work debiting the contractor with the cost of the labour and the price the material (of he amount of which cost and price certified by the Engineer-in-Charge shall be CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 60 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:31:52 +0530 final and conclusive) against the contractor and crediting him with the value of the work done in all respects in the same manner and at the same rates a if it had been carried out by the contractor under the terms of his contract. The certificate of the Divisional Officer as to the value of the work done shall be final and conclusive against the contractor provided always that action under the sub- clause shall only be taken after giving notice in writing to the contractor. Provided also that if the expenses incurred by the department are less than the amount payable to the contractor at his agreement rates, the difference shall not be paid to the contractor.
(c) After giving notice to the contractor to measure up the work of the contractor and to take such whole, or the balance or part thereof as shall be un-executed out of his hands and to give it to another contractor to complete in which case any expense which may be incurred in excess of the sum which would have been paid to the original contractor if the whole work had been executed by him (of the amount of which excess the certificate in writing of the Engineer-in-Charge shall be final and conclusive) shall be borne and paid by the original contractor and may be deducted from any money due to him by M.C.D. under his contract or on any other account whatsoever or from his security deposit or the proceeds of sales thereof or a sufficient part thereof as the case may be. If the expenses incurred by the department are less than the amount payable to the contractor at his agreement rates, the difference shall not be paid to the contractor. In the event of anyone of more of the above courses being adopted by Engineer-in-Charge the contractor shall have no claim to compensation for any loss sustained by him by reasons of his having purchased procured any materials or entered into any engagements or made any advance on account or with a view to the execution of the work or the performance of the contract. And in case action is taken under any of the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereof or actually performed under this contract unless and until the Engineer-in-Charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified. Provided further that if any of the recoveries to be made, while taking action as per (b) and/or (c) above, are in excess of the security deposit forfeited, these shall be limited to the amount by which the excess cost incurred by the Department exceeds the security deposit so forfeited.CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 61 of 73 Digitally signed by ILLA RAWAT
ILLA Date:
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CLAUSE 5
Time and Extension for Delay.
The time allowed for execution of the work as specified in the Schedule 'F' or the extended time in accordance with these conditions shall be the essence of the Contract.
The execution of the works shall commence from the 15 th day or such time period as mentioned in Letter of Award after the date on which the Engineer-in-Charge issues written orders to commence the work or from the date of handing over of the site whichever is later. If the contractor commits default in commencing the execution of the work as aforesaid, Government shall without prejudice to any other right or remedy available in law, be at liberty to forfeit the earnest money absolutely.
5.1 As soon as possible after the contract is concluded the Contractor shall submit a time & progress Chart and get it approved by the Department. The chart shall be prepared in direct relation to the time stated in the Contract documents for completion of items of the works. It shall indicate the forecast of the dates of commencement and completion of various trades of sections of the work and may be amended as necessary by agreement between the Engineer-in-Charge and the Contractor within the limitations of time imposed in the contract documents, and further to ensure good progress during the execution of the work. The contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs for which a separate program has been agreed upon) complete 1/8th of the contractual work before 1/4th of the whole time allowed in the contract has elapsed 3/8th of the work before one-half of such time has elapsed and .... of the work before 3/4th of such time has elapsed.
5.2 If the work(s) be delayed by :-
(i) Force majeure, or
(ii) Abnormally bad weather, or
(iii) Serious loss or damage by fire, or
(iv) Civil commotion, local commotion of workmen, strike or lockout, affecting any of the trades employed on the work, or
(v) delay on the part of other contractors or tradesmen engaged by Engineer-in-Charge in executing work not forming part of the Contract, or
(vi) any other cause which, in the absolute discretion of the authority mentioned in Schedule 'F' is beyond the Contractor's control.CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 62 of 73 Digitally signed
ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:32:07 +0530 then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the Engineer-in-Charge but shall nevertheless use constantly his best endeavours to prevent or make good the delay and shall do all that maybe reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works.
5.3 Request for rescheduling of Milestones and extension of time, to be eligible for consideration, shall be made by the Contractor in writing within fourteen days of the happening of the event causing delay on the prescribed form. The Contractor may also,if practicable, indicate in such a request the period for which extension is desired.
5.4 In any such case the authority mentioned in Schedule 'F' may give a fair and reasonable extension of time and reschedule the milestones for completion of work, such extension shall be communicated to the contractor by the Engineer-in-Charge in writing, within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the Engineer-in-
Charge and this shall be binding on the contractor."
102. A bare perusal of clause 2 of GCC reveals that it empowers the authority/defendant to impose penalty/ compensation in writing if the contractor fails to execute the work on time. In such an event, the decision of authority is deemed to be final and binding.
103. The clauses of contract regarding imposition of penalty were considered by Hon'ble Supreme Court in case of "J.G. Engineers Pvt. Ltd. Vs. Union of India & Ors", MANU/SC/0527/2011 and it was held as under:-
"14. Thus what is made final and conclusive by clauses (2) and (3) of the agreement, is not the decision of any authority on the issue whether the contractor was responsible for the delay or the department was responsible for the delay or on the question whether CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 63 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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termination/rescission is valid or illegal. What is made final, is the decisions on consequential issues relating to quantification, if there is no dispute as to who committed breach. That is, if the contractor admits that he is in breach, or if the Arbitrator finds that the contractor is in breach by being responsible for the delay, the decision of the Superintending Engineer will be final in regard to two issues. The first is the percentage (whether it should be 1% or less) of the value of the work that is to be levied as liquidated damages per day. The second is the determination of the actual excess cost in getting the work completed through an alternative agency. The decision as to who is responsible for the delay in execution and who committed breach is not made subject to any decision of the respondents or its officers, nor excepted from arbitration under any provision of the contract.
15. In fact the question whether the other party committed breach cannot be decided by the party alleging breach. A contract cannot provide that one party will be the arbiter to decide whether he committed breach or the other party committed breach. That question can only be decided by only an adjudicatory forum, that is, a court or an Arbitral Tribunal. ...."
104. No doubt that the clauses of GCC contain somewhat identical provisions to that mentioned in the cited judgment. Hence, the decision of competent authority in reaching to the conclusion as to which of the party was at fault to delay execution of work and why, is not final and the same is open to scrutiny by the Court. Even otherwise, such like provisions are violative of Section 28 of the Contract Act, 1872 which prescribes that where both the parties to an agreement are under a mistake as to matter of fact essential to the agreement, the agreement is void. Thus despite implication in clause 2 of GCC that decision of MCD for imposing the penalty shall be final and binding, the same can be reviewed by this Court.
105. As already observed, the plaintiff has given above CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 64 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:32:26 +0530 noted two reasons for its inability to complete the work at site, firstly that hindrances at the site of work were not removed by defendant despite repeated written communications by plaintiff. Secondly, the defendant failed to release the amount payable towards 1st RA bill despite having verified and passed the same and also failed to verify and pass 2 nd RA bill due to which defendant came under considerable financial difficulty.
106. As far as the first reason for delay is concerned viz. hindrances posed by trees at the site of work are concerned, the plaintiff as well as defendant are equally responsible for the delay on account of non removal of the trees from the site of work. In the first instance, as already observed hereinabove, the plaintiff applied for bid for work order by ignoring the provisions of clause 9 of NIT, part of Ex.DW1/1. He carried out demolition work at site and also carried out some work thereupon on purported assurance of the officials of defendant corporation that the said hindrances would be removed. The plaintiff has neither given names of the said officials nor specific date when such assurances were given to him.
107. On its part defendant failed to prove that plaintiff could have completed work at other portions of the site even without removal of the trees in question. It is trite to state that defendant was not authorized to remove the trees in question without appropriate permission from the Forest Department. Even after Forest Department granted permission to the defendant, it was for the Horticulture Department of the defendant to remove the trees. From the documents placed on record by the defendant, CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 65 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:32:37 +0530 it appears that the Forest Department granted permission to defendant to remove trees vide letter dated 10.12.2020, Ex.DW1/3. It is noteworthy that the stipulated period of completion of work order, Ex.PW1/3, was from 03.01.2020 to 02.01.2021. Even after receiving permission from the Forest Department on 10.12.2020, the removal of trees did not take place immediately. From the cross-examination of DW1, it is clearly brought out that defendant department had removed the trees after the lapse of period of completion of the work order i.e. after 02.01.2021. There is, however, nothing placed on record from which it can be ascertained that what was the actual date of removal of the five trees, which fell between Grid 1 to 13, for which permission for removal had been taken from the Forest Department. It thus cannot be ascertained whether the trees in question had already been removed from the site on 15.06.2021 when letter, Ex.PW1/10, i.e. show cause notice under clause 2 was issued to plaintiff. It is also not clear if the trees had been removed from the site even as on 12.05.2022 when show cause notice under clause 3 of the agreement, Ex.PW1/21, was issued to the plaintiff which was replied to on behalf of plaintiff by their counsel vide letter, Ex.PW1/22, dated 24.05.2022. The defendant replied to letter, Ex.PW1/22, vide their letter dated 30.06.2022, Ex.PW1/25, and levied compensation under clause 2 upon plaintiff. It is noteworthy that specific portions of the reply, filed on behalf of plaintiff by their counsel vide letter, Ex.PW1/22, were taken up for point-wise reply in letter dated 30.06.2022, Ex.PW1/25, by the defendant. It would be relevant to refer to point 4 of the said letter which is as under:-
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S.No. Reply of Contractor Reply of Department
4. That my client has again requested This statement is not only through letter dated 21.09.2020 for factually wrong but misleading.
removal of hindrances at site and In any case, after the inspection extension of time in proportion to of the site, it was noticed that the period of delay which are not the work was held up and the attributed to my client. Instead of physical progress of work was giving the reply of letter of my not commensurate with time as client and removing the hindrances stipulated in the Work Order at site as intimated through letters even though there being no dated 13.03.2020 and 31.07.2020 hindrance on complete site in and granting extension of time in execution of work at site and it proportion to the period attributed to was only at small portion of site. your good-self department or As such, the MCD had already beyond the control of my client issued a letter to the Forest granting the provisional extension of Department for grant of time upto 30.06.2021 vide your permission to transplant/remove letter dated 09.03.2021. It is 05 No. of trees from the Govt. admitted position that the date of property situated at the site for completion of this work was construction of proposed 02.01.2021 and again the State classroom inside M.C. Primary Govt. of Delhi declared lockdown School and received permission due to Covid-19 from 19.04.2021 to from the Forest Department 04.06.2021 and allowed only the letter dt. 10.12.2020 for the construction activities. From same under DPTA, 1994 and 03.01.2021 till 08.03.2021 on also saved some other trees by extension of time was granted by changing site plan. Hence it your good-self, therefore, the time is clear that reasons one cited by not essence of this contract. the contractor in letter mentioned are denied.
108. It is apparent from the reply given by department that it again refers to the permission received form Forest Department vide letter dated 10.12.2020 and of change in site plan to save some other trees yet it does not specify the actual date when the trees in question were removed, if at all they had been. It also does not clarify if the five trees in question were also amongst the "saved trees" and if so whether the changed site plan prepared by the department had been supplied to plaintiff at all and if so date thereof. The defendant Corporation has apparently given a vague reply in response to letter dated 24.05.2022 sent by counsel for CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 67 of 73 Digitally signed by ILLA ILLA RAWAT Date:
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plaintiff on behalf of plaintiff.
109. Subsequent to its letter dated 30.06.2022,
Ex.PW1/25, the Executive Engineer of defendant sent a letter dated 04.07.2022, Ex.PW1/26, to plaintiff informing it of actions proposed against it. Later on defendant issued show cause notice, Ex.PW1/29, dated 15.02.2023 under revised instructions for inlistment/revalidation of contractor 2016.
110. Upon careful consideration of the record, it can safely be held that the defendant was equally responsible for delay and ultimate abandonment of the contract for at no point of time it conveyed the specific date of removal of trees to the plaintiff nor made effort to handover changed site plan to the plaintiff and continued to give provisional extension of time to plaintiff to complete the contract mechanically without any intention to ensure that there was a meaningful extension which resulted in completion of work under the assigned work order. Rather the officials of defendant corporation appear to be taking advantage of their own wrong not withstanding the fact that to start with plaintiff should not have made bid for the work order by ignoring provisions of clause 9 of NIT.
111. Even otherwise, defendant has not placed anything on record from which it can be ascertained that it had suffered loss in sum of Rs.40,22,025/- due to delay in completion of work by plaintiff or that it had suffered loss to the extent of security money or earnest money deposited by the plaintiff. Moreover, even till the date DW1 appeared to depose before the Court, process of CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 68 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:33:03 +0530 recall of tender given to plaintiff had not been completed and thus question of assigning it to some other contractor had not commenced. It appears that despite its claim that defendant department was sincere in ensuring timely completion of project its actions reflect otherwise for it had not floated fresh tender for remaining work till the date DW1 appeared to depose.
112. Moreover, in a recent order dated 12.02.2025 in case of M/s Techno Prints vs Chhattisgarh Textbook Corporation & Anr., SLP(C) No.10042/2023, it has been held by Apex Court as under:-
"33. As observed by this Court in Erusian Equipment & Chemicals Ltd. Vs. State of W.B. reported in (1975) 1 SCC 70, an order of blacklisting casts a slur on the party being blacklisted and is stigmatic. Given the nature of such an order and the import thereof, it would be unreasonable and arbitrary to visit every contractor who is in breach of his contractual obligations with such consequences. There have to be strong, independent and overwhelming materials to resort to this power given the drastic consequences that an order of blacklisting has on a contractor. The power to blacklist cannot be resorted to when the grounds for the same are only breach or violation of a term or condition of a particular contract and when legal redress is available to both parties. Else, for every breach or violation, though there are legal modes of redress and which compensate the party like the Corporation before us, it would resort to blacklisting and at times by abandoning or scuttling the pending legal proceedings."
113. In the instant case also, letter/order bearing no.D/98/EE (Pr.)/KPZ/ 2022-23 dated 04.07.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 are apparently unreasonable and arbitrary considering CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 69 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:33:10 +0530 that the officials of Defendant Corporation are also responsible for delay and latches due to which the work under the work order could not progress beyond a particular stage.
114. The judgments relied upon by counsel for plaintiff in case of North Delhi Municipal Corporation vs. IJM Corporation Berhad (supra), Shripati Lakhu Manu vs. The Member Secretary, Maharashtra Water Supply and Sewerage Board & Ors (supra) and Harcharan Dass Gupta Constructions Pvt. Ltd. vs MCD (supra) are not applicable in the facts and circumstances of the present case.
115. Considering totality of facts and circumstances, the letters/order bearing no. SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/ 2022-23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/ KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by defendant, are declared null and void on account of contributory negligence and delay caused by the officials of Defendant Corporation. The defendant is thus restrained from enforcing/implementing the said letters/orders.
116. Since the letters/order bearing no.
SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022- 23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/KPZ/ 2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 70 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:33:18 +0530 defendant have been declared null and void and defendant is further restrained from enforcing/implementing the same and admittedly department has not recovered any amount thereunder from the plaintiff till date, the plaintiff is not entitled to decree for recovery of any such amount. All these issues are decided accordingly.
ISSUE NO.3:-
Whether the plaintiff is not entitled to refund of security deposit/earnest money for want of compliance with Clauses 17 &45 of GCC? (OPD)
117. The amount of security deposit/earnest money is refundable upon completion of the work and lapse of period of defect liability. In the instant case, admittedly the work pertaining to work order was never completed by the plaintiff and defendant intends to float a fresh tender for remaining work. However, as it has been held that plaintiff and defendant both are equally responsible for frustrating the contract and consequently completion of work under the work order and further the letters/orders bearing no. SE/KPZ/2022/D.105 dt. 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dt. 04.07.2022, letter bearing ref.
No.D/257/EE(PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by defendant, have been declared null and void, the plaintiff is at liberty to approach the department for refund of security and earnest money. The department is expected CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 71 of 73 Digitally signed by ILLA ILLA RAWAT Date: RAWAT 2025.02.22 12:33:28 +0530 to consider the request made by plaintiff with an open mind considering the attendant facts and circumstances of the present case. This issue is decided accordingly.
R E L I E F:-
118. In view of the findings on foregoing issues, the present suit is decreed as under :-
(a) A decree of recovery of Rs.1,01,83,222/- (Rupees One Crore One Lakh Eighty Three Thousand Two Hundred Twenty Two only) is passed in favour of the plaintiff and against the defendant, with simple interest @ 8% per annum on the said amount w.e.f. 29.07.2021 till realization of the decreetal amount.
(b) A decree of declaration is passed in favour of the plaintiff and against the defendant thereby declaring the letters/order bearing no. SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/ 2022-23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/ KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 passed by defendant, as null and void.
(c) A decree of the Permanent injunction is passed in favour of the plaintiff and against the defendant thereby restraining the defendant from enforcing/implementing the letters/order bearing no. SE/KPZ/2022/D.105 dated CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 72 of 73 Digitally signed ILLA by ILLA RAWAT Date:
RAWAT 2025.02.22 12:33:36 +0530 30.06.2022, D/98/EE (Pr.)/KPZ/ 2022-23 dated 04.07.2022, letter bearing ref.No.D/257/EE(PR.)/ KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref.No. D/6/EE/PR./KPZ/ 2022-23 dated 15.02.2023 against the plaintiff.
Parties are left to bear their respective costs. Decree sheet be prepared accordingly.
File be consigned to record room after due compliance. Digitally signed by ILLA ILLA RAWAT Date:
Announced in the open Court RAWAT 2025.02.22 12:33:44 on 22nd Day of February, 2025 +0530 (ILLA RAWAT) District Judge (Commercial Court)-03 Central, Tis Hazari Courts, Delhi CS (COMM) No. 995/2022 M/s Ram Niwas Goel Vs. Municipal Corporation of Delhi Page 73 of 73