Delhi District Court
Ms Dc Pipelines vs M/S Kmp Expressways Ltd And Ors on 18 May, 2024
IN THE COURT OF SH.ABHITOSH PRATAP SINGH RATHORE,
DISTRICT JUDGE-04, SOUTH DISTRICT,
SAKET COURTS, NEW DELHI.
Old Suit No. : CS(OS)2495/2014
New Suit No. : CS DJ 8045/2016
CNR NO. : DLST 01-001068-2014
IN THE MATTER OF :
M/s DC Pipelines
Through its Proprietor Shri Khushwant Singh
104, Tapovan Building,
65, J.K. Mehta Road,
Santa Cruz(W)
Mumbai - 400054. ......Plaintiff.
Versus
1. M/s KMP Expressways Limited
E-9, 3rd Floor, South Extension Part II
New Delhi-110049
2.M/s Haryana State Industrial &
Infrastructure Development Corporation (already ex pate
Through its Chief Engineer vide order dated
No. C 13-14, Sector 6, Panchkula 10.10.2018)
Haryana
3. DSC Engineering Pvt. Ltd.
(Through its Managing Director)
E-9 3rd Floor,
South Extension, Part II,
New Delhi 110049. .....Defendants.
Date of Institution of Suit :22.08.2014
Date of Pronouncement :18.05.2024.
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 1of 29
SUIT FOR RECOVERY OF MONEY & BREACH OF
CONTRACT
JUDGMENT
1. Originally, the present suit was filed before Hon'ble High Court and pursuant to the notification no.27187/DHC/Orgl. dated 24.11.2015, present suit was transferred to this Court.
(The status of defendants as originally filed has changed several times during the course of present litigation. Suit was initially filed against (i)DSC (ii) M/s KMP Expressways Limited & (iii) Haryana State Industrial & Infrastructure Development Corporation (HSIIDC). Later DSC Engineering Private Limited (DEPL) was also made a party. Vide order dated 16.01.2019 DSC Limited was deleted from the array of the parties and M/s KMP Expressways Limited, Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) & DSC Engineering Private Limited (DEPL) became the only defendants. Therefore, for the sake of convenience and to avoid confusion parties are referred by their name).
2. Brief facts as laid out in the plaint are that plaintiff M/s DC Pipelines is owned by Proprietor Shri Khushwant Singh and is engaged in construction activities including pipeline construction. The defendant no.2 M/s KMP Expressways is a company inter alia, engaged in the project of development of an Expressways connecting Kundli, Manesar & Palwal through its subsidiary being the defendant no.1 M/s DSC (later deleted).
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 2of 29 Plaintiff was constructing and providing the defendant no.2 M/s KMP Expressways with certain split casing required to protect Hindustan Petroleum Corporation Limited's Mundra Delhi Pipeline Chainage, which was passing by the KMP Expressways connecting Kundli, Manesar and Palwal. DSC issued a work order bearing no. KMP/4300005436/0 dated 19.04.2011 to the plaintiff for the commencement of the construction of the Split Casing. The said work order contained that the casing length would be 80 meters and the value of the contract Rs.34,77,171/-. The said work order was amended on 02.07.2011 with the increase of casing length to 94 meters and the value to Rs.40,17,110/-.
3. On 24.07.2011, final bill was submitted by the plaintiff to DSC after completion of the job. The said final bill after certification for payment of Rs.26,28,834/- was approved by the Billing Engineer of the TAC Department of defendant no.1 on or around 14.09.2011 & 16.09.2011 and on submission of said final bill & certificate, an amount of Rs.26,28,834/- became due and payable from defendant no.1 to the plaintiff.
4. Plaintiff approached defendant no.1 & 2 (KMP Expressways & DSC) for payment of outstanding dues on several occasions and on all these occasions defendant no.1 & 2 gave an assurance that the outstanding dues would be paid alongwith interest for the delay in making payment. But no payment was made. On 14.08.2012, plaintiff again sent an email to the KMP Expressways to clear the long pending due amount of Rs.26,28,834/- but no payment was released. On 09.07.2013, CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 3of 29 defendant no.2 sent an authorization letter to the Chief Engineer of HSIIDC requesting that the payment of Rs.25,99,363/- should be paid directly by the defendant no.3 to the plaintiff. By the said letter KMP Expressways acknowledged its liability and the liability of defendant no.1 towards the plaintiff. The defendant no.2 also further acknowledged that only part payment had been made to the plaintiff though the work of split casing of HPCL's pipeline had been completed by the plaintiff. Plaintiff sent a letter dated 09.11.2013 to the defendant no.3 requesting the release of Rs.26,28,834/- but all to no avail.
5. On 25.03.2014, plaintiff sent a legal notice to the defendants demanding the principal amount due i.e. Rs.26,28,834/- as well as the interest @18% per annum which amounts to about Rs.13,41,774/- as calculated from 24.07.2011 till 23.05.2014. Therefore, the total amount due as on 23.05.2014 is Rs.39,70,608/- and plaintiff is entitled to a decree for the said amount from the defendants jointly and severally.
6. Written statement to the above mentioned plaint was filed on behalf of DSC in which the DSC denied the averments of the plaint and took the preliminary objections that there is no relationship of Debtor & Creditor between the parties. Suit is barred by limitation. This court has no territorial jurisdiction to adjudicate upon the present suit. DSC cannot be fastened with any liability on the basis of any letter written by KMP Expressways to HSIIDC and even otherwise there were many shortcomings in the work executed by the plaintiff. In para-wise reply, it is stated that the averments made in the plaint filed by CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 4of 29 the plaintiff are wholly misconceived & fallacious. DSC was subsequently taken over by DSC Engineering Pvt. Ltd. (DEPL) i.e. (Defendant no.3). Its written statement was also adopted by DEPL (defendant no.3).
7. Written statement to the above mentioned plaint was also filed on behalf of KMP Expressways in which the defendant denied the averments of the plaint and stated that the contract i.e. Work Order dated 19.04.2011, as amended on 02.07.2011 on the basis of which the present suit is filed was entered into between the plaintiff & DSC and hence, KMP Expressways is not a party to the same. There was no arrangement, agreement or contract whatsoever between KMP Expressways & plaintiff with regard to the supply & installation of the subject 'split casing' and as such there is no privity of contract between the plaintiff and the KMP Expressways Limited. KMP Expressways is not liable to pay any amount to the plaintiff and plaintiff has no cause of action against it. The work done by the plaintiff in respect of aforesaid work order was deficient in several respect, as a result of which the progress of the entire project was jeopardized. Due to the failures and breaches on the part of the plaintiff, the DSC was constrained to engage third party agencies to remedy the deficiencies, incurring additional expenditure in this regard, which is recoverable from the plaintiff. Hence, the present suit is liable to be rejected on this ground.
8. Replication was filed by the plaintiff in response to the written statement filed on behalf of defendants in which most of CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 5of 29 the averments made in plaint were reiterated. It is repeated that defendant no.1 & 3 are one and same entity. It is stated that the defendant no.1&3 operate from same premises and have the same office i.e. E-9, 3rd Floor, South Extension Part-II, New Delhi 110049. The management of the defendant no.1 & 3 is also substantially the same & most of the employees are common, therefore, they are one and the same entity and act at the behest of each other.
9. On the basis of pleadings, following issues were framed.
1. Whether the plaintiff is entitled to a decree in a sum of Rs.39,70,608/- as prayed for?If yes, against which defendant?OPP
2. Whether the plaintiff is entitled to interest, if so, at what rate and for which period?OPP
3. Relief.
10. Vide order dated 23.07.2022, the following additional issue was framed:
3. Whether the present suit is properly instituted or not?OPD3.
4. Relief.
11. Vide order dated 24.04.2024, the following additional issues were framed:
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 6of 29
4. Whether this suit is barred by limitation?OPD
5. Whether this court has no jurisdiction to try the present suit?OPD The above Issues are being re-numbered for the sake of continuity and convenience.
1. Whether this suit is barred by limitation?OPD
2.Whether this court has no jurisdiction to try the present suit?OPD
3.Whether the plaintiff is entitled to a decree in a sum of Rs.39,70,608/- as prayed for?If yes, against which defendant?OPP
4. Whether the plaintiff is entitled to interest, if so, at what rate and for which period?OPP
5. Whether the present suit is properly instituted or not?OPD3.
6. Relief.
12. Plaintiff had examined its Proprietor Sh. Khushwant Singh. In his evidence, plaintiff has relied upon the following documents:
(a)Copy of work order dated 19.04.2011 is Mark 'A' (6 pages)(Ex.PW1/1 is de-exhibited);
(b)Copy of letter dated 24.06.2011 is Mark 'B' (Ex. PW1/2 is de-exhibited);
(c)Copy of amended work order dated 02.07.2011 is Mark 'C' (3 pages) (Ex. PW1/3 is de-exhibited);
(d)Copy of final bill dated 24.07.2011 is Mark 'D' (Ex. PW1/4 is de-exhibited);
(e)Copy of completion certificate dated 12.11.2011 is Mark 'E' (Ex.PW1/5 is de-exhibited);
(f)Copy of email dated 14.08.2012 is Mark 'F' (Ex.
PW1/6 is de-exhibited) (objected to as same is not CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 7of 29 email);
(g)Copy of letter dated 09.07.2013 is Mark 'G' (2 pages) (Ex. PW1/7 is de-exhibited);
(h)Copy of letter dated 03.10.2013 is Mark 'H' (Ex. PW1/8 is de-exhibited);
(i)Copy of letter dated 09.11.2013 is Mark 'I' (Ex. PW1/9 is de-exhibited);
(j)Copy of letter dated 25.03.2014 is Ex. PW1/10;
(k)Reply to legal notice by defendant no. 2 is Ex. PW1/11;
13. Defendant No.1 on its part examined one Sunil M.Asnani, the Senior Vice President of defendant no.1 company. He relied on following documents.
(i).Ex. DW1/A, Evidence affidavit.
(ii).Ex. DW1/1 (Colly), Power of Attorney in his favour along with extracts of Board of Resolution dated 21.10.2019.
14. Defendant no.3 on its part examined one Rajesh Raina, AR of defendant no.3. He relied on following documents:
(i) Ex.D3W1/A, Evidence Affidavit.
(ii)Ex.D3W1/1, Board of Resolution dated 31.01.2024.
15. This court has heard the arguments and perused the record carefully.
16. My findings on the issues are as follows:
Issue No. 1.
Whether suit is barred by limitation?OPD As per the plaintiff suit was instituted within limitation on 23.05.2014. As per Clause 16(vii) of the terms and conditions of the work order dated 19.04.2011, as amended on 02.07.2011, the payment was required to be made by DSC Limited (Substituted by DSC Engineering Ltd, Defendant no.3) by way of cheque, CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 8of 29 within 7 days of presentation of Bill by the plaintiff. The said condition Clause 16(vii) remained unaltered in the amendment dated 02.07.2011. On 24.07.2011, plaintiff submitted final bill to M/s DSC Limited (Substituted by DSC Engineering Pvt. Ltd.
(DEPL), Defendant no.3) after completion of the work as required under the work order. Therefore, money became due on 24.07.2011 and suit filed on 23.05.2014 was within limitation.
Defendant no.3 had taken this objection at the very outset. As per defendant no.3, the so called filing of suit on 23.05.2014 was non-est as there were many objections marked by Registry.
To prove his point that date of initial filing is the date for purpose of limitation, plaintiff has relied on the judgment passed by the Hon'ble Delhi High Court in 'D.C. Shukla v. Ashok K. Parmar, 1995 SCC Online Del 945'. Whereas defendant has relied upon the judgment of Hon'ble Delhi High Court in 'DDA v. Durga Construction Co., 2013 (139) DRJ (DB)'.
The case quoted by the plaintiff was also relied upon by Hon'ble Delhi High Court in its decision in 'DDA vs Durga Construction'. Hon'ble High Court in Para 17 observed:
"17. The cases of delay in re-filing are different from cases of delay in filing in as much as, in such cases the party has already evinced its intention to take recourse to the remedies available in courts and has also taken steps in this regard. It cannot be, thus, assumed that the party has given up his rights to avail legal remedies. However, in certain cases where the petitions or applications filed by a party are so hopelessly inadequate and insufficient or contain defects which are fundamental to the institution of the proceedings, then in such cases the filing done by the party would be considered non est and of no consequence. In such cases, the party cannot be given the benefit of the initial filing and the date on which the defects are cured, would have to be considered as the date of the initial filing. A similar view in the CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 9of 29 context of Rules 1&2 of Chapter IV of the Delhi High Court (Original Side) Rules, 1967 was expressed in Ashok Kumar Parmar v. D.C. Sankhla: 1995 RLR 85, whereby a Single Judge of this Court held as under:
"Looking to the language of the Rules framed by Delhi High Court, it appears that the emphasis is on the nature of defects found in the plaint. If the defects are of such character as would render a plaint, a non-plaint in the eye of law, then the date of presentation would be the date of re-filing after removal of defects. If the defects are formal or ancillary in nature not effecting the validity of the plaint, the date of presentation would be the date of original presentation for the purpose of calculating the limitation for filing the suit."
A Division Bench of this Court upheld the aforesaid view in D.C. Sankhla v. Ashok Kumar Parmar:1995 (1) AD (Delhi) 753 and while dismissing the appeal preferred against decision of the Single Judge observed as under:
"5....In fact, that is so elementary to admit of any doubt. Rules 1 and 2 of (O.S) Rules 1967, extracted above, do not even remotely suggest that the re-filing of the plaint after removal of the defects as the effective date of the filing of the plaint for purposes of limitation. The date on which the plaint is presented, even with defects, would, therefore, have to be the date for the purpose of the limitation act.
In the present case it is not in doubt that the suit was initially filed within limitation with defects though. DSC in its written statement, which was later adopted by DEPL (defendant no.3) has conceded that initial filing of the suit was in May, 2014. Legal principle as extracted from the cases quoted by plaintiff is that for the purpose of limitation, date of original filing is considered as date of filing except where the defects in filing are so glaring, so monumental, that the filing itself cannot be considered to be filing at all. In the present case, there is nothing CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 10of 29 on record to show the nature of defects. In absence of any material on record the court cannot reach the conclusion that the suit is time barred.
Besides, defendant no.1 KMP Expressways (from whom also the relief is claimed by plaintiff) in its letter dated 09.07.2013, addressed to defendant no.2(HSIIDC) clearly acknowledges its liability towards the plaintiff. Plaintiff has produced the copy of this document, which has been denied by defendant no.1 but it has been admitted by D1W1 although with a rider, that it was a bonafide mistake. No explanation has been given as to how a bonafide mistake led to such a meticulously drafted letter that contain almost the same figure that was being claimed by the plaintiff. It fulfills all the requirement of Section 18 Limitation Act, 1963.
In either case, the suit is not time barred. This issue is decided against the defendants.
ISSUE NO.2:
Whether this court has no jurisdiction to try the present suit? OPD Defendant no.3 had taken this objection at the very outset, whereas as per the plaintiff this court has jurisdiction to decide the present suit by virtue of Section 20(c) of CPC,1908.
Section 20 of CPC reads as under:
20.Other suits to be instituted where defendants reside or cause of action arises.--Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction--
(a)the defendant, or each of the defendants where there are more than one, at the time of CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 11of 29 the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b)any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally works for gain, as aforesaid, acquiesce in such institution; or
(c)The cause of action, wholly or in part, arises.
[Explanation].--A corporation shall be deemed to carry on business at its sole or principal office in 3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
The registered office of DSC Engineering Pvt. Ltd (successor of DSC Limited) and KMP Expressways Ltd. presently lie within the territorial jurisdiction of this court and the same is admitted by the defendants in their evidence affidavit.
Counsel for defendant no.3 has relied upon the judgment of Hon'ble Supreme Court of India in "Patel Roadways' (1991) 4 SCC 217', whereas counsel for plaintiff has argued that principle laid down in Patel Roadways do not apply to the present suit as the facts are completely different. Counsel for plaintiff has relied upon judgment of Hon'ble High Court in 'Rana Sugars Limited v. Bajaj Electricals Ltd., 2017 SCC Online Del 9152'.
Perusal of the abovementioned judgments shows that Hon'ble High Court of Delhi has clarified the law on the point and also explained the true import of decision of Hon'ble Supreme Court in 'Patel Roadways' case (supra). Hon'ble High Court observed CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 12of 29 that in cases where cause of action wholly or partly arises within the jurisdiction of this court said court shall have the jurisdiction to decide the suit by virtue of Section 20 (c) CPC irrespective of the place of the office of a corporation. Relevant observations are reproduced below:
"14. Patel Roadways (supra), it is seen, interprets and lays down when dealing with sub-sections (a) and (b) of Section 20 CPC and the Explanation to Section 20 CPC holding that the suit has to be filed as against a company either where the sole/principal office is situated or if the defendant company has a branch office then at the courts where the branch office is situated provided a cause of action has accrued where the branch office is situated i.e. the ratio of the judgment in the case of Patel Roadways (supra) is that mere existence of a principal office/head office will not entitle a company to be sued at the place where the principal office/head office is situated once it is found that where the cause of action has arisen the defendant company has a branch office. The relevant paras of Patel Roadways (supra) case are paras 9 to 13 and 15 and which read as under:-
"9. Clauses (a) and (b) of Section 20 inter alia refer to a court within the local limits of whose jurisdiction the defendant inter alia "carries on business". Clause (c)on the other hand refers to a court within the local limits of whose jurisdiction the cause of action wholly or in part arises. It has not been urged before us on behalf of the appellant that the cause of action wholly or in part arose in Bombay. Consequently Clause (c)is not attracted to the facts of these cases. What has been urged with the aid of the Explanation to Section 20 of the Code is that since the appellant has its principal office in Bombay it shall be deemed to carry on business at Bombay and consequently the courts at Bombay will also have jurisdiction. On a plaint reading of the Explanation to Section 20 of the Code we find an apparent fallacy in the aforesaid argument. The Explanation is in two parts, one before the word "or" occurring between the words "office in India" and the words "in respect of" and the other thereafter. The Explanation applies to a defendant which is CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 13of 29 a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction in as much as even if the defendant many not be actually carrying on business at that place, it will "be deemed to carry on business" at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The words "at such place" occurring at the end of the Explanation and the word "or" referred to above which is disjunctive clearly suggest within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office".
10.Here we may point out that the view which we take finds support from a circumstance which, in our opinion, is relevant. Section 20 of the Code before its amendment by the Code of Civil Procedure (Amendment) Act, 2976 had two Expla- nations being Explanations I and II. By the Amendment Act Explanation I was omitted and Explanation II was renumbered as the present Explanation. Explanation I so omitted read as hereunder:-
"Explanation I: Where a person has a permanent dwelling at one place and also temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence."
11.This Explanation dealt with the case of place of residence of the defendant and provided with regard to a person having a permanent dwelling at one place and also temporary at another CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 14of 29 place that such person shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence. The language used in Explanation II on the other hand which is the present Explanation was entirely different. Had the intention been that if a corporation had its principal office at one place and a subordinate office at another place and the cause of action arose at the place where it had its subordinate office it shall be deemed to be carrying on business at both places the language used in Explanation II would have been identical to that of Explanation I which was dealing with a case of a person having a permanent dwelling at one place and also temporary residence at another place. The marked difference in the language of the two Explanations clearly supports the view which we have taken with regard to the interpretation of the present Explanation to Section 20 of the Code which was Explanation II earlier as indicated above.
12.We would also like to add that the interpretation sought to be placed by the appellant on the provision in question renders the explanation totally redundant. If the intention of the legislature was, as is said on their behalf, that a suit against a corporation could be instituted either at the place of its sole or principal office (whether or not the corporation carries on business at that place) or at any other place where the cause of action arises, the provisions of clauses (a), (b) and (c) together with the first .part of the explanation would have completely achieved the purpose. Indeed the effect would have been wider. The suit could have been instituted at the place of the principal office because of the situation of such office (whether or not any actual business was carried on there). Alternatively, a suit could have been instituted at the place where the cause of action arose under clause (c) (irrespective of whether the corporation had a subordinate office in such place or not). This was, Therefore, not the purpose of the explanation. The explanation is really an explanation to clause (a). It is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 15of 29 on business. This, it is clarified, will be the place where the principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corporation situated at such place. The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed to be carrying on business, the disjunctive "or" will not be there. Instead, the second part of the explanation would have read "and in respect of any cause of action arising at any place where it has a subordinate office, also at such place".
13.As far as we can see the interpretation which we have placed on this section does not create any practical or undue difficulties or disadvantage either to the plaintiff or a defendant corporation. It is true that, normally, under clauses (a) to (c), the plaintiff has a choice of forum and cannot be compelled to go to the place of residence or business of the corporation and can file a suit at a place where the cause of action arises. If a corporation desires to be protected from being dragged into litigation at some place merely because a cause of action arises there it can save itself from such a situation by an exclusion clause as has been done in the present case. The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship if, in CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 16of 29 spite of the corporation having a subordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation's place of business, not an additional one.
Plaintiff's submission that cause of action in part has arisen within the jurisdiction of this court is in accordance with the facts and law.
Hon'ble Supreme Court of India in 'A.B.C. Laminart (P) Ltd. v. A.P Agencies, (1989) 2 SCC 163' interpreted the expression of cause of action and also dealt with Section 20(c) of CPC 1908. It was observed in Para 12, 13, 14 & 15 of the aforesaid judgment:
12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 17of 29
13.Under Section 20(c) of the Code of Civil Procedure subject to the limitation stated there before, every suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part arises. It may be remembered that earlier Section 7 of Act of 1888 added Explanation III as under:
Explanation III--In suits arising out of contract the cause of action arises within the meaning of this section at any of the following places, namely: (1) the place where the contract was made; (2) the place where the contract was to be performed or performance thereof completed; (3) the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable."
14. The above Explanation III has not been omitted but nevertheless it may serve a guide. There must be a connecting factor.
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the Law of Contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 18of 29 where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears The above are some of the connecting factors.
It is evident from the interpretation of Section 20(c) CPC as adopted by Hon'ble Supreme Court that the cause of action also arises wherein performance of the contract was to be done or any money to which the suit relates to, is expressly or impliedly payable. Hon'ble Supreme Court observed in Para 15 of the aforesaid judgment observed that a part of cause of action arises where money is expressly or impliedly payable under a contract.
In the present suit as per the Clause 16 (7) of the Work Order, defendant no.3 was required to make payment to the plaintiff through cheque payable at Gurgaon & Delhi within seven days of presenting the Bill. Perusal of record shows that the work order dated 19.04.2011 clearly mentions the payment will be made through cheque payable at Gurgaon / Delhi.
It is also a settled provision of law that making of the contract is also a part of the cause of action. A suit on contract can also be decided where it was made. The correspondence between the parties regarding work order and release of payment for the work done by the plaintiff was made with DSC at their registered offices, as is evident from the letter dated 24.06.2011 sent to DSC Limited on the behalf of DC pipelines, signed by Khushwant Singh, the proprietor of the plaintiff concern. As curious as it may sound, registered address of both KMP Expressways and DEPL (successor of DSC) is same & identical CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 19of 29 as reflected from the evidence affidavit of their respective witnesses. It is clear that cause of action arose within the jurisdiction of this court.
In the light of the above discussion, this court is of the opinion that this court has jurisdiction to decide this suit.
This issue is decided against the Defendants.
ISSUE NO.3:
Whether the plaintiff is entitled to a decree in a sum of Rs.39,70,608/- as prayed for?If yes, against which defendant? OPP Plaintiff's case is that plaintiff had supplied and installed outer casings as per the order from DSC at Kundli, Manesar & Palwal highway. Plaintiff has stated that DSC Engineering is the subsidiary of the defendant no.1 i.e. KMP Expressways (DSC Limited was subsequently taken over by DSC Engineering Private Limited). Plaintiff's case can be summarized into following points:
(1) Work order was issued by DSC Limited (DSC Limited was subsequently taken over by DSC Engineering Private Limited).
(2)After the completion of work a final bill was submitted on 24.07.2011 to DSC Limited. (3) The billing engineer of the DSC Limited approved the said final bill for an amount of Rs.26,28,834/-.
(4) As plaintiff was under impression that DSC CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 20of 29 Limited is subsidiary of KMP Expressways he approached both KMP Expressways Ltd. & DSC Limited to clear the dues but dues were never cleared.
Defendant KMP Expressways as well as the DSC Engineering Private Limited have tried to avoid their liability by referring to an EPC Contract that existed between KMP Expressways and DSC Limited. EPC stands for Engineering, procurement and construction Agreement.
DSC Limited is avoiding its liability on the ground that it never acknowledged or approved the bill, whereas KMP Expressways has denied its liability on the ground that there exists no 'privity of contract' between the KMP Expressways and the plaintiff. It is curious that in the written statement while denying that there exists no privity of contract between KMP Expressways and the plaintiff, they have pointed out the deficiencies in the work of the plaintiff. It is also stated that as a result of the aforesaid failure and breaches on the part of the plaintiff the EPC contractor i.e. DSC was constrained to engage third party to complete the aforesaid deficiencies incurring additional expenditure in this regard. Despite maintaining that this additional expenditure is recoverable from the plaintiff, no counter-claim has been filed by any of the defendants.
Defendant no.2 i.e. HSIIDC remained 'ex-parte' and no written statement was ever filed on their behalf.
Both KMP Expressways and DSC have refrained from disclosing the terms of their engagement. Neither of them has CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 21of 29 filed any document disclosing the exact nature of the relationship between KMP Expressways & DSC. Even the witnesses examined by them i.e. D1W1 and D3W1 have merely tendered their authority letters in evidence. Defendants' strategy has been to just deny the plaintiff's case and hide behind technical jargon without disclosing the exact nature of the dealings between the defendant no.1 & 3. It is further interesting to note that although letter dated 09.07.2013 was denied during the admission denial by Defendant no.1 but their sole witness D1W1 Sunil M.Asnani, who had deposed on behalf of the KMP Expressways has not denied the letter dated 09.07.2013 issued by KMP Expressways to HSIIDC. In the letter it was requested to HSIIDC to release the amount to the plaintiff that is due to them. It was further stated that final bill of Rs.42,47,111/- submitted to HSIIDC was prepared as per the actual consumption of the items. As per the letter, this amount is Rs.25,99,363/- whereas as per plaint the amount is Rs.26,28,834/-. Considering the scale of money & complexity of calculations involved a difference of Rs.30,000 approx- can be ignored. Except taking a moonshine defence of "bonafide mistake" defendant no.1 has not produced any evidence on this point. No explanation has been given as to how such a meticulously drafted letter was result of a mistake. No document to show the exact nature of the relationship between Defendant no.1 and 3 has been produced that could have established the financial insulation of Defendant no.1 from the defendant no.3. It was important particularly in light of the admissions of the defendants to the following effect:
1. Defendant No.1 was the original CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 22of 29 concessionaire of the Government for the project and principal employer of Defendant No.3
2. Defendant no.3 was hired by the Defendant No.1 for this project to supervise, under an EPC (Engineering, procurement and construction) Agreement.
3. Plaintiff supplied material/ worked for this project only.
As a fact specially within their knowledge as per Section 106 of Indian Evidence Act, 1872 defendant no.1 and 3 must have proved it. But no evidence was led on this point.
D1W1 had further deposed that work under EPC Contract dated 27.02.2006 was not completed, on the contrary KMP Expressways had to engage another agency to complete the work, but there is no document on record to show that DSC Limited had to engage another agency for completion of the work.
On the careful perusal of the pleadings and the evidence of the parties, following facts stand established:
1. KMP Expressways Ltd. was the original concessionaire of the HSIIDC (State Government Undertaking) to whom the work of split casing was allotted.
2. KMP Expressways Ltd. had hired DSC under EPC Contract. KMP Expressways was the principal employer of DSC.
3. Plaintiff received work order from DSC.
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 23of 29
4. Plaintiff carried out the work according to the work order placed by DSC. (Although with certain deficiencies, as per Defendant no 1 & 3).
5. KMP Expressways Ltd. had written to HSIIDC to make payment to the plaintiff that was owed to it, clearly acknowledging its liability.
6. HSIIDC in its reply had admitted this notice and justified not making payment.
(HSIIDC remained ex-parte).
Defendant No.1's main point of defence was that there is no privity of contract between it and plaintiff. But once it was established that the letter dated 09.07.2013 was indeed sent on the behalf of defendant no.1 to the defendant no.2, it was incumbent upon defendant no.1 to disclose the exact nature of dealings/relationship between defendant no.1 and 3, as being a fact specially within their knowledge as per Section 106 of Indian Evidence Act, 1872.
Defendant no.3's main point of defence was that the final bill was not submitted to them. In the written statement of DSC Limited, which was later adopted by defendant no.3, it is clearly admitted that work regarding which the bill was raised was performed but was deficient on several counts and no copy of final bill dated 24.07.2011 was submitted to them and therefore, has now become time barred. Plaintiff has pleaded loss of original receipt and has produced photocopy of the receipt. Photocopy of the receipt was tendered in evidence by the plaintiff's witness (Mark D) and he was cross-examined at length. His testimony on the point that Bill was delivered to the CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 24of 29 DSC Limited remained unimpeached. It is evident that defendant no.3 herein is taking a sham defence of non supply of bill and is enjoying 'unjust enrichment'.
In civil cases, the standard of proof is of a lighter shade than the one in criminal matters. Hon'ble Supreme Court of India in Dr. N.G Dastane Vs. Ms. S. Dastane (1975) 2 SCC 326 in para 24 observed;
"The normal rule which governs civil proceedings is that a fact can be said to be established if it is proved by a preponderance of probabilities. This is for the reason that under the Evidence Act, Section 3, a fact is said to be proved when the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. The belief regarding the existence of a fact may thus be founded on a balance of probabilities. A. prudent man faced with conflicting probabilities concerning a fact- situation will act on the supposition that the fact exists, if on weighing the various probabilities he links that the preponderance is in favour of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. The first step in this process is to fix the probabilities, the second to weigh them, though the two may often intermingle. The impossible is weeded out at the first stage, the improbable at the second. Within the wide range of probabilities the court has often a difficult choice to make but it is this choice which ultimately determines where the preponderance of probabilities lies. Important issues like those which affect the status of parties demand a closer scrutiny than those like the loan on a promissory note : "the nature and gravity of an issue necessarily determines the manner of CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 25of 29 attaining reasonable satisfaction of the truth of the issue" Per Dixon, J. in Wright v. Wright (1948) 77 C.L.R. 191 at p. 210; or as said by Lord Denning, "the degree of probability depends on the subject-matter. In proportion as the offence is grave, so ought the proof to be clear" Blyth v. Blyth [1966] 1 A.E.R. 534 at 536. But whether the issue is one of cruelty or of a loan on a pronote, the test to apply is whether on a preponderance of probabilities the relevant fact is proved. In civil cases this, normally, is the standard of proof to apply for finding whether the burden of proof is discharged.
25. Proof beyond reasonable doubt is proof by a higher standard which generally governs criminal trials or trials involving inquiry into issues of a quasi-criminal nature. A criminal trial involves the liberty of the subject which may not be taken away on a mere preponderance of probabilities. If the probabilities are so nicely balanced that a reasonable, not a vascillating, mind cannot find where the preponderance lies, a doubt arises regarding the existence of the fact to be proved and the benefit of such reasonable doubt goes to the accused. It is wrong to import such considerations in trials of a purely civil nature".
Hon'ble Supreme Court of India in Govt of Goa Through the Chief Secretary Vs. Maria Julieta D'souza 2024 SCC Online SC 104 in para 8 observed;
"On law, the position is as follows. There is a clear distinction between burden of proof and standard of proof. This distinction is well-known to civil as well as criminal practitioners in common law jurisprudence. What Ms. Ruchira sought to point out is that the documents relied on by the plaintiff did not point out the existence of title at all. She is right to the extent that no single document in itself concludes title in favour of the plaintiff, but this is not an issue of burden of proof. This is a matter CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 26of 29 relating to the sufficiency of evidence. While inquiring into whether a fact is proved, the sufficiency of evidence is to be seen in the context of standard of proof, which in civil cases is by preponderance of probability. By this test, the High Court has correctly arrived at its conclusion regarding the existence of title in favour of the plaintiff on the basis of the evidence adduced".
In the present case this court is of considered view that Plaintiff has proved his case by preponderance of probability against defendant no.1 & defendant no.3.
This issue is decided in favour of the Plaintiff. Therefore, this court is of opinion that the plaintiff is entitled to recover Rs.25,99,363/- from defendant no.1 and defendant no.3.
ISSUE NO.4:
Whether the plaintiff is entitled to interest, if so, at what rate and for which period?OPP Plaintiff has demanded an 18% rate of interest but has produced no evidence to show how this exorbitant rate of interest is warranted in his case.
In absence of any evidence on this point, this Court is inclined to grant presuit interest @6% p.a. from 24.07.2011 till 23.05.2014 and interest pendente lite as well as future interest @6% p.a. from the date of filing till the satisfaction of the decree.
This issue is decided with the finding that Plaintiff is entitled to presuit interest of 6% p.a and also 6% p.a. as interest pendete-lite & future.
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 27of 29 ISSUE NO.5:
Whether the present suit is properly instituted or not?OPD3 A suit is considered to be properly instituted when the plaint is presented in accordance with the Order IV and Section 26 of CPC, 1908.
In the present case suit was initially filed against four defendants out of which defendant no.1 DSC was deleted from the array of parties on the ground that its liabilities have been taken over by DSC Engineering Private Limited, who is now defendant no.3.
Suit has been filed against the parties, from whom the relief is claimed or who are necessary to decide the matters in controversy. Besides, burden of proof of showing that suit is not properly instituted was on the defendant no.3 but defendant no.3 has produced no evidence to prove the same. The issue is decided against the defendant no.3.
RELIEF:
Plaintiff has claimed relief of Rs.39,70,608/- in which the presuit interest calculated@18% p.a. is already included but in view of the finding on Issue No.4, the suit of the plaintiff is decreed for a sum of Rs.25,99,363/- alongwith presuit interest @6% p.a. from 24.07.2011 till 23.05.2014 and interest pendente lite as well as future interest @6% p.a. from the date of filing till the satisfaction of the decree against defendant no.1 & defendant no.3. Both defendant no.1 & 3 are jointly and severally liable to pay the amount.
CS DJ 8045/16 M/S DC Pipelines vs M/s KMP Expressways Ltd.s Ltd. & Ors. Page 28of 29 Cost of the suit is also awarded to the plaintiff. Decree-sheet be prepared accordingly, on filing of deficient court fee, if any.
File be consigned to the Record Room.
Typed to the dictation directly, corrected and pronounced in the open Court on 18.05.2024 (Abhitosh Pratap Singh Rathore) District Judge-04, South District Saket Courts, New Delhi.
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