Delhi District Court
M/S Raj Brothers vs Dda & Ors. 53(1994)Dlt 14 on 19 March, 2011
IN THE COURT OF MS. SEEMA MAINI :
ADJ (3) NORTH: TIS HAZARI COURTS: DELHI
In re :
Suit No. 81/08
Unique Case ID No. 02401C5285452004
In the matter of:
M/s Raj Brothers,
147-C, A/D, Gandhi Nagar,
Jammu.
........Plaintiff
VERUS
1. Delhi Development Authority,
Service to be effected through,
Its Vice-Chairman/Secretary/ Executive Engineer/Principal Officer,
Vikas Sadan, Near INA Market,
New Delhi.
........Defendant
Date of filing of the main suit : 03.05.1995
Date of reservation for judgment : 29.10.2010
Date of judgment : 19.03.2011
SUIT for recovery of Rs. 10,89,500/-
APPEARANCE:
Sh. Sanjay Dua, counsel for plaintiff
Ms. Promila Kapoor, counsel for defendant
Suit No. 81/08 page no. 1/26
JUDGMENT
1. The instant suit has been filed by the plaintiff M/s Raj Brothers against the DDA, defendant for recovery of Rs. 10,85,955/-.
2. The brief facts, as stated in this suit are that the plaintiff is a partnership firm, duly registered with the Registrar of Firms, J & K Government and consists of of three partners namely Sh. Harbansh Lal S/o Lal Dev Raj Sethi, Ghanshyam Sethi and Ramesh Sethi both the sons of Harbansh Lal Sethi. Sh. Ghanshyam Sethi has filed the instant suit on behalf of the plaintiff firm, being one of the registered partners of the firm.
3. It was stated that the plaintiff was registered as 'A' class contractor with J & K State, PWD and as 'B' class contractor with MES Eastern Command and is a specialized contractor in design and construction on over head-cum-ground reservations and water and sewage plants.
4. It was further stated that the letter dated 19.01.1992, the plaintiff submitted its tenders in response to NIT by the defendant, for the development of land at Kishan Garh (P/P service), for providing peripheral water supply in sectors A to D at Vasant Kunj and Construction of one number V.G. Tank of 1 M.G. capacity in sector B Pocket-7 Vasant Kunj. The tender, after certain negotiations, was resubmitted by the plaintiff on 22.05.1992.
5. It was stated, that after exchange of some communications between the plaintiff and the defendant, the defendant vide its letter dated 23.05.1992 accepted the tender of the plaintiff for the tendered amount of Rs. 25,12,000/- for the said work after accepting earnest money to the done of money of Rs. 27,000/-.
6. It was stated, that on 28.05.1992 the defendant entered into an agreement vide agreement no. 12/SWD.8/A/92-93 in which estimated cost was mentioned as Rs. 22,000,00/- while the tender accepted cost was Rs. 25,12,000/- The said contract agreement was entered into through the Executive Engineer SWD, Vasant Kunj, New Delhi for and on behalf of the defendant.
Suit No. 81/08 page no. 2/267. It was stated, that one of the important conditions of the acceptance letter dated 23.05.1992 was :-
"The time allowed for completion of work is six months from the 10th day after date of written order to commence work."
8. It was stated that vide letter dated 06.07.1993, the plaintiff informed the defendant that a bearing capacity of 5 tones/M2 can easily be adopted for safety of its structure as per the recommendations of the soil Engineering Specialist report and requested the defendant to clear of the design so that the plaintiff could proceed with the work.
9. It was stated, that the plaintiff immediately, undertook the work of excavation and incurred an amount of Rs. three lacs for the same. It was stated that then after exchange of some more letters between plaintiff and the defendant, in pursuance of the directions of the defendant, the plaintiff submitted "Safe Bearing Capacity" as determined by M/s Soil Layers Consultants, A-1/34, Janakpuri, New Delhi vide letter dated 08.04.1993 and requested the defendant to approve the design already submitted by the plaintiff to enable him to execute the work.
10. It was stated that vide letter dated 05.07.93 the plaintiff requested the defendant and sought the approval of the design, submitted by the plaintiff.
11. It was stated that again vide letter dated 06.07.93, the plaintiff informed the defendant that a bearing capacity of 5 tonnes/M2 can easily be adopted for the safety of its structure, as per the recommendations of the Soil Engineering Specialist report. The defendant was also requested to clear the design so that the plaintiff could commence the work. Vide the said letter the plaintiff also informed the defendant that it would be responsible for any defect in the structure in terms of the contract and also gave a guarantee of five years and, therefore, bound itself to rectify any defect in the work, during the said period.
12. It was stated, that vide letter dated 23.07.93, th e defendant simply stated that Soil Testing Report, submitted by the plaintiff was wrong and incomplete, without Suit No. 81/08 page no. 3/26 giving any reason, in support of its statement.
13. It was stated that with malafide intention and ulterior motive the defendant issued a false show cause notice on 06.10.93 despite the fact that according to the contract agreement the date of completion was 01.12.1992. As such the show cause notice was false to the knowledge of defendant itself. It was stated that at no point of time, any written order for commencing of the work given by the defendant to the plaintiff.
14. It was stated that under the instructions of the defendant after spending a huge amount, the plaintiff obtained the Soil Testing Report from Soil Engineering Consultants, Ansal Chamber, Bhikaji Cama Place, Delhi, who were the approve consultants on the list of the defendant, and submitted the same, to the defendant alongwith the letter dated 10.11.93. The result of both the reports prepared by the specialists, which were submitted by the plaintiff, were the same but plaintiff had to spend an amount of Rs. 40,000/- in obtaining the two reports.
15. It was further stated that in the reply to certain clarifications, the plaintiff forwarded the clarifications by M/s Soil Engineering Consultants alognwith letter dated 25.01.1994 which was followed by meetings held in this regard, with defendant and its Superintending Engineer.
16. It was stated that with malafide intention, the defendant did not allow the plaintiff to work and continued to exchange letters with the plaintiff, causing the plaintiff further loss. Vide a pre-prepared letter dated 27.10.1994, which was illegal and false, the defendant wrongfully rescinded the contract of the plaintiff and unauthorizedly forfeited the security amount of Rs.27,000/- of the plaintiff, which the defendant was liable to refund at the rate of 24% per annum from the date of its deposit with the defendant by the plaintiff. The plaintiff challenged the correctness of the said letter dated 27.10.1994.
17. It was stated that the plaintiff sent a reply dated 16.11.1994 setting out the facts, in which the show cause notice was also challenged by the defendant. It was stated, that due to illegal rescindment of the contract, the plaintiff had suffered a Suit No. 81/08 page no. 4/26 loss of reputation on the account of the arbitrary rescindment of the contract by the defendant and therefore, the plaintiff claimed a nominal sum of Rs. Two lacs, for the said loss of reputation.
18. It was stated that the defendant failed to take the entire joint measurement even on 17th and 18th November, 1994 as few things were left out, namely water tank, stones deposited in the ditch within premises as well as 20 Lorries of stone which were wrongfully removed by the defendant from the site without the consent of the plaintiff. As such the plaintiff has suffered loss which the defendant was liable to repay to the plaintiff on this account.
19. It was stated that the plaintiff had suffered the following loss on account of the illegal arbitrary and malafide acts of the defendant:-
1. Excavation Work - Rs. 3,00,000/-
2. Soil Investigation - Rs. 40,000/-
3. Infrastructure & Water Tank - Rs. 20,000/-
4. Watch & Ward for 22 months @ 10,000/- - Rs. 2,20,000/-
5. Design Calculations submitted for approval - Rs. 30,000/-
6. Earnest money deposited in the form of CDR- Rs. 27,000/-
7. Loss of expected profit @ 10% on the - Rs. 2,50,000/-
tendered amount
8. Loss of reputation for wrongly terminating/ - Rs. 2,00,000/-
rescinding the contract ______________
TOTAL - Rs.10,87,000/-
_______________
20. It was stated that the plaintiff had sent a legal demand notice dated 16.12.1994 to the defendant as required u/s 53B of Delhi Development Act, 1957 r/w Sec. 80 of the CPC which was served upon the defendant on 19.12.1994, as per the AD card, which was received back. However, the said notice was neither replied nor complied with, by the defendant.
21. It was stated that the plaintiff had incurred an expenditure of Rs.2500/- in connection with a legal notice upon the defendant, the charges of which the Suit No. 81/08 page no. 5/26 defendant was liable to pay. The plaintiff was also entitled to interest @ 24% per annum on the earnest money of Rs.27,000/- from the date of its disposal till realization.
22. It was stated that the cause of action arose firstly, when the tender was submitted by the plaintiff. It also arose on 22.05.1992 when the defendant accepted the tender of the plaintiff. It also arose on 28.05.1992, when the agreement was entered into and thereafter, on 06.10.1993 when the show cause notice was served upon the plaintiff, arbitrary and thereafter on 27.10.1994 when the defendant wrongfully and illegally rescinded the contract. It also arose from time to time, when letters were written by the plaintiff to the defendant and also legal demand notice was served upon the defendant on 19.12.1994. The agreement was entered into, at New Delhi where the work was to be executed and so this Court had the territorial jurisdiction to adjudicate upon the dispute. The suit has been filed within the limitation and value of the suit for the purpose of jurisdiction and Court fee had been rightly fixed at Rs.10,89,500/- on which requisite court fee of Rs. 13,080/- has been paid. It was prayed that the decree of Rs. 10,89,500/- in favour of the plaintiff and against the defendant alongwith declaration that both the show cause notices dated 06.10.1993 and the letter dated 27.10.1994, rescinding the contract of the plaintiff were illegal, arbitrary and malafide. An interest of 24% be also awarded from the day of service of the legal demand notice till realization of the claimed amount alongwith the costs of the suit.
23. WS was filed on behalf of the defendant, wherein it was stated that so far as the submissions, the plaintiff firm is concerned to put to approved. It was stated that in response to Notice Inviting Tenders (NIT) the plaintiff submitted its tender in respect of the development of land at Kishan Garh for providing the peripheral water supply in Sector A to D, Vasant Kunj. The plaintiff was to construct an undergone tank of one million gallon capacity in Vastant Kunj, Delhi and the estimated cost of work was Rs.22 lacs, though tendered amount was for an amount of Rs.25,12,000/- on lump sum basis. The work was awarded to the plaintiff on 23.05.1992. The work was to be completed within six months i.e on or before December, 1992, but the plaintiff neglected in carrying out the same. The plaintiff did not undertake the work immediately, as it was not in position to take on work Suit No. 81/08 page no. 6/26 immediately, and therefore, with malafide intention, he started entering into unnecessary and unwarranted correspondence.
24. It was stated that the soil testing report submitted by the plaintiff was not in conformity with the basic design and engineering standards and was not acceptable to the department. The plaintiff was repeatedly called upon to get the designs checked and approved but the plaintiff neglected to comply with the said requisitions of the defendant. The plaintiff miserably failed to fulfill the contractual agreement, within the stipulated period.
25. It was stated that as per terms of the agreement, the plaintiff was to get the design checked from the competent authority. It was stated that time was the essence of the contract. Repeated reminders were given to the plaintiff, for finishing the work in the stipulated period. However, time was extended up to 31.12.1993, on provisional basis but despite extension of the time, the plaintiff neglected to complete the work and thus failed to fulfill its obligations. The defendant was left with no other alternative than to rescind the contract, as per the clause in the agreement.
26. It was stated that the defendant was placed in an awkward situation, since the plaintiff did not take the steps complete the work. It was stated that the plaintiff did not undertake any work immediately, even though, the work had commenced and a joint survey in respect of the work had been carried out, which was also confirmed by the plaintiff, vide letter dated 04.06.1992. It was denied that the plaintiff incurred an amount of Rs. Three lacs for executing the work of excavation. Rather than carrying on with the work, the plaintiff started finding faults in the department while indulging into unnecessary and unwarranted correspondence. It was also stated that the soil testing report, that had been submitted by the plaintiff, was under the terms of the agreement, entered into between the parties, but it was not in conformity with the basic design and engineering standards and was therefore, not acceptable to the defendant. The plaintiff was called upon, time and again, to contact the competent authority to get the designs checked and approved but the plaintiff failed to comply with the request of the defendant. It was the plaintiff's obligation and responsibility to get the designs Suit No. 81/08 page no. 7/26 approved, which the plaintiff failed to discharge.
27. It was further stated that the drawings, which were submitted by the plaintiff, were also not in conformity with the basic designs and approved engineering standards and thus, could not be accepted by the defendant. The plaintiff knew the grounds on which the soil testing report, submitted by him, alongwith the design, was not being accepted by the defendant, but the plaintiff did not rectify the defects or get the basic designs approved in accordance to the agreement.
28. It was stated that the defendant extended the time upto 31.12.1993, but even then the plaintiff, failed and neglected to undertake the work, which was for the convenience, benefit and utility of the residents, of the area, in question. It was denied that the show cause notice, issued by the defendant to the plaintiff, was a false one. Rather it was issued because the plaintiff had neglected to carry out the work and submit the design, as per the approved Engineering Standards.
29. It was also denied that the contract had been illegally rescinded but it was stated that the plaintiff was shown due indulgence and the defendant had waited and tolerated the irresponsible behaviour of the plaintiff and the contract was rescinded only when it could not be prolonged any further. It was denied that the plaintiff had expended any amount or had suffered any loss of reputation. It was stated that the suit of the plaintiff was without merits and be therefore, dismissed.
30. Replication has also been filed on behalf of the plaintiff to the written statement of defendants wherein the assertions made by the defendants were denied and the facts narrated by the plaintiff in the plaint, were reiterated.
31. On the basis of the pleadings of the parties, the following issues were framed by the Predecessor of this Court on 23.02.1999:-
1. Whether time was the essence of the contract in question and if so, its effect?
2. Whether the plaintiff committed breach of the contract and if so, to what extent and to what effect?Suit No. 81/08 page no. 8/26
3. Whether the Contract was legally rescinded by the defendant?
4. Whether the defendant was authorized to forfeit the security deposit of Rs.27,000/-?
5. Whether the plaintiff is entitled to recover from the defendant Rs.10,89,500/- as claimed in the present suit?
6. Whether the plaintiff is also entitled to claim interest and if so, at what rate and for which period?
7. Relief.
32. To substantiate its case, Sh. Ghanshyam Sethi, partner of the plaintiff firm entered the witness box as PW1 and deposed on an affidavit. He testified on oath all the averments made in the plaint. He brought on record, the extension letter of his tender by the DDA as Exh. P-1, copy of the letter dated 15.01.1993 as Exh. P-2, letter dated 05.07.1993, vide which the plaintiff requested the defendant to approve the design, submitted by the plaintiff as Exh. P-3. The letter dated 06.07.1993 vide which the plaintiff informed the defendant that the bearing capacity of 5 tonnes/M2 can easily be adopted for safety of structure in question is Exh. P-4. The soil test report from M/s Soil Engineering Consultants, who was on the list of DDA, submitted to the defendant alongwith a letter dated 10.11.1993 is Exh. P-5. The clarifications sought for by the defendant and given by M/s Soil Engineering Consultant alongwith letter dated 25.01.1994 is Exh. P-6. The letter of the defendant dated 27.10.1994, vide which the defendant wrongfully determined/rescinded the contract and unauthorizedly forfeited the security of Rs.27,000/- is Exh. P-7, the detailed reply dated 16.11.1994 sent by the plaintiff to the defendant, alongwith the original postal receipt is Exh. P-8. The legal demand notice, issued by the plaintiff to the defendant u/s 53B, of the DD Act r/w Sec. 80 of the CPC alongwith the AD card are Exh. P-13 to Exh. P-15 respectively.
33. In his cross-examination, he admitted that he did not remember the date of the award of the work by the DDA but the work was to be completed within six months after written orders to start the work. He admitted the agreement of work, which was signed by both the parties, and was taken on record as Exh.
PW1/D-1 and also admitted that in the agreement the time stipulated in the contract Suit No. 81/08 page no. 9/26 was stated to be the essence of the contract. He further admitted that he had started the work of excavation to determine the soil bearing capacity, after one month of the award, but denied that the work was started on 04.06.1992 and also admitted that the excavation work was to form a part of the work. He stated that he was not aware of the fact that the safe bearing capacity, was got to be done through a company approved by the Engineering Incharge, but after being confronted with clause VI of Exh. PW1/D-1, wherein it was so stated, he admitted that he had skipped this requirement. He also admitted that the soil test report, prepared by M/s Soil Layers Consultants, Janakpuri, was not on the list, as approve by the DDA. He denied that he failed to fulfill the obligations to execute the work within the stipulated period and admitted that he had submitted the second soil investigation report prepared by M/s Soil Engineering Consultants, Bhikaji Cama Place, after approximately two months of the rejection of the first report. He admitted that the plaintiff firm did not execute any other work except excavation and building of infrastructure. A joint measurement was recorded for part of the excavated material in the presence of the plaintiff's representative Sh. S.K. Ghosh. He also admitted that Exh. PW1/D-5 to Exh. PW1/D-9 were the letters received by him, but denied that through these letters and verbal discussion, the deficiencies in the soil test report, were informed by the defendant to the plaintiff. He admitted that he was called upon and advised to contact the competent authority to get the designs checked and approved, which he did, but also stated that the plaintiff wanted to be extra safe and that is why their consultant had given the safe bearing capacity as 5 tonnes per square meter although the results showed tobe 22.8 tonnes per sq. meter. He admitted the receiving of show cause notice Exh. PW1/D-6, but stated that the reply to the said notice was given in time. He denied that he had not incurred an expenditure of the amount specified in para no. 23 on excavation, soil investigation, watch and ward and on design calculation etc. He denied that no watchman was posted at the site but stated that 4 or 5 watchman had been posted, but no register was maintained. He also admitted that there was no material lying on the site, which required watch and ward.
34. PW2 Sh. S.K. Ghosh, Engineer by vocation and Incharge of the work in question, on behalf of the plaintiff firm, entered the witness box as PW2 and deposed on an affidavit, which he proved as Exh. PW2/A. He testified on oath, Suit No. 81/08 page no. 10/26 about the tender being submitted by the plaintiff in response to the NIT, given of the defendant, for the development of land and construction of the water tank, at Vasant Kunj. He deposed that he was conversant with the facts of the case and was thus competent to deposed on behalf of the plaintiff. He deposed that the design had been submitted by the plaintiff for execution of the work, for approval of the defendant, but despite repeated requests and various letters and verbal communications, made by Sh. Ghanshyam Sethi, partner of the plaintiff firm, the designs were not approved by the defendant. The Soil Testing Report was also submitted, firstly from M/s Soil Layers Consultants and subsequently from M/s Soil Engineering Consultants, which was followed with meetings. He deposed that plaintiff has spent a sum of Rs. 40,000/- in procuring the two reports from the consultants and besides this a sum of Rs. 20,000/- was spent upon the infrastructure and water tank, Rs.3,00,000/- on the excavation work and Rs. 2,20,000/- on watch and ward for a period of 22 months @ Rs.10,000/- per month and Rs. 30,000/- for the design calculation, which was submitted by the plaintiff. He also deposed that the defendant failed to take complete joint measurement inspite of the requests made by the plaintiff.
In his cross-examination, he admitted that he was not living in Delhi in the year 1992 to 1994, but used to come to Delhi quite often, for supervising the work being conducted. He admitted that the work of excavation at the site, was commenced on 04.06.1992 and this work carried on for 7 or 8 months, though he admitted that the stipulated time, given for completion of work was one year. It was further stated that the requirement of the soil investigation and the safe bearing capacity was not mentioned in the letter of award dated 23.05.1992 and that they came to know about the requirement of the above tests only with the correspondence with the defendant.
In his cross-examination, he denied that no expenditure was incurred upon watch and ward but subsequently stated that 5 persons were posted at the site for this purpose and that the duty register and the Muster Rolls also used to be maintained and salaries were paid through vouchers.
35. Mr. Vijay Razdan, entered the witness box as PW3 and deposed that he was a qualified Design Engineer and was the Proprietor of M/s Vijay Razdan & Associates. He deposed that the plaintiff had obtained his services for preparing the Suit No. 81/08 page no. 11/26 design of the work in question to be executed at Kishangarh, Vasant Kunj. He had prepared the designs, as per the prescribed standard, which were submitted by the plaintiff with the defendant for its approval and that he had charged Rs.30,000/- from the plaintiff, besides out of pocket expenses for the said designs. A copy of the receipt, given by him to the plaintiff, acknowledging the receipt of Rs. 30,000/- is Exh. PW-X. In his cross-examination, he stated that the plaintiff had given the data of safe bearing capacity of the soil before getting the designs prepared and that his designs for the reservoir were based n the soil investigation report, submitted to him by the plaintiff.
36. Mr. A.V.S. Rangarao, entered the witness box as PW4 and deposed that his qualification was M.Tec (Geo Technical Engineering) M.I.G.S., and he was working under the name and style of M/s Soil Engineering Consultants, which firm was on the approved list of DDA. He deposed that in the year 1993 Mr. Ghanshyam Sethi of M/s Raj Brothers, approached them for site investigation in connection with the contract with DDA and for this purpose and on behalf of the firm, he had carried out the soil investigation and submitted the report in original, which was in turn submitted by the plaintiff to the DDA. Copy of the report was brought on record as Exh. PW4/1. He also stated that he had also gave his detailed clarifications in respect of the queries raised by the DDA, which were also submitted in original by the plaintiff to the defendant, vide their letter dated 25.01.1994 and photocopy of which was taken on record as Exh. PW4/2.
In his cross-examination, he deposed that he had visited the site and had must have taken him a week or 10 days in preparing the report Exh. PW4/1. He also admitted that only two bore holes were done for the purpose of investigation. He denied that more than two bore holes were required and volunteered that as the strength of rock was more then the strength of weak soil, the lower value was adopted on the shear and settlement and accordingly the recommendation made in the report Exh. PW4/1. He denied that the recommendation was not based on any criteria and was based only on an assumption.
37. PW5, inadvertently mentioned again as PW4, Mr. Harminder Kumar, Executive Engineer, from Construction Division, Delhi Jal Board, entered the Suit No. 81/08 page no. 12/26 witness box and produced the summoned record alongwith a letter dated 22.04.2008 issued by the Executive Engineer. He identified the signatures of Sh. S.C. Das Gupta on the letter, at point X, which was taken on record as Exh. PW4/A. The letter was annexed with the site plan and soil report, which was formed part of the letter.
38. After close of PE, Mr. P.K. Nanda, Executive Engineer, DDA entered the witness box on behalf of the defendant and deposed on an affidavit, which he proved as Exh. D-1. He testified on oath, all the assertions made on behalf of the defendant in the written statement.
39. I have heard Sh. Sanjay Dua counsel for the plaintiff and Ms. Promila Kapoor counsel for the defendants, perused the record, scrutinized the evidence adduced, gone through the relevant prepositions of Law and my issue-wise findings are as under:-
At the outset, it maybe mentioned that, at the time of framing of issues, the onus of proving the issues was not placed upon any specific party. However, it is to be kept in mind that onus to prove a fact or an issue, is always upon the party, who alleges it, though broadly, the plaintiff, who has instituted the suit, has to prove his entire case and also prove or refute the issues, in order to substantiate his case.
ISSUE NO.1:-
"Whether time was essence of the contract in question and if so, its effect?"
40. It was the defendant, who has alleged that time was the essence of the Contract by making an assertion in this respect, on page no.3 of the WS. It is the contention on behalf of DDA that since the time was the essence of the contract, it was specifically stipulated in the letter of acceptance of the tender of the plaintiff as well as in the agreement dated 28.05.1992, which was entered into between the parties, that the work would be completed within six months. On the other hand, it was the contention of the plaintiff that time was not the essence of the contract for two reasons, since firstly, the time for completion of Suit No. 81/08 page no. 13/26 the work was to commence after 10 days of the written order being given by the DDA to the plaintiff. Secondly, without prejudice to their contention, it was further submitted that the time for completion of the work was admittedly extended by the DDA and therefore, even if time had been the essence of the contract, it ceased to be so, once the time was extended. It was submitted on behalf of the plaintiff that no written order was ever given by the DDA to the plaintiff to commence the work and therefore, the time for completion of the work had never commenced.
41. The scrutiny of the agreement dated 28.05.1992, entered into between the parties, on page no.3, contains the specific mention of a clause, which reads as under:-
"The time allowed for completion of work is six months, from the tenth day, after date of the written order, to commence the work".
42. Unrefutably, there is no such specific written order from the side of DDA, awarding the work to the plaintiff for commencing the work. However, clause 22 (1) of the agreement dated 28.05.1992, at this juncture, needs to be looked into and the same is therefore, reproduced herein below:-
Clause 22(1)-- "If the contractor/agency withdrawn his offer or abondone the work after award of work and after taking over possession of site then the action under clause 2 and 3 of the agreement (tender documents), I.e taking up the work at the risk and cost of the contractor and to penalize his for not completing the work within the stipulated period will be taken. For taking action under clause 2 and 3, the only documentarly proof required will be the documents showing signatures of contractor or his authorized representative for taking over the possession of site. It is further clarified that action under clause 2 and 3 of the agreement is attracted even though the contractor fails to sign the agreement on Rs.2/- non-judicial stamp paper and also does not start the work from the 10 th day after the date on which the date, the date on which the order to commence the work is issued to him. The date of start of the work will be considered as date of taking over the possession of site.
43. In para no.8 of his plaint, the plaintiff has stated that "he immediately Suit No. 81/08 page no. 14/26 undertook the work of excavation and incurred an amount of Rs. three lacs, in that connection." A cumulative reading of clause 22 (1) of the agreement and the assertion, made by the plaintiff in the plaint, would reveal that the plaintiff had entered upon the site and taken over its possession, since only then could the work of excavation, could have been carried out, being the first stage of the contemplated work, which had been awarded to the plaintiff. Vide letter dated 04.06.1992, admittedly, sent by the plaintiff to DDA and which is Exh. D-2, clearly refers to the "joint survey undertaken by the Junior Engineer of DDA, which also suggests the fact that the possession of the site was taken over by the plaintiff." This factum was also admitted on behalf of the plaintiff, when the PW1 entered the witness box, being the partner of the plaintiff firm by admitting that 'the excavation was started by the plaintiff firm on 04.06.1992, and that it would form part of the work." Therefore, in these circumstances, it is quite clear that the work order had been constructively handed over to the plaintiff, and plaintiff was under no confusion or illusion, that any other separate written order was yet to be received by it, in order to enable it to commence the work.
44. However, if the letter dated 09.12.1992, admittedly, written by the defendant to the plaintiff, is perused, it reveals that it was, vide this letter, that the defendant gave the plaintiff a clear cut go-ahead for carrying out the excavation and to submit the soil bearing capacity of the soil, vide the report. Vide this letter, the plaintiff was asked by the defendant, to submit the soil testing report, without further delay, so that the designs submitted by the plaintiff, could be checked on the basis of the soil testing report. This letter did not further give a stipulated date, by which the soil testing report, was to be submitted, but the intent of the letter was clear, that time was granted by this letter to the plaintiff, to carry out the first stage of the work and to submit the soil testing report. This letter, as per the plaintiff was received by the plaintiff on 22.12.1992. Vide letter dated 06.02.1993 again DDA corresponded with the plaintiff, while mentioning that the progress of the work, commenced by the plaintiff, was slow, granted further time to submit the soil testing report. Further, vide letter dated 06.10.1993, Exh. PW1/D-6, the defendant corresponded with the plaintiff and mentioned that, as per the agreement, the time allowed for completion of the work was six months i.e 01.12.1992, which had already Suit No. 81/08 page no. 15/26 expired, but that though some work had been done, the soil testing report had not been submitted and ultimately, asked him to show cause notice as to why the work entrusted to the plaintiff, since not completed within the stipulated period, be issued.
45. From the correspondence, mentioned above, it is clear that the work, which was to be completed, as per the defendant by 01.12.1992, admittedly, not having been completed, was allowed by the defendant to be carried out, by extending the time to do so, but without even mentioning another dead line, as to when the said work was to be completed.
46. In K.C.Goel Vs. DDA & Ors. 53(1994)DLT 141, in a similar case, where a similar question came up for adjudication before an Arbitrator, and who held that when after the expiry of the contract period, stipulated in the agreement, no time was mutually agreed between the parties, the time for completion of the balance work, then the time was not kept as essence of the contract. the Hon'ble Delhi High Court, in an appeal against the said order of the Arbitrator upheld the findings given by the Arbitrator and has observed that a unilateral extension of the period of completion of the work, by the DDA, "made the time clause and it being the essence of the contract" redundant.
In the case in hand, as clear from the multifarious correspondences, between the plaintiff and the defendant, that the DDA accepted the delay in the active commencement of the work, by extending the time for completion of the soil test report and approval of the designs on the basis of which, the work was to be commenced. Thus by extending the time and not fixing any further dead line, the DDA obliquely made redundant, the specified time period in which the work was to be concluded and therefore, was no longer the essence of the contract, between the plaintiff and the defendant. Accordingly, issue no.1 is decided in favour of the plaintiff and against the defendant.
ISSUES No. 2, 3 and 4:-
2. "Whether the plaintiff committed breach of the contract and if so, to what extent and to what effect?"Suit No. 81/08 page no. 16/26
3. "Whether the Contract was legally rescinded by the defendant?"
4. "Whether the defendant was authorized to forfeit the security deposit of Rs.27,000/-?"
47. The admitted facts are that the plaintiff submitted a soil testing report from M/s Soil Lairs Consultancy, Janakpuri, Delhi on 08.04.1993 itself, but the same was not considered. Unrefutably, the plaintiff also sent a letter dated
05.07.1993 to defendant, to approve its designs, which has been brought on record as Exh. P-3. Another letter dated 06.07.1993 Exh. P-4 was again written by the plaintiff to the defendant for clearing the designs and it was only on 06.10.1993 the defendant merely issued a show cause notice to the plaintiff, though vide the earlier letter dated 22.07.1993 the defendant simply stated that the soil testing report, which was submitted by the plaintiff was wrong and incomplete, without giving any reasons for the said observation. However, subsequently, the plaintiff submitted another soil testing report from the approved consultants, who was on the list of the DDA, on 10.11.1993, which has been brought on record as Exh. P-5, and was later proved as Exh. PW4/1, by Sh. A.V. S. Ranga Rao, who was working under the name and style of M/s Soil Engineering Consultancy and was on the approved list of DDA. Once again, since after the submission of the second soil testing report, since there was no response from the defendant, a letter dated 25.01.1994 was sent by the plaintiff to the DDA, requesting for approval of designs, the said letter having been brought on record as Exh. P-6 and not refuted by the defendant. Therefore, it is apparent that after complying with the requirements of the DDA, there was nothing on the part of the plaintiff, to be done, except waiting for the approval of the designs, submitted by the plaintiff for construction of the water tank, on the basis of the soil testing report, which had been submitted by the plaintiff.
48. As per the work order, the soil bearing capacity, which was contemplated by the defendant, was 22.5 tons/metric sq. while as per the first soil testing report, as well as the second soil testing report Exh. PW4/1, the soil bearing capacity of the soil at the site, was 12.5 metric sq. The designs of the tank, which were submitted by the plaintiff, would admittedly have put a pressure Suit No. 81/08 page no. 17/26 upon the soil to the extent of 5 tons per sq. meter. However, through the correspondences with the plaintiff as well as dated 29.07.1993, which was in response to the plaintiff's letter dated 05.07.1993, suggested soil bearing capacity of 5 tons/metric sq., was not found in conformity by the defendant. However, even the submission of the second soil testing report by the plaintiff to the defendant, brought about further silence from the side of the DDA, and only vide letter dated 24.03.1994 Exh. PW1/D-5, DDA asked the plaintiff to get the designs approved. When the designs alongwith the soil testing report, from the approved consultant, had already been submitted by the plaintiff, this correspondence of the DDA with the plaintiff, in my opinion, had no meaning, since any act that had to be done, was to be done by the defendant.
49. The fact remained that the designs of the plaintiff were not approved by DDA. In the WS, which has been filed by the defendant as well as in the written arguments, which were submitted by the Ld. counsel, on behalf of the defendant, it was contended that, as per the condition no.4 of the agreement dated 28.05.1992, the soil bearing capacity, which was required was 15 tonns/m2 while the plaintiff's designs recommended a bearing capacity of 5 tonns/m2, whereas the actual result obtained by the soil test report was 22.8 tonns/m2. The contention of the defendant was that the plaintiff was compelling the defendant to accept the lower safe bearing capacity of 5 tones/per meteric sq. against the required 15 tones/meteric sq. bearing capacity.
50. It has been rightly mentioned in the written arguments by the Ld. counsel for defendant that the supporting power of soil is referred to as its bearing capacity and it may be defined as the large intensity of pressure, which may be applied by a structure to the soil without causing failure of soil in shear or excessive settlement. In other words, safe bearing capacity is the maximum pressure, which the soil can carry safely, without risk of shear failure.
51. Once the defendants are very clear about the meaning of the safe bearing capacity of the soil, and its own requirement, as per condition no.4 of the agreement, was a safe bearing capacity of 15 tonns/per square meter, then obviously, the designs submitted by the plaintiff recommending a bearing Suit No. 81/08 page no. 18/26 capacity of 5 tonns/m2 was by far, the best proposition that defendant could have asked for. It is apparent that the defendant has mis-interpreted the safe bearing capacity of 5 tonns/m2 to be a lower safe bearing capacity, against the required 15 tonns/m2 meter as required by the defendant. A 5 tones/m2 capacity would mean that per square meter of the soil, as per the designs of the plaintiff, a maximum pressure of 5 tonnes would be imposed, whereas, the defendant's requirement was of a designs which would put a maximum pressure upto 15 tones per meteric square.
52. A design which was put less pressure on the per square meter of the soil, was without doubt, a better design and totally in conformity with the requirements of the DDA. Therefore, the defendant did not approve the design of the plaintiff, despite the plaintiff having submitted the design alongwith the soil testing report from the approved consultant within the extended time and despite repeated reminders to the defendant for approving his design, DDA did not approve the design on a misinterpretation of the technical aspect of the design. Since the designs were not approved, the plaintiff could not have commenced the actual work of construction, of the tank in question. Therefore, the contention of the defendant that there was a breach of contract by the plaintiff, for not having concluded the work within the stipulated period or during the extended period, is without force. Rather, in my opinion, there was o breach of contract on behalf of the plaintiff. Since there was no breach of contract, committed by the plaintiff, but rather there was a lapse on the part of the defendant, in approving the designs due to misinterpretation of the designs, the soil testing report and the safe bearing capacity of the soil, the rescindment of the contract by the defendant vide letter dated 27.10.1994 was illegal and not warranted. In lieu of the rescindment of the contract, the security deposit of Rs.27,000/-, deposited by the plaintiff, which was forfeited was also unauthorizedly forfeited by the defendant. Accordingly, issues no. 2, 3 and 4 are decided in favour of the plaintiff and against the defendant.
ISSUE NO.5 :-
"Whether the plaintiff is entitled to recover from the defendant Rs.10,89500/- as claimed in the present suit?"Suit No. 81/08 page no. 19/26
53. In para no. 23 of the plaint, while claiming a total amount of Rs.
10,87,000/-, the bifurcation of the amount, which was liable to be recovered by the plaintiff from the defendant has been given, and therefore, for expediency, the issue of entitlement of the plaintiff to recover the amount, if any, is proposed to be dealt with, under the specific heads. However, before proceeding any further, the crux of the matter may be crystallized by observing that the plaintiff carried out the excavation work, procured the soil investigation reports, submitted the design calculation for approval of the defendant, deposited earnest money in the form of a CDR and for doing all such work, must have also had some kind of infrastructure stationed in the office of the plaintiff in Delhi and therefore, has obviously incurred some expenditure. The defendant has not paid any amount to the plaintiff for carrying out the excavation work or submitting the soil testing report, but rather the work contract, awarded to the plaintiff by the defendant, was rescinded on premises, and reasons, which were not warranted. Therefore, it is held that the plaintiff is entitled to recover the following amount from the defendant, under the specific heads, given herein below :-
53.1 EXCAVATION WORK :
The plaintiff has claimed Rs. Three lacs for the excavation work, carried out by him. However, no details showing the actual amount of expenditure incurred by the plaintiff upon the excavation work, carried out by him, have been furnished. However, the excavation work is admitted by the DDA in their letter Exh. DW1/D-5 and Exh. DW1/D-6. The agreement Exh. P-1, gives the schedule of payment, which was to be made, which as per item 2 was to be 8% of the total payment, was to be released, after excavation. The total contract amount was Rs.25,12,000/- and 8% thereof comes to Rs. Two lacs. It is however, to be borne in mind that the schedule of payment, which is generally mentioned in the contract, is not the payment of the actual amount, incurred till that particular date, but it is only a schedule of the payment of the total amount, which is agreeably, to be made in phases. The said payment is against, not just the actual expenditure incurred by the contractor/plaintiff till a particular period, but also comprises of advance payment, being released to the Suit No. 81/08 page no. 20/26 contractor/plaintiff for facilitating the further work to be undertaken by the said contractor. In my opinion, therefore, an amount of Rs. Three lacs, which is claimed by the plaintiff towards excavation work is arbitrary and rather on the higher side. However, keeping in view, the magnitude of the work and the amount of payment and the work, which would have gone into, the said excavation, an amount of Rs.75,000/- would be a reasonable amount to be paid for this work.
Accordingly, for excavation work, the plaintiff is awarded a sum of Rs.75,000/-.
53.2 SOIL INVESTIGATION :
The plaintiff has claimed Rs.40,000/- in all for having submitted the two soil test reports with the defendant. PW2 has categorically stated that a sum of Rs. 40,000/- was expanded on the two soil testing reports, and his testimony on this score remained uncontroverted. PW4 the approved consultant on the list of DDA, has entered the witness box and admitted that he had furnished the soil testing report Exh. PW4/1 on behalf of his firm M/s Soil Engineering Consultants, Bhikaji Cama Place. His testimony has not been controverted by giving any suggestion to the contrary. However, it is an admitted fact by the plaintiff himself that, the first report, which was submitted by him from M/s Soil Layer Consultants, was not on the approved list of DDA and therefore, any amount, spent by the plaintiff on obtaining the soil test report from the said firm, cannot be considered. However, as far as the second report, furnished by the approved Engineering Consultant, who was on the list of DDA, has been considered and therefore, the amount which was paid by the plaintiff to M/s Soil Engineering Consultants, is liable to be recovered by the plaintiff from the defendant.
Accordingly, I award a sum of Rs.20,000/- to the plaintiff towards Soil Investigation.
53.3 INFRASTRUCTURE AND WATER TANK :-
The plaintiff has claimed Rs.20,000/- towards the infrastructure. It is Suit No. 81/08 page no. 21/26 the unrebutted testimony, on this score, of the PW1 and PW2, that the plaintiff had spent a sum of Rs.20,000/- upon the infrastructure and there was no rebuttal evidence or arguments in this respect. The plaintiff has not placed on record any proof to show where he was running his local office, the number of staff, he had employed and the amount expended by him. However, keeping the entire facts and circumstances in mind, I am of the opinion that Rs. 10,000/- would be a reasonable amount, to be awarded to the plaintiff towards infrastructure. I, therefore, award a sum of Rs.10,000/- to the plaintiff towards infrastructure.
53.4 WATCH & WARD :-
The plaintiff has claimed Rs. 2,20,000/- towards the watch and ward, with a submission that he had spent Rs. 10,000/- p.m. for a total period of 22 months on watch and ward. However, he was unable to place on record any proof that he had actually employed any staff for the purpose of watch and ward, for any particular period or time, whatsoever.
In DDA Vs. M/s Pride Constructions, in a judgment, passed by the Hon'ble Delhi High Court, in RFA 649/2005 and 651/2005 on 15.12.2008, in a similar matter in dispute, where watch and ward charges were claimed from the DDA, the Hon'ble High Court has held that there has to be some kind of proof that the plaintiff had deployed watch and ward staff and had paid wages to the staff deployed and in the absence of any evidence to this effect, in the form of register, voucher or receipt that any amount was paid to any person, no amount can be awarded for watch and ward.
In the case in hand, similar is the situation where the plaintiff has not been able to place on record any cogent proof to show that any employee for watch and ward was deployed and the wages were paid. Therefore, plaintiff is not entitled to any amount under this head.
53.5 DESIGN CALCULATIONS SUBMITTED FOR APPROVAL :-
Plaintiff has claimed Rs.30,000/- under this head. PW3 Sh. Vijay Suit No. 81/08 page no. 22/26 Razdan has entered the witness box on behalf of the plaintiff and has categorically deposed that he had prepared the design of the work, which was to be undertaken by the plaintiff and had charged Rs.30,000/- from the plaintiff, besides out of pocket expenses and brought on record, the copy of the receipt, issued by him to the plaintiff as Exh. PW/X. The said amount has not been refuted or controverted by the defendant and therefore, the same is accepted. The plaintiff is therefore, entitled to recover a sum of Rs.30,000/- under this head, from the defendant.
53.6 EARNEST MONEY :-
It is an admitted fact that a sum of Rs.27,000/- was deposited by the plaintiff with DDA as earnest/security money. The said amount was admittedly forfeited after the contract was rescinded by the DDA. It has already been held, that the forfeiture of the amount and the rescindment of the contract was illegal and was not warranted. Therefore, the plaintiff is entitled to recover a sum of Rs.27,000/-, deposited by him, as earnest money, from the DDA.
53.7 LOSS OF EXPECTED PROFIT @ 10% ON THE TENDERED AMOUNT OF RS. 25,12,000/- :-
The plaintiff has claimed Rs. 2,50,000/- under this head. In Dwarka Dass Vs. State of Madhya Pradesh AIR 1999, SC 1031 the Hon'ble Supreme Court has observed that :-
" ...... there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by a way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. ...... a Division Bench of the same High Court has accepted 15 per cent of the value of the balance of the works contract would not be an un-reasonable measure of damages for loss of profit."
Based upon the said reasoning, the Hon'ble Supreme Court awarded 15% of the value of the remaining part of the work as damages for loss of Suit No. 81/08 page no. 23/26 profits.
In AIR 1984 SC 1703, M/s A.T Brij Paul Singh & Bros. Vs. State of Gurarat, the Hon'ble Supreme Court has observed that :-
"..... the second reason to reject the contention is that ordinarily a contractor while submitting his tender in response to an invitation to tender for a works contract reasonably expects to make profits. What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. ..... a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an un-reasonable measure of damages for loss of profit."
Reverting back to the case in hand, while keeping the observations and the guide lines of the aforesaid authorities in mind, it is, the plaintiff herein would have obviously had a reasonable expectation of profit from the contract work. The plaintiff has claimed 10% of the total contract amount, which in my view is quite reasonable. Plaintiff is therefore, awarded a sum of Rs. 2,50,000/- under this head, from the defendant.
53.8 LOSS OF REPUTATION FOR WRONGFUL TERMINATION OF CONTRACT :-
The plaintiff has claimed Rs. Two lacs for the loss of reputation. It is not disputed that the plaintiff was a 'A' class of contractor with J & K State PWD and 'B' class Contractor with MES Eastern Command and therefore, was a construction firm of reputation. The rescindant of the contract, which has already been held to be illegal, must surely have resulted in a loss of reputation to the plaintiff. Loss of reputation cannot be determined in actual figure since the extent of the same cannot be contemplated, but this loss of reputation, becomes one of the major ground for non-awarding of future contract also, to the plaintiff, from the other organization, especially Government organization, as in the instant case. The plaintiff is definitely entitled to be compensated on this score and in my opinion a sum of Rs.50,000/- would be a reasonable Suit No. 81/08 page no. 24/26 amount. Plaintiff is accordingly granted a sum of Rs. 50,000/- under this head.
53.9 In view of my discussion, above, the plaintiff is entitled to recover the amount, detailed as under:-
1. Excavation Work - Rs. 75,000/-
2. Soil Investigation - Rs. 20,000/-
3. Infrastructure & Water Tank - Rs. 10,000/-
4. Watch & Ward - Rs. NIL
5. Design Calculations - Rs. 30,000/-
6. Earnest Money - Rs. 27,000/-
7. Loss of expected Profits - Rs. 2,50,000/-
8. Loss of Reputation - Rs. 50,000/-
______________________ TOTAL - Rs. 4,62,000/-
______________________ 53.10 Hence, the plaintiff is entitled to recover a total amount of Rs.4,62,000/- from the defendant. Issue no.5 is accordingly decided in favour of the plaintiff and against the defendant.
ISSUE NO.6 :-
"Whether the plaintiff is also entitled to claim interest and if so, at what rate and for which period?"
54. The contract was executed in 1992 and if everything had gone as per schedule, despite extension of the period, the work would have been completed by the end of 1994 and the money would have been released to the plaintiff, latest by March, 1995. The amount, which the plaintiff is entitled to recover from the DDA, either after the conclusion of the work contract or as in the present case, as per his entitlement and the damages, in my opinion, had become due latest by March, 1995. Even if a notice had been given to the defendant to make the payment, the defendant would have had 30 days period to make the payment. The instant suit was instituted on 03.05.1995 by the plaintiff. The plaintiff, being a firm carrying on business, has been deprived of Suit No. 81/08 page no. 25/26 the said amount and therefore, needs to be compensated by grant of interest. Therefore, the plaintiff is entitled to interest upon the amount of Rs. 4,62,000/- @ 6% per annum from the date of filing of the petition i.e 03.05.1995 till realization. Issue no. 6 is decided in favour of the plaintiff and against the defendant.
RELIEF :-
55. In view of my findings, given on issues no. 1 to 6 above, the suit of the plaintiff is decreed in favour of the plaintiff and against the defendant, for a sum of Rs.4,62,000/- alongwith interest @ 6% per annum from the date of filing of the petition i.e. 03.05.1995, till realization. The plaintiff shall also be entitled to the costs of the suit. Decree-sheet be prepared accordingly. File be consigned to record room.
ANNOUNCED IN THE OPEN COURT (SEEMA MAINI) on 19th day of March, 2011 ADJ-3 (NORTH):DELHI Suit No. 81/08 page no. 26/26 Suit No. 81/08 19.03.2011 Present: Sh. Sanjay Dua, counsel for plaintiff Ms. Promila Kapoor, counsel for defendant
Vide my separate Judgment of even date, announced in open Court, the suit of the plaintiff is decreed in favour of the plaintiff and against the defendant, for a sum of Rs.4,62,000/- alongwith interest @ 6% per annum from the date of filing of the petition i.e. 03.05.1995, till realization. The plaintiff shall also be entitled to the costs of the suit. Decree-sheet be prepared accordingly. File be consigned to record room.
(SEEMA MAINI) ADJ-03 (North)Delhi Suit No. 81/08 page no. 27/26