Delhi District Court
S.K. Suri vs Hyt Engineering Company Pvt. Limited on 13 May, 2022
IN THE COURT OF SH. AJAY GARG,
ADDITIONAL DISTRICT JUDGE 01,
EAST DISTRICT, KARKARDOOMA COURTS, DELHI
FORMERLY
ADDITIONAL DISTRICT JUDGE 01,
PATIALA HOUSE COURTS, NEW DELHI
CS No. 58023/16
CNR No.DLND010002772012
S.K. Suri
A410, Rail Vihar
Sector 15/2,
Gurgaon 122001
......... Plaintiff
Versus
HYT Engineering Company Pvt. Limited
701, Naurang House,
K.G. Marg, Connaught Place
New Delhi - 110 001
........ Defendant
Suit presented On : 07.11.2012
Arguments Concluded On : 11.05.2012
Judgment Pronounced On : 13.05.2022
JUDGMENT
1. This is a suit for recovery of Rs. 69,96,467/ lacs. Brief facts of the case are :
That the Plaintiff is working as consultant and has been providing consultancy services to various companies and prior to CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 1 of 16. commencing consultancy, he retired as a General Manager from Indian Railways. The defendant is a company incorporated under the Companies Act and is engaged in manufacturing and supplying of machinery for machining of WheelSets for the Railways.
Defendant, in order to explore the business opportunities emerging with the Indian Railways and Railway related organizations, entered into an Agreement with the plaintiff to provide his expert services and the scope of consultancy to be provided by the plaintiff will cover all the stages of Project Execution ranging from conception to complete execution of the Projects.
After negotiations defendant appointed the plaintiff as Consultant on the terms and conditions in the Agreement dated 20.06.2011. It was agreed that the defendant will pay Rs.50,000/ per month as a retainer fee to the Plaintiff ; commission of 1% of the value of the Contract/Purchase Order pertaining to the projects where the plaintiff has provided his inputs ; and commission of 1% of the value of contract will be paid in two installments, i.e. 50% on release of the purchase order/contract agreement in favour of the Defendant and the balance immediately after execution of the Order/Contract.
From 01.07.2011 the plaintiff started working as a consultant for the defendant and provided his specialized and expert knowledge and knowhow on various emerging projects i.e. Integral Coach Factory (ICF) Chennai Expansion Project and provided an 'Overview of the Project to the Managing Director of the defendant, vide email message dated 10.07.2012 ; Two tenders (Tender Nos, COFMOW/ICF/WT01 & 02) floated by the Central Organization for Modernization of Workshops CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 2 of 16. (COMFOW) on 29/7/2011 and 20/9/2011 which have a combined outlay/value of Rs. 135 crores, entails construction of Workshop structures, buildings, Stores Depot and other civil engineering works, accounting for Rs.54 crores Since defendant had no expertise in civil engineering plaintiff suggested defendant to tieup with one Jindal Mectec Pvt. Limited, having good experience in carrying out civil works, as the said company has built Maintenance Work Shops for Delhi Metro Rail Corporation (DMRC) and also Workshop Sheds worth Rs.50 crores for Rail Coach Factory, Rai Bareli ; two tenders (initially opened on 21.10.2011 and 28.11.2011 respectively) discharged by COFMOW on 16.01.2012 & 19.01.2012 respectively and fresh tenders floated by COFMOW on 16.02.2012 and 04.03.2012 respectively.
The plaintiff provided the necessary assistance, guidance and information in preparing the offers for these tenders whenever the officials of the defendant faced difficulty on these issues. The efforts put in by the plaintiff contributed towards the defendant being able to secure the two contracts from COFMOW on 23.05.2012 and 28.06.2012 respectively, for a total value of Rs. 134,92,93,657.
There was no dispute with regard the services provided by the plaintiff to the defendant and also regarding the two contracts awarded by COFMOW to the defendant . The fact that the defendant continuously paid the retainer fee to the plaintiff since the Agreement came into force till May 2012 shows that the defendant was satisfied with the consultancy services provided to him by the plaintiff.
Once the defendant became confident that it would get the CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 3 of 16. two contracts from COFMOW, defendant became dishonest and claimed to have terminated the contract vide communication dated 08.05.2012. According to the Terms of the Agreement, the contract was valid for a period of three years with effect from 01.07.2011. Availing of the plaintiff's services continuously from July 2011 onwards and suddenly vide a cryptic email message sent on 08.05.2012 by one Kiran Gupta, Executive Assistant to Managing Director allegedly terminating the said contract is not tenable for multi fold reasons.
The agreement between the plaintiff and defendant provides that the said agreement can be terminated by giving one month's notice. The email sent by Kiran Gupta, Executive Assistant to Managing Director to the Plaintiff on 08.05.2012 states that the notice period for the said agreement ends on 31.05.2012, and the notice period is taken with effect from 01.05.2012 i.e. in effect no notice of 30 days period has been given to the plaintiff by the defendant.
The agreement between the plaintiff and the defendant continues to be in operation and the defendant is liable to pay the retainer fee for the months of June, July, August, September, and October 2012 @ Rs.50,000/ per month totaling to Rs.2,50,000/. Further the plaintiff is entitled for a commission of 1% of the value of the contracts/purchase orders pertaining to the projects where he has provided his inputs, of which 50% of the amount became due and payable on the date the defendant received the respective contracts. The Defendant, however, failed to make payment of this amount to the Plaintiff .
Since the defendant has been able to secure two turnkey projects because of the inputs provided since July 2011 the plaintiff, vide CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 4 of 16. his letter dated 19.08.2012 raised his bill for Rs.67,46,467/, being the 50% of the total commission payable to the Plaintiff by the Defendant. The Plaintiff is entitled to receive the remaining amount of Rs.67,46,467/ upon completion of the execution of works by the Defendant and accordingly the Plaintiff reserves the right to raise his invoice at the relevant time. The defendant refused to pay the amount demanded by Plaintiff, vide his letter/invoice dated 19.08.2012. The defendant, however, in a total breach of its contractual obligations sent a reply dated 27.08.2012 wrongly alleging that the plaintiff has not provided any inputs on the subject and that the contract was terminated by the Defendant in May 2012. The plaintiff sent legal notice dated 10.09.2012 to the defendant demanding payment of the said amount. Despite service defendant failed to make the payment, but sent a frivolous reply dated 03.10.2012. Hence the suit was filed.
2. Written statement was filed by defendant alleging that the suit is liable to be dismissed as it is misuse of due process of law ; defendant entered into an agreement with plaintiff on 20.06.2011 to get consultancy services from the plaintiff as per its terms and conditions. The agreement was valid for three years w.e.f. 01.07.2011 and either party could terminate the agreement by giving one month notice to other party.
The ICF / Chennai is first project of COFMOW in Chennai and defendant company came to know about this project through newspaper. The Managing Director and other officials were personally involved and they personally ensured that all requirements are fulfilled. Plaintiff never worked or provided any strategic input upon any of the CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 5 of 16. these projects. Defendant company has direct business relation with COFMOW since 20 year an is enjoying great rapport within the organizational hierarchy of COFMOW.
The work done by the plaintiff i.e. organizing seminars etc. is neither needful nor was within the framework of the job assigned to him. Defendant company made payment of retainer fees to the plaintiff till May 2012. The agreement dated 20.06.2012 was terminated on the sole ground of lack of efficiency of consultancy services provided by the plaintiff. Plaintiff never performed any of the duties assigned to him and was involved in kinds of works which were never assigned to him as per the agreement.
The two contracts from COFMOW were not awarded on the basis of the efforts of the plaintiff and the same was awarded only on the efforts of the defendant company. The termination of contract was telephonically communicated to the plaintiff by Ms. Kiran Gupta, Executive Assistant to the Managing Director. All the correspondence between the plaintiff and defendant company was communicated through Ms.Kiran Gupta.
On merits it was averred that the agreement between the plaintiff and defendant company was terminated on 01.05.2012 and the contracts were awarded on 23.05.2012 and 28.06.2012. Therefore, no question of payment of retainer fees for the month of June, July, August, September and October 2012 arises.
3. Plaintiff filed replication to the written statement wherein the contents of the written statement are denied and averments made in CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 6 of 16. the plaint are reiterated and affirmed.
4. From the pleadings, following issues were framed vide order dated 04.10.2013 :
1. Whether the plaintiff is entitled to recovery of the amounts, as claimed? OPP
2. If the issue no.1 is decided in favour of the plaintiff, whether the plaintiff is entitled to the interest, if any, and if so, at what rate and from what date? OPP
3. Relief.
5. In order to substantiate its case, the plaintiff himself stepped in witness box as PW1 and tendered his evidence by way of affidavit Ex. PW1/A. In his affidavit Ex. PW1/A, PW1 has reiterated the facts averred in the plaint and has placed reliance on the following documents:
i. Agreement dated 20.06.2011 Ex. P1
ii. Correspondence of plaintiff to defendant vide email
dated 04.07.2011 ex. P2,
iii. Correspondence of plaintiff to defendant vide email
dated 10.07.2011 Ex. P3,
iv. Correspondence of plaintiff to defendant vide email
dated 14.07.2011 Ex.P4,
v. Correspondence of plaintiff to defendant vide email
dated 17.01.2012 Ex. P9,
vi. Correspondence of plaintiff to defendant vide email
dated 31.01.2012 Ex. P10,
vii. Correspondence of plaintiff to defendant vide email
dated 01.02.2012 Ex. P11,
viii. Correspondence of plaintiff to defendant vide email
dated 24.02.2012 Ex. P12
ix. Correspondence of plaintiff to defendant vide email
CS no. 58023/16
S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 7 of 16.
dated 19.03.2012 as Ex. P13
x. Correspondence of plaintiff to defendant vide email
dated 19.10.2011 Ex. P5,
xi. Correspondence of plaintiff to defendant vide email
dated 28.10.2011 Ex. P6,
xii. Correspondence of plaintiff to defendant vide email
dated 21.12.2011 Ex. P8
xiii. Email dated 12.12.2011 sent by plaintiff to defendant
Ex.P7
xiv. Correspondence exchanged with defendant through
emails dated 08.06.2012 Ex. P14
xv. Correspondence exchanged with defendant through
emails dated 08.07.2012 as Ex. P15
xvi. Contract dated 23.05.2012 awarded by COFMOW to
defendant Ex. PW1/1
xvii. Contract dated 28.06.2012 awarded by COFMOW to
defendant Ex. PW1/2
xviii. Consultancy bills dated 19.08.2012 raised by plaintiff
for the month of June and July, 2012 Ex. PW1/3
xix. Letter dated 19.08.2012 demanding commission of
1% of the value of contract Ex. PW1/4
xx. Letter dated 27.08.2012 terminating the contract Ex.
P16
xxi. legal notice dated 10.09.2012 Ex. P17
xxii. Reply dated 03.10.2012 sent by defendant to the
legal notice Ex. P18
This witness was extensively crossexamined by ld counsel for defendant. Thereafter, vide separate statement plaintiff evidence was closed.
6. In defence, Mr. Bhojraj Teli, Managing Director of defendant stepped in witness box and examined himself as DW1 and tendered his evidence by way of affidavit as DW1/A. He relied upon following CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 8 of 16. documents :
i. Agreement dated 20.06.2011 executed between defendant and plaintiff Ex. P1 ii. Copies of mails on record Ex. D2 iii. Copy of email about termination Ex. D4 iv. Reply 27.08.2012 of the defendant refusing the payment claimed by the plaintiff Ex. D5.
This witness was exhaustively crossexamined by ld counsel for plaintiff thereafter vide separate statement defendant evidence was closed.
7. The Court has heard Sh. K.K. Malviya, ld counsel for the plaintiff and Mr. Manoj Joshi, ld counsel for defendant and has gone through the entire records of the case including pleadings of the parties, evidence led by the parties and documents proved by the parties during trial.
8. My issuewise findings are as under:
Issue No1:
"Whether the plaintiff is entitled to recovery of the amounts, as claimed? OPP"
9. The onus to prove this issue is upon the plaintiff. In support of this issue, Ld. counsel for plaintiff argued that in the referred agreement, it was envisaged that the plaintiff shall be providing consultancy services covering all stages of project execution, ranging from its conception to complete execution. The plaintiff started providing advice and consultation by way of inputs in terms of the referred CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 9 of 16. agreement. During his initial consultancy meeting with the Managing Director of the defendant company, it was suggested that the defendant company should venture into TurnKey Railway Projects, but initially, the Managing Director of the defendant company was reluctant to enter into this new area, on the ground of lack of exposure, experience and expertise, including lack of experience in execution of major Civil Engineering works. He further argued that on the persuasion and assurance of the plaintiff, he shall be able to bring reputed joint venture partner for execution of various Civil Engineering works, the defendant company agreed to participate in the bidding for Turnkey projects. Thus, the plaintiff played a major role in motivating the Managing Director of the defendant company to participate in the Integral Coach Factory Expansion Project Tenders. In addition to the above project, the plaintiff also provided necessary inputs to the defendant company, in the areas such as Rail Coach Factory, Rae Bareilly, New Wagon Factories being set up, Wagon Manufacturing plants at Kulti, West Bengal & Baroda, Rail Axle Factory, New Jalpaiguri etc. The proposed new division was to be dedicated for manufacturing LHB Coaches Shells. The major portion of the project was to be executed by floating three TurnKey tenders entailing procurement of machinery and plant required for manufacture of LHB Coach Shells and construction of industrial sheds. On the advice and technical guidance of the plaintiff, the defendant company participated in two Tenders having a combined total outlay of approx. Rs.135 Crores and eventually was awarded the contracts on 23.05.2012 and 28.06.2012 respectively. Both above referred contracts were successfully executed by the defendant company.
CS no. 58023/16S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 10 of 16.
Per contra, Ld. counsel for defendant argued that the plaintiff has claimed the commission for these two tenders wherein he never worked or provided any strategic input upon any of these projects. The above mentioned tenders were one of the important projects. For this reason, the Managing Director was personally involved in these projects. Plaintiff has alleged that the information of tenders was brought to the knowledge of defendant company by him whereas, the defendant company is having business relation with COFMOW SINCE 1984. He further argued that this fact was admitted by the defendant witness in his crossexamination which was not rebutted by the plaintiff. Since the plaintiff had wasted the valuable time of the defendant company by sending unnecessary emails beyond the scope of work assigned to him such as organizing seminars, conferences, upcoming tenders which were not related to defendant company's business. He further argued that the agreement dated 20.06.2011 Ex.P1 was terminated by the defendant vide its email dated 08.05.2012 only on sole ground of lack of efficiency and productivity. On 23.05.2012 & 28.06.2012, the two tenders were awarded to the defendant company. The plaintiff alleges that the defendant company got the knowledge of the award of the tender, much before the actual date of award and consultancy agreement was terminated to deprive him from his commission. This contention of the plaintiff does not substantial the claim raised since the award of tender is a process which takes place in the presence of senior level officials of the respective departments and no one could have the knowledge of the bids of any person/company until and unless the tenders are awarded on the scheduled date and time.
CS no. 58023/16S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 11 of 16.
He further submitted that the contentions of the plaintiff did not substantiate with any oral or documentary evidence whatsoever. With his efforts, the defendant company has bagged two contracts worth Rs.135 Crores from COFMOW. The claim of the plaintiff is wholly baseless as he himself admitted that defendant company has been supplying machinery and plant to the Railways for approx 20 years. Further, the plaintiff arranged meeting with M/s. Jindal Mectec P. Ltd. & its sister concern M/s. Jindal Buildsys Ltd to tieup and form a Joint Venture to execute the two tenders. It is evident from the letter of acceptance issued by the COFMOW that the defendant company formed a joint venture with GEL and both the tenders were awarded to HYT GEL (JV). In the entire pleading and in the evidence, the plaintiff has not disputed this fact that the tenders were awarded to HYTGEL (JV), whereas as per his contention, he suggested M/s. Jindal Mectec P. Ltd. to tie up for the tenders. This speaks volumes that the defendant company has not availed any benefit from the plaintiff in securing the two tenders.
10. The bone of contention in the instant suit is as to whether the plaintiff rendered any consultancy by providing inputs for award/contract/purchase order to the defendant and if yes, whether he is entitled to any commission thereof or not. As per clause 3 of Ex.P1 i.e. the letter agreement reads as follows: "For this work, HYT will pay a retainer of Rs.50,000/ per month to the Consultant from the date of this MOU. In addition, HYT will pay the consultant a commission of 1% of the value of the Contract/Purchase Order pertaining to the projects where the consultant has provided his inputs. Out of CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 12 of 16.
this commission, 50% (0.5% of the value) will be paid on release of the Purchase Order/Contract Agreement and the balance immediately after execution of the Order/Contract".
Meaning thereby as per the contract, the plaintiff was to provide consultancy services to the defendant for business development and contract execution for the various business opportunities emerging with Indian Railways & Railway related Organizations. The scope of Consultancy is to cover all stages of Projects Execution ranging from conception to complete execution of projects and in lieu of the services rendered by the plaintiff, he was entitled to 0.5% of the value of the contract/purchase order pertaining to the projects at the time of release of purchase order/contract agreement and the balance immediately upon execution of the purchase order/contract. The plaintiff asserted that vide several emails Ex.P2, Ex.P3, Ex.P4, Ex.P5, Ex.P6, Ex.P7, Ex.P8, Ex.P9, Ex.P10, Ex.P11, Ex.P12, Ex.P13, Ex.P14 & Ex.P15, he rendered specific inputs regarding the upcoming projects of the Indian Railways basing upon which the project/contract pertaining to contract from COFMOW on 23.05.2012 and 28.06.2012 respectively for the total value of Rs.134,92,93,657/ was awarded to the defendant herein. As per the email communications exchanged between the parties, the plaintiff specifically provided inputs to the defendant in respect of the above mentioned projects vide emails Ex.P2 to Ex.P15. Since none of the emails were reverted back by the defendant nor ever objected to, it can safely be presumed that the inputs provided by the plaintiff by these emails were of importance to the defendant and help the defendant in getting those contracts, though defendant claims that being in the railway business, he CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 13 of 16. was already aware about the ongoing projects of the above two tenders floated by the Indian Railways. However, it seems to be an afterthought as this was never communicated to the plaintiff in response to his emails wherein he gave the specific inputs about these tenders/contracts. Though admittedly the defendant company did not enter into the joint venture with M/s. Jindal Mectech P. Ltd. as suggested by the plaintiff, however, the mere fact that they got the said project by forming a joint venture with GEL, is sufficient to presume beyond preponderance of probabilities that the inputs provided by the plaintiff herein in respect of the above two tenders played a vital roles in getting those contracts/tendered by defendant company. Further, as per the contract, the only task assigned to the plaintiff is to render the inputs and expert services and he was entitled to 0.5% of the value of the contract immediately upon release of the purchase order/contract agreement. Upon holistic perusal of the emails sent by the plaintiff to the defendant herein, it can be safely gathered that plaintiff has rendered valuable inputs in respect of the tender in question which were ultimately awarded to the defendant herein. The defence that neither the plaintiff provided any strategic inputs upon any of these projects or that the plaintiff has wasted the valuable time of the defendant company by sending unnecessary emails beyond the scope of work assigned to him such as organizing seminars, conferences, upcoming tenders which were not related to defendant company business, seems to be an afterthought since till the institution of the suit, no such objection was ever raised by the defendant despite continuous emails providing such inputs sent by the plaintiff to the defendant herein. In these circumstances, considering the fact that the inputs provided by the CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 14 of 16. plaintiff were valuable and technical in nature, I am of the considered opinion that plaintiff is entitled to at least 0.5% of the commission of the total value of the tender project of the purchase order/contract agreement awarded to the defendant herein. Therefore, this issue is decided in favour of the plaintiff and against defendant.
As far as claim of recovery of notice period salary is concerned, since the notice of termination was duly served upon the plaintiff and was in consonance with the contract agreement between the parties, he is not entitled to arrears of salary as claimed by him for the period June, 2012 to October, 2012.
Issue No.2 :
"If the issue no.1 is decided in favour of the plaintiff, whether the plaintiff is entitled to the interest, if any, and if so, at what rate and from what dated? OPP"
11. In view of the decisions on issue no.1, the plaintiff is held entitled to pendente lite and future interest @ 10% per annum from the date of filing of the suit till its realization.
Issue No.3 (Relief):
12. In view of the findings and observations herein above, the plaintiff is held entitled for recovery of Rs.67,46,467/. Plaintiff is also entitled for pendente lite and future interest @ 10% per annum from the date of filing of the suit till its realization. Costs of the suit is also awarded to the plaintiff. Decree sheet be prepared accordingly after CS no. 58023/16 S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 15 of 16. deposit of deficient Court fee, if any.
File be consigned to record room.
Dated 13.05.2022 (AJAY GARG)
Additional District Judge01
East District, KKD Courts, Delhi.
Formerly
Additional District Judge 01,
Patiala House Courts, New Delhi
CS no. 58023/16
S.K. Suri Vs. HYT Engineering Company Pvt. Ltd. Page no. 16 of 16.