Delhi District Court
Unitech Ltd vs Delhi Development Authority on 26 April, 2024
DLND010052682016
IN THE COURT OF ADDITIONAL DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
CS No. 58223/2016
Unitech Limited
A public limited company incorporated
under the Companies Act, 1956, having
its registered office at 6, Community
Center, Saket, New Delhi-110017 and
Corporate Office at Unitech House,
L-Block, South City-I, Gurgaon-122001
(through its Constituted Attorney
Mr. V.P. Gupta).
......... Plaintiff
Versus
1. Delhi Development Authority
Vikas Sadan,
I.N.A. New Delhi-110049
[through its Chairman]
Also at:
Office of the Executive Engineering
WD-2, Division,
B2B, Janak Puri, New Delhi
CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 1 of 38
2. The Canara Bank
Nehru Place Branch
D.D.A. Building, Nehru Place,
New Delhi-110019
[Service to be effect through
its Chief Manager]
........ defendants
Suit presented On : 24.01.2005
Judgment Pronounced On : 25.04.2024
JUDGMENT
1. The case at hand is a classic example of how executive whims and fancies and misadventures can financially bleed the state exchequer and squeeze the finances of private players to the verge of bankruptcy with no accountability of its officers.
2. Shorn of all necessary details, this suit seeking declaration and consequential reliefs has been instituted averring that (a) DDA (defendant no.1) vide letter of intent bearing no. F.50(39)/WD.2/DDA/2001-2002/4585, dated 19.12.2001, awarded a contract for construction of 240 HIG, 104 MIG and 120 MIG multi storied houses including construction of basement, internal water supply, sewer, SW drains, electrification, installation of pumps and tube-wells, roads, paths and landscaping etc. behind, Pocket 6, Vasant Kunj, New Delhi to the plaintiff for a contracted value of Rs.37,51,41,378/-. (b) Agreement was signed between the parties on 24.12.2001 and the contract agreement was subject to General CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 2 of 38 Conditions of Contract (G.C.C.) and Special Condition of Contract (S.C.C.). (c) The scheduled time for completion of work was 30 months commencing on 29.12.2001 till 28.06.2004. (d) As per the contract, under Clause 10CC of G.C.C., escalation for labour, all material, petrol, oil, and lubricants was also payable but only during contractual period of 30 months and not during the extending period of the contract. (e) Pursuant to the terms of contract, the plaintiff furnished Performance Security by way of Bank Guarantee (B.G.) bearing no.02205 dated 20.02.2002 for a sum of Rs.1,85,57,070/- (equivalent to the 5% of the contract value) issued by Canara Bank (defendant no.2) to DDA (defendant no.1). (f) The contract also entitled the plaintiff to mobilization advance against a B.G. to the tune of 2.5% of the estimated value of cost put to tender and therefore, another B.G. bearing no. 02212 dated 26.02.2002 for Rs.83,91,401/- was issued to defendant no.1 by defendant no.2. (g) The B.G.s which were valid upto 26.06.2004 were extended till 28.03.2005 and has continued to be extended. (h) According to the plaintiff, on award of the contract, it immediately undertook the execution of the work and to adhere to the contractual time schedule, extensively mobilized all it's resources, purchased building materials like steel, cement aggregate etc and construct site offices, go-downs, stores, labs and labour hut-mants for Rs.54.3 lacs. However, the work only commenced on 01.02.2002 as there was a delay by DDA (defendant no.1) in release of site and drawings. (i) The plaintiff has stated that initial delays were as under:
'....1. Details regarding proposed formation, Plinth level & permission for Borewell given by DDA:23.01.02.CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 3 of 38
2. The start with filing area for excavated earth outside the campus shown to us by DDA on 7.2.2002.
3. Clearance for Basement Excavation (upto full Depth) given only on 19.2002.
4. Basement floor Plan : 2.3.02.
Approximately qty of dia wise steel requirement details received on : 2.3.02 Advance copy of Group demarcation plan for basement excavation only received on 6.3.02.
Advance copy of basement beam lay out.
5. Good for construction drawings of basement beam layout for Block-I received on : 15.3.02.
6. End portion retaining wall excavation layout received on :
23.3.03.
7. Stoppage of mining operations of Aravalli Hills.'
(j) As the work was at full swing, on 26.10.2002 (Ex. P-9), vide letter no. F.AE(P)(150)WD.2/DDA/2002/1299 DDA (defendant no.1) stopped work at site till further orders citing some Court order. (k) Apparently, the Division Bench of Delhi High Court on 16.09.2002 in C.W. P No.4978 of 2002 observing that under Section 11A of The Delhi Development Act, 1957 (hereinafter, referred to as the DDA Act), the land use from agricultural land had not been changed for residential project and public notice was also issued by DDA (defendant no.1) in violation of Rule 5 read with Rule 12 of Delhi Development (Master Plan and Zonal Development Plan) Rules, 1959 ordered for work at site to be stopped. (l) Therefore, a case has also been made out that the letter of intent dated 19.12.2001 and the subsequent contract was contrary to law and against public policy, therefore, void and unenforceable under The Indian Contract Act,1872 (hereinafter, referred to as 'The ICA Act). (m) The plaintiff, on 02.12.2002, vide letter no. UL/CD/VKH/DDA/2002/1021, CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 4 of 38 informed DDA (defendant no.1) that it was incurring loss to the tune of Rs.2.5 lacs per day due to abrupt suspension of work but the defendant did not specify or gave any indication when the work would be resume. Also, the plaintiff vide numerous communications informed DDA (defendant no.1) that work force, machinery, plan and equipment were lying idle at site. (n) In response to letter dated 29.03.2003 of DDA (defendant no.1), the plaintif vide letter no. AE(P) (125)/WD.2/387 dated 25.04.2003 and letter no. UL:CD:VKH:DDA:2003:1393 dated 04.08.2004, gave the details of losses being incurred by it. (o) Subsequently, DDA (defendant no.1) vide letter no. AE(P)(125)/WD.2/765 dated 22.06.2004 (7 days before the scheduled date of completion), expressed its willingness to extend the stipulated date of completion of work by the period for which the work had remained closed subject to all other terms and conditions of the contract remaining the same and informing the plaintiff that it would be entitled to increases under Clause 10 C.C. of the agreement for the extended period of the contract. However, it was added that '...This is with a clear understanding that you would not raise any other claim on any account whatsoever. In case this is acceptable to you, you may communicate/ confirm immediately after the receipt of this letter and re-start the work immediately. However, in case we do not receive any communication from you or the work does not start at site, the agreement will be determined as per conditions of the agreement.'
(p) On 23.06.2004 vide letter no. F.50(33)WD-2/DDA/2001-02/774 unilateral provisional extension of time for completion of the work was granted till 28.12.2004 without prejudice to the right of DDA (defendant no.1) to recover liquidated damages in terms of provision CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 5 of 38 of Clause 2 of the agreement. However, it is claimed by the plaintiff that between 29.12.2001 to 26.10.2002 (but effectively, the work only having been executed for 7 months for delay allegedly attributable to DDA (defendant no.1)), plaintiff executed work to the tune of 14.16% of the contract value and thus, duly complied with the Clause 2 of the agreement. Further, the work remained suspended for 20 months during which the rates quoted by the plaintiff in the tender became otiose as there was unprecedented and abnormal increase in construction material which was not adequately catered to by Clause 10 C.C. of the Conditions of Contract. (q) This was followed by a letter dated 13.07.2004 bearing no. F.50(33)WD-2/DDA/2001-02/854 asking the plaintiff to take up the work within 7 days of receipt of the letter failing which, the agreement would be determined under the relevant clause of the agreement. In response thereof, the plaintiff vide letters dated 16.07.2004 and 20.07.2004 requested for time to submit their reply and requested for personal meeting in the matter. Subsequently, on 04.08.2004 vide letter no.
UL:CD:VKH:DDA:2004:882, the plaintiff submitted a detailed reply to DDA's letter dated 21.06.2004 and raised a claim of Rs.10.25 Crores on account of losses/ damages suffered by it during the 20 months when the work remained suspended. (r) Thereafter, on 16.08.2004, show-cause notice bearing no. F.50(39)/WD- 2/DDA/2001-02/1053 was issued alleging that on account of wrongful suspension of work by the plaintiff, as the work at site could not be completed within the extended date of completion, the plaintiff was called upon to explain why action under Clauses 3(a) to (c) of the CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 6 of 38 agreement should not be taken. (s) It was duly replied that re- commencement letter was issued without considering ground realities. It was requested that work could be restarted on creation of congenial environment for the same by appreciating the claims and pleas of the plaintiff as due to suspension of work for 20 months, losses had been incurred by it and the tender rates had become redundant due to abnormal increase of market of the construction materials. (t) It is averred that a meeting was held with the Chief Engineer, DDA (defendant no.1) on 18.08.2004 wherein 3 options/ alternatives were offered for consideration of the defendant to mitigate / provide for the losses suffered by the plaintiff and other such companies engaged for different parts of the project. Accordingly, letter dated 25.08.2004 bearing no. UL:CD:VKH:DDA:2004/919 was issued by the plaintiff to the Chief Engineer South-West Zone, DDA (defendant no.1) with the proposed alternatives. (u) However, on 25.08.2004, the Superintending Engineer issued letter no. F.13(143)55(P)CE-V/WD- 2/04-05/55 to the plaintiff alleging that since only 14.16% of the work had been executed in the period of 12 months, it was liable to pay compensation under Clause 2 of the agreement and within a fortnight, sought explanation why compensation should not be levied. Again on 03.09.2004, the propose alternatives were reiterated and personal hearing was sought. Also, the allegations of delay alleged by DDA (defendant no.1) was condemned by the plaintiff. (v) Vide letter no. F.50(39)/WD.2/DDA/2001-02/148 dated 12.01.2005 (Ex. P-28), the Superintending Engineer levied compensation amounting to Rs.3,35,65,603/- under Clause 2 of the agreement @10% of the CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 7 of 38 estimated cost and threatened to recover the said amount from the security deposit lying with DDA (defendant no.1). On the same day, vide letter no. F.50(39)/WD-2/DDA/2001-02/48 the Executive Engineer issued show-cause notice for termination of the contract invoking Clause 3(iv) (a) and (c) of the agreement. Vide letter dated 20.01.2005, the show-cause notice was duly replied wherein, it has been decried to be arbitrary, illegal and capricious denouncing all allegations of delay and stating that the construction was in violation of provision of master plan and against representations in Clause 2(b) of NIT that 'site of the work is available'. The plaintiff also asserted that the contract did not provide for suspension of work by the DDA (defendant no.1) in any circumstance. It has been alleged that letter dated 26.10.2002 for stoppage of work was in fundamental breach of the contract. The plaintiff sought to make out a case of compensation for the period when the work was suspended as it had incurred losses on various accounts and also alleged that the directives in letter dated 22.06.2004 for resuming work was without a accounting of ground realities which had cropped up on account of rise in prices of construction material and not duly catered for by Clause 10 CC. The plaintiff sought for withdrawal of the show-cause notice. However, apprehending action by DDA (defendant no.1) on the impugned notices, the present suit came to be filed seeking declarations that agreement (Ex. P-3) dated 24.12.2001 had been rendered illegal, unlawful, void and unenforceable and show-cause notices dated 12.01.2005 are illegal and the bank guarantees (given as performance security and against mobilization advance) cannot be invoked. In CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 8 of 38 addition, it was sought that DDA (defendant no.1)be restrained to take coercive action against show-cause notices and also restrained DDA (defendant no.1) from invoking the bank guarantees. It was also sought that defendant no. 2 be injuncted from releasing the amount.
WRITTEN STATEMENT
3. Preliminary objections were taken that the plaintiff was not entitled to the reliefs as it had not approached the Court with clean hands, the suit had been under valued for the reliefs sought and was barred under Section 53 of The DDA Act.
4. In brief, on merits, execution of the agreement, submission of bank guarantees and proceedings before the Delhi High court in C.W. P No.4978 of 2002 are not disputed. However, all allegations of the agreement being unenforceable under Section 23 of ICA and delay in execution of work on account of hindrances caused by the defendant have been denied. It has been asserted that the plaintiff failed to execute the required work as was stipulated to be done within 10 months when the work at site had not been suspended. It has been denied that the defendant has acted arbitrarily against the plaintiff.
REPLICATION
5. Replication reiterates the contents of the plaint and is not produced for the sake of brevity.
CS No. 58223/2016Unitech Limited vs. Delhi Development Authority Pages 9 of 38 ADMISSION AND DENIAL OF DOCUMENTS
6. Admission and denial of documents have been conducted on behalf of the plaintiff and defendant no.1.
6.1 Vide order dated 03.03.2006, the following documents are admitted on behalf of defendant no.1:
Sr. Document Exhibited as
No.
1 Copy of General Power of Attorney Ex. P-1
2 Copy of letter no. F.50(39)WD-2/DDA/2001- Ex. P-2
2002/4585 dated 19.12.2001
3 Copy of agreement dated 24.12.2001 Ex. P-3
4 Copy of notice inviting tender Ex. P-4
5 Copy of Bank Guarantee for performance Ex. P-5
6 Copy of Bank Guarantee towards mobilization Ex. P-6
advance
7 Copy of reference no.02205 sent to the DDA Ex. P-7
8 Copy of Writ Petition no.4978 of 2002 titled as Ex. P-8
Delhi Science Forum vs. DDA
9 Letter no. F.AE(P) Ex. P-9
(150)WD.2/DDA/2002/1299 dated 26.10.02 10 Letter no. UL:CD:VKH:DDA:2002 dated Ex. P-10 30.10.2002 11 Letter no. UL:CD:VKH:DDA:2002/1021 dated Ex. P-11 02.12.2002 12 Letter No. F.AE(P) Ex. P-12 (150)WD.2/DDA/2022/1478 dated 21.12.02 13 Copy of letter no. Ex. P-12A UL:CD:VKH:DDA:2003/1287 dated CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 10 of 38 12.03.2003 14 Letter no. AE(P)(125)/WD.2/387 dated Ex. P-13 29.03.03 15 Letter no. UL:CD:VKH:DDA:2003:1393 dated Ex. P-14 25.04.2003 16 Letter No. AE(P)125/WD.2/764 dated 21.06.04 Ex. P-15 17 Letter No. AE(P) (125)/WD.2/765 dated Ex. P-16 22.06.04 18 Letter No. F.50(33)WD-2/DDA/2001/774 Ex. P-17 dated 23.06.04 19 Letter No. F.50(33) WD-2/DDA/2001-02/854 Ex. P-18 dated 13.07.04 20 Letter no. UL:CD:VKH:DDA:2004:844 dated Ex. P-19 16.07.2004 21 Letter no. UL:CD:VKH:DDA:2004:853 dated Ex. P-20 20.07.2004 22 Letter no. UL:CD:VKH:DDA:2004:852 dated Ex. P-21 04.08.2004 23 Letter no.F.50(39)/WD-2/DDA/2001-02/1053 Ex. P-22 dated 16.08.04 24 Copy of letter no. Ex. P-23 UL:CD:VKH:DDA:2004/908 dated 19.08.2004 25 Copy of letter no. Ex. P-24 UL:CD:VKH:DDA:2004/919 dated 25.08.2004 26 Letter no. F.13 (143)EE(P)CC-V/WD.2/04- Ex. P-25 05/1075 dated 25.08.2004 27 Copy of letter no. Ex. P-26 UL:CD:VKH:DDA:2004/926 dated 03.09.2004 28 Letter no. F.13 (143)EE(P)CC-V/WD.2/04- Ex. P-27 05/55 dated 12.01.05 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 11 of 38 29 Letter no. F.50(39)/WD-2/DDA/2001-02/48 Ex. P-28 dated 12.01.05 30 Letter no. UL:CD:VKH:DDA:2005/1229 Ex. P-29 6.2 Vide order dated 24.11.2005, the following documents were admitted and denied by the plaintiff:
Sr. Document Exhibited Admitted/ No. as denied 1 Letter no. Ex. D-1 admitted UL:CD:VKH:DDA:2004/919 dated 25.08.2004 2 Letter no. Ex. D-2 admitted UL:CD:VKH:DDA:2004/908 dated 19.08.2004 3 Letter no. Ex. D-3 admitted UL:CD:VKH:DDA:2004/919 dated 25.08.2004 4 Letter no. Ex. D-4 admitted UL:CD:VKH:DDA:2004/908 dated 19.08.2004 5 Letter no. Ex. D-5 admitted UL:CD:VKH:DDA:2003/1287 dated 12.03.2003 6 Details of daily losses Ex. D-6 admitted 7 Letter No. F.A(P) Ex. D-7 admitted (150)WD.2/DDA/2002/1299 dated 26.10.2002 8 Letter no.UL:CD:VKH:DDA:2002 Ex. D-8 admitted dated 30.10.2002 9 Letter Ex. D-9 admitted no.UL:CD:VKH:DDA:2002/1021 dated 02.12.2002 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 12 of 38 10 Letter no.UL:CD:VKH:DDA:2002 Ex. D-10 admitted dated 30.10.2002 11 Letter no. Ex. D-11 admitted UL:CD:VKH:DDA:2002/1021 dated 02.12.2002 12 Ex. D-12 admitted 13 Letter no. UL:CD:VKH:DDA:2002 Ex. D-13 admitted dated 30.10.2002 14 Letter no. Ex. D-14 admitted UL:CD:VKH:DDA:2003/1287 dated 12.03.2003 15 Details of daily losses Ex. D-15 admitted 16 SAME AS D-11 Ex. D-16 admitted 17 Letter no. Ex. D-17 admitted UL:CD:VKH:DDA:2003/300 dated 06.09.2003 18 Statement of part rate withheld on Ex. D-18 admitted agreement items 19 Statement of part rate withheld on Ex. D-19 admitted extra items. 20 Letter no. Ex. D-20 admitted UL:CD:VKH:DDA:2002/072 dated 09.10.2002 21 Letter no. UL:CD:VKJ/2002/053 Ex. D-21 admitted dated 03.08.2002 22 Letter No. UL:CD/VKJ/2002/031 Ex. D-22 admitted dated 29.05.2002 23 Letter No. UL:CD/VKJ/2002/032 Ex. D-23 admitted dated 30.05.2002 24 List of extra item bearing no. Ex. D-24 admitted UL:CD:VKJ/2002/032 dated 30.05.2002 25 Letter no. UL/CD/VK/2002 dated Ex. D-25 admitted CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 13 of 38 27.03.2002 26 Letter no. UL/CD/VK/2002/724 Ex. D-26 admitted dated 08.03.2002 27 Letter no. UL/CD/VKJ/2002/004 Ex. D-27 admitted dated 15.02.2002 28 Letter no. UL/CD/VKJ/2002/650 Ex. D-28 admitted dated 12.02.2002 29 Letter no. UL/CD/VKJ/2002/647 Ex. D-29 admitted dated 12.02.2002 30 Letter bearing diary no.65 dated Ex. D-30 admitted 14.02.2002 31 Attested true copy of tender Ex. D-31 admitted (document Mega Housing Project Vasant Kunj) 32 Letter No. UL:CD/VKJ/2005/008 Ex. D-32 Admitted dated 08.08.2005 the contents but denied the official notings 33 Letter no. UL:CD:VKJ/2005/005 Ex. D-33 Admitted dated 08.02.2005 the contents but denied the official notings 34 Letter no. UL:CD:VKJ/2006/046 Ex. D-34 Admitted dated 17.07.2002 the contents but denied the official notings 35 Letter no. UL:CD:VKJ:2002/023 Ex. D-35 Admitted dated 30.04.2002 the contents but denied the official notings 36 Letter no. UL:CD:VKJ:2002/017 Ex. D-36 Admitted CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 14 of 38 dated 11.04.2002 the contents but denied the official notings 37 Letter no.UL:CD:VKJ/2002/013 Ex. D-37 Admitted dated 26.03.2002 the contents but denied the official notings 38 Letter no. F.50(39)/WD- Ex. D-38 Admitted 2/DDA/2004-05/146 dated the receipt 22.01.2005 of document but denied the contents thereof 39 Letter bearing diary no.596 dated Ex. D-39 Admitted 17.08.2004 the receipt of document but denied the contents thereof 40 Letter no. F.50(33)WD-2/DDA/2001- Ex. D-40 Admitted 02/774 dated 23.06.2004 the receipt of document but denied the contents thereof 41 Letter no. AE(P)(125)/WD.2/765 Ex. D-41 Admitted dated 22.06.2004 the receipt of document but denied the contents thereof CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 15 of 38 42 Letter no. AE(P)(125)/WD.2/764 Ex. D-42 Admitted dated 21.06.2004 the receipt of document but denied the contents thereof 43 F.13(143)/EE(P)/CC-V/WD.2/04- Ex. D-43 Admitted 05/1075 dated 25.08.2004 the receipt of document but denied the contents thereof 44 AE(P)/(125)/WD.2/387 dated Ex. D-44 Admitted 29.03.2003 the receipt of document but denied the contents thereof 45 Letter no. F.AE(P) Ex. D-45 Admitted (151)/WD.2/DDA/2002/1478 dated the receipt 21.12.2002 of document but denied the contents thereof 46 Letter no. AE.(P)(125)/WD.2/387 Ex. D-46 Admitted dated 29.03.2003 the receipt of document but denied the contents thereof CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 16 of 38 ISSUES
7. Vide order dated 16.03.2006 following issues were framed :
1. Whether the suit is barred for non-service of notice under Section 53B of the Delhi Development Act, 1957? OPD
2. Whether the suit has been valued properly for the purpose of Court fee? OPD
3. Which of the parties has committed breach of the contract? If so to what effect?
4. Whether the contract between the parties has not been lawfully rescinded? OPP
5. Whether defendant is not entitled to invoke the Bank Guarantees in question? OPP
6. Whether defendant is not entitled to invoke provisions of Sub-
Clause 3(iv) 9(a) & (c) of the Contract? OPP PLAINTIFF EVIDENCE
8. PW-1 Sh. S.S. Sharma, Additional General Manager of the plaintiff company was examined and he tendered his evidence by way of affidavit which is exhibited as Ex. PW-1/A and relied upon the following documents:
Sr. No. Documents Exhibited as
1 Copy of hindrance record dated 03.10.2002 Mark A
2 Copy of major hindrance dated Mark B
3 Copy of hindrance Mark C
4 Copy of letter no. Mark D
UL:CD:VKH:DDA:2006/1051 dated
30.03.2006
5 Copy of letter no. Mark E
UL:CD:VKH:DDA:2006/1243 dated
CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 17 of 38
24.01.2005
6 Copy of letter no. UL:CD:VKH:DDA:2005 Mark F
dated 02.03.2005
7 Copy of letter no. F.50 (39)/WD- Mark G
2/DDA/2001-02/A/C/451 dated 18.03.2005 8 Copy of letter no. Mark H UL:CD:VKH:DDA:2005/09 dated 04.04.2005 9 Copy of letter no. Mark I UL:CD:VKH:DDA:2005/480 dated 05.10.2005 10 Copy of letter no. F5(248)01-02/A/SWD-IV Mark J dated 27.07.2004 11 Certified true copy of letter no. Ex. PW-1/4 SKM/GEN/05-1740/H dated 24.01.2005 12 Letter no. Ex. PW-1/5 F.Cash(103)/Acctt./WD.2/DDA/2004-05/175 dated 28.01.2005 13 True copy of letter/notice no. Ex. PW-1/6 UL:CD:VKH:DDA:2005/352 dated 03.08.2005 14 Certified copy of letter no. Ex. PW-1/9 UL:CD:VKH:DDA:2005/1249 dated 27.01.2005 15 Certified true copy of letter no. Ex. PW-1/10 UL:CD:VKH:DDA:2005/1283 dated 09.02.2005 16 Certified true copy of letter no. Ex. PW-1/12 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 18 of 38 F.50(39)/WD.2/DDA/2001-02/408 dated 09.03.2005 17 Certified true copy of letter no. Ex. PW-1/13 UL:CD:VKJ/2005/007 dated 14.03.2005 18 True copy of notice/letter bearing no. Ex. PW-1/17 SKM/GEN/06-1740/R dated 24.06.2006 This witness was duly cross-examined by Ld. Counsel for the defendants.
8.1 Thereafter vide order dated 15.02.2013, PE stood closed on behalf of the plaintiff.
DEFENDANT EVIDENCE
9. Sh. S.K. Sharma Executive Engineer of the defendant was examined as DW-1 and he tendered evidence by way of affidavit Ex. DW-1/A and relied upon the following documents:
Sr. No. Document Exhibited as
1 Copy of master test register Ex. DW-1/A
2 Attested copy of Letter no.41/01/170 dated Ex. DW-1/1
27.12.2001
3 Attested copy of letter no. Ex. DW-1/2
JE/CC5/12(104)/EECP/154 dated 24.01.2002 4 Attested copy of letter no. CC.S/DDA/175 Ex. DW-1/3 dated 28.01.2002 5 Attested copy of letter no. Ex. DW-1/4 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 19 of 38 SE(V)12(104)EE(P)DDA/18 dated 02.04.2002 6 Attested copy of letter no. Ex. DW-1/5 SE(V)12(104)EE(P)/DDA/669 dated 30.04.2002 7 Attested copy of letter no. F.50(39)/WD- Ex. DW-1/6 2/DDA/2001-02/270 dated 25.02.2002
8. Attested copy of letter no. Ex. DW-1/7 F.50(39)/WD.2/DDA/2001-2002/272 dated 25.02.2002 8 Copy of letter sent by The Tata Iron and Steel Ex. DW-1/8 Co. Ltd. to DDA dated 17.05.2002 9 Attested copy of letter no. Ex. DW-1/9 F.50(39)WD.2/DDA/2001-2002/764 dated 14.06.2002 10 Attested copy of letter no. F.50(39)/WD- Ex. DW-1/10 2/DDA/2001-02/1102 dated 10.09.2002 11 Attested copy of letter no. AE(P) Ex. DW-1/11 (150)/WD.2/DDA/2002/1288 dated 26.10.2002 He was duly cross-examined by the Ld. Counsel for the plaintiff.
9.1 Thereafter vide order dated 18.09.2017, DE stood closed.
FINAL ARGUMENTS
10. Final arguments have been advanced by both the sides led by Sh. Siddharth Batra on behalf of plaintiff and Ms. Promila Kapoor on behalf of the defendant.
CS No. 58223/2016Unitech Limited vs. Delhi Development Authority Pages 20 of 38 REASONING AND APPRECIATION OF MATERIAL ON RECORD
11. This Court has considered the submissions and material on record.
ISSUEWISE FINDINGS A) Whether the suit is barred for non-service of notice under Section 53B of the Delhi Development Act, 1957? OPD (Issue no.1).
12. The onus to prove the issue was upon the defendant.
12.1 Whereas, the plaintiff has relied upon Section 53B(3) of DDA Act to state that statutory notice is not required as it would render the suit infructuous, the defendant has questioned the maintainability of the suit for want of statutory notice prior to it's institution. (During the pendency of the matter, IA NO.352 of 2008 was filed under Order VI Rule 17 of CPC to amend paragraph no.71A to state that the plaintiff had issued statutory notice dated 24.06.2006 to the DDA (defendant no.1)in terms of provision of Section 53B of DDA Act. However, the same was dismissed vide order dated 15.01.2009 observing as under:
'....The issue in this case were framed on 16.3.2006 and the very first issue is - Whether the suit is barred for non-service of notice under Section 53B of the Delhi Development Act? There is no dispute that no notice under Section 53-B was served by way of plaintiff upon the defendant before filing of the suit. It is settled law that a suit can be filed by a person on the basis of cause of action which has already arisen. No suit can be filed for future cause of action. A suit has to be considered maintainable or non-maintainable on the date when it was filed.CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 21 of 38 Service of a notice, during pendency of a suit, on DDA under Section 53-B cannot be related back to the date of filing of the suit, nor an amendment to this effect can be allowed. I find no force in the application. The application is hereby dismissed.' 12.2 Section 53B of DDA Act by way of sub-section (3) provides that notice under Section 53B of DDA Act would not be required in a suit where 'the only relief claimed is of injunction of which object would be defeated by giving of notice or the posponment of the institution of the suit.' 12.3 No evidence has been led by the defendant through its witness Sh. S.K. Sharma explaining why notice under Section 53B of DDA was necessitated in the present matter when in fact, the plaintiff has moved the Court for urgent relief to restrain DDA from invoking the bank guarantees.
12.4 Even otherwise on 16.03.2004, Ld. Counsel for the defendant did not press upon the issue.
12.5 Therefore, the issue is decided against the defendant.
B) Whether the suit has been valued properly for the purpose of Court fee? OPD (Issue no.2)
13. The onus to prove the issue was upon the defendant.
13.1 The plaintiff has valued the suit as under:
CS No. 58223/2016Unitech Limited vs. Delhi Development Authority Pages 22 of 38
a) Three reliefs of decree for Declaration are valued at Rs.7,50,000/-.
b) The two reliefs of decree for Permanent Injunction are valued at Rs.500/- each.
The value of the suit for the purpose of jurisdiction is fixed at Rs.22,51,000/-
13.2 Even though, preliminary objection was taken regarding under valuation of the suit for the purposes of Court fees, it was not substantiated as to why? No evidence has also been led on behalf of the defendant on the issue. Even otherwise, on 16.03.2004, Ld Counsel for defendant DDA did not press on the issue.
13.3 The issue is decided against the defendant.
C) Which of the parties has committed breach of the contract? If so to what effect? (Issue no.3) D) Whether the contract between the parties has not been lawfully rescinded? OPP (Issue no.4) E) Whether defendant is not entitled to invoke the Bank Guarantees in question? OPP (Issue no.5) F) Whether defendant is not entitled to invoke provisions of Sub- Clause 3(iv) 9(a) & (c) of the Contract? OPP (Issue no.6) Above mentioned issues are taken up for discussions together as they are inter connected.
14. The onus to prove the issue is upon the parties.
14.1 It has been extensively argued on behalf of the plaintiff that the plaintiff cannot be held liable for any breach of the contract as the agreement (Ex. P-3) is unenforceable by application of Section 23 of CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 23 of 38 ICA as well as in view of Section 56 of ICA, the performance of it became impossible. By referring order dated 16.09.2002 (Ex P-8), it has been submitted that it is apparent that the tender floated by DDA (defendant no.1) was in violation of Section 11A of DDA Act as well as Rule 5 read with Rule 12 of Delhi Development (Master Plan and Zonal Development Plan) Rules, 1959 and therefore, it was illegal. Further, it has been adumbrated that the plaintiff was never apprised of the status of the land and even the order of High Court (Ex, P-8) was not annexed alongwith notice dated 26.102002 (Ex P-9) vide which, the work was suspended. The Ld. Counsel for the plaintiff also referred to Mark J issued to M/s L&T Limited on 22.07.2004 declining to furnish the Court order to demonstrate that DDA (defendant no.1) kept concealing material facts about the agreement even from the plaintiff, herein. Therefore, it has been submitted that by application of Section 23, the object of the agreement being unlawful, rendered the agreement (Ex. P-3) void and was therefore, not enforceable. It has also been argued that the agreement (Ex. P-3) also became impossible to perform due to supervening circumstances under Section 56 of ICA and therefore, cannot be enforced. Reliance has been placed upon MD, Army Welfare Housing Organization vs Sumangal Services Pvt. Ltd.1 and Sushila Devi & Anr. Vs. Hari Singh & Anr.2 The Court was led through letter dated 22.06.2004 (Ex P-16) to demonstrate that a week before the period for completion of the agreement, DDA (defendant no.1) offered to the plaintiff extension of only 6 months to complete the project and only 1 Appeal Civil no.1725 of 1997 decided by Supreme Court of India decided on 08.10.2003 2 1971 AIR 1756, 1971 SCR 671 decided by Supreme Court of India on 05.05.1971 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 24 of 38 offered to grant increases under 10 CC of the agreement for the extended period of the contract. However, since the letter is clear to the effect that it was an offer to the plaintiff to renegotiate the terms, which did not culminate into any agreement, it was arbitrary to unilaterally extend the period of completion of the work vide letter dated 23.06.2004 (Ex. P-17) and then, to issue letter dated 13.07.2004 (P-18) followed by impugned show-cause notices (Ex P-22), (Ex-P-
27) and (Ex. P-28). It has been submitted that whereas the show- cause notice Ex. P-22) alleged that the plaintiff was responsible for wrongful suspension of work, the order dated 16.09.2002 (Ex P-8) clears why the work at spot had to be suspended by DDA (defendant no.1), itself. Thereafter, referring to the ground mentioned in show- cause notice dated 25.08.2004 demanding compensation under Clause 2 of the agreement, it has been submitted that the defendant failed to prove that when admittedly, the plaintiff had executed 14.16% of work within 10 months (of which delay for 3 months was shown to be on account of defendant no.1 delay in handing over of site and drawings), how the plaintiff had not adhered to the contract schedule? It has also been shown from records that show-cause notices were desperate attempts on behalf of engineers of DDA (defendant no.1) to shift the blame for failure of project upon the plaintiff.
14.2 In rebuttal, Ld Counsel for defending DDA (defendant no.1) has justified the action of DDA (defendant no1) stating that the plaintiff did not adhere to the contract schedule and had only executed 14.16% of the work in 10 months against mobilization advance of 2.5% of the CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 25 of 38 estimated cost of the tender. Once again, by referring to order in C.W. P No.4978 of 2002, (Ex. P-8), it has been submitted that all earnest efforts for conversion of land use was being undertaken by DDA (defendant no.1) and therefore, it's earnestness towards the project should not be ignored.
14.3 At the outset, the Court is inclined to deal first with the applicability of Section 56 of The ICA.
14.4 Section 56 of The ICA provides as under:
'...56. Agreement to do impossible act.--
An agreement to do an act impossible in itself is void. Contract to do an act afterwards becoming impossible or unlawful.--A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non-performance of act known to be impossible or unlawful.-- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the nonperformance of the promise.' 14.5 For applicability of the Section, the following conditions are material:
a) That the Act became impossible.
b) That possibility was by reason of some event which the
promisor could not prevent and
c) That the possibility was not self induced by the promisor or due
to his negligence.
CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 26 of 38
14.6 The question which arises is whether order dated 16.09.2002 (Ex. P-8) on account of which work at site could not be executed can be said to be a supervening circumstance which was beyond the control of DDA (defendant no.1) or was itself induced?
14.7 Here, it would be relevant to allude to the order dated in C.W. P No.4978 of 2002 (Ex. P-8) '.... Admittedly since the date of acquisition till 1999 the first respondent herein did not take any step to move the Central Government for taking any action in terms of Section 11A of the Act. For three years the Central Government also did not take any steps pursuant to or in furtherance of the application filed by the first respondent herein for change in the land user. In the meantime, purported to be on the ground of protecting the land in question from further encroachment as also for other co-lateral purposes a mass housing project in Vasant Kunj for 416 HIG for Group I had been undertaken. Pursuant to or in furtherance of the said scheme/a notice inviting tenders had been issued and allegedly a contract has been awarded for completion of the said scheme. In this Public Interest Litigation apart from highlighting the violation of the provisions of the Delhi Development Act and the rules framed there under the petitioner herein had contended that the water level of the area has gone down to a great extent and as a matter of fact the water requirement of the area is of the order of 4 MGD and only 1.3 MGD has been supplied by way of river water and the rest is sourced from the already stressed ground water regime. Permission to dig certain bore-wells were granted by the Central Ground Water Authority in terms of Section (3) of the Environment Protection Act, 1986 but it also prohibited extraction of the ground water without its specific prior approval by a notification dated 25.4.1999. The first respondent despite the said ban has been allegedly digging ground water in violation of the said ban. The first respondent, however, in its reply alleged that it has started special projects for supply of water in the area in question and whereas the constructions of the flats may be completed by 2004 such water supply scheme would be completed by December, 2003. It now stands admitted that the constructions have been started in clear violation of the provisions of Delhi CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 27 of 38 Development Act and the rules framed there under. When we heard the matter in par t on 11th September, 2002 it was prayed by Mr. Arun Jaitely, learned Senior Advocate appearing on behalf of respondent No. 1 that respondent No. 2 herein be asked to inform this Court about the progress made on the request of the first respondent for change of the land rules.
Today Ms. Raman Oberoi has produced before us a purported fax message which is as under:
"Delhi Development Authority submitted a proposal with approval of Competent Authority on 17th November, 1999 to Ministry of Urban Development for change of land use of an area measuring about 56 hac. (138.40 acres) in the south of Mehrauli-Mahipalpur Road, New Delhi.
2. The details of "the proposed land use modifications were as under:
Land Pocket Total Area From To Area
(in Hac.
1. Land around 28.0 Hac Rural Residential 11.0
Sultan Garhi
Monument Public &
Semi public
facilities 9.0
Recreational 8.0
2. Land adjoining
spinal injury
Hospital 5.0 Hac Rural Residential 3.0
Recreational 2.0
3. Land behind 23.0 Hac. Rural Residential 23.0
Sector D-6
Vasant Kunj
-------------------------------------------------------------------------- Total 56.0 Hac.
(138.40 Acres) 56.0 Hac
------- ----------------------------------------------------------------------------
3. On 14.7.2000 DDA again requested Ministry of Urban Development for Central Government approval for issue of a Public Notice under Section 11-A of DD Act, 1957 for inviting objections/suggestions from the public for the proposed change of land use.
4. On 25.8.2000 Ministry sought clarification form DDA as to whether clearance for such change of land use has been obtained CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 28 of 38 form National Capital region Planning Board.
5. On 16.1.2001 DDA wrote to Chief Regional Planner of National Capital Region Planning Board for necessary clearance for proposed change of land use.
6. NCRPB wrote to DDA on 17.8.2001 that proposal is being examined by them and will be placed before the Planning Committee soon for consideration.
7. Vice-Chairman, DDA requested Ministry of Urban Development on 22.8.2001 for processing of change of land use.
8. On 25.9.2001 a team of officers from DDA, Land & Building Deptt, GNCT, Delhi Archaeological Survey of India and NCRPB visited the proposed site for change of land use.
9. The proposal for change of land use of an area measuring about 56 Hac. (138 Acres) from Rural use to Urban use in the south of Mehrauli-Mahipalpur Road, NCT Delhi was considered in the 47th Planning Committee meeting held on 23.2.2001 and after thorough deliberation and in view of the contiguity of the area with the built up areas and taking note of all the views expressed Planning Committee recommended the change of land use on 15.4.2002.
10. The proposal for considering change of land use was considered by the Ministry on 12.9.2002. The Ministry communicated to Commissioner (Planning), DDA on 13.9.2002 its approval to issue Public Notice under Section 11-A of Delhi Development Act for inviting objections/suggestions form the Public for proposed change of land use of an area measuring 56 hac. (138 acres) in the south of Mehrauli-Mahipalpur Road, New Delhi. DDA was also authorized to take further action accordingly."
It is strange that the first respondent herein has issued a public notice inviting objections/suggestions form the public in general within a period of 30 days from the date of publication thereon. The said notice is also violative of Rule 5 read with Rule 12 of the Delhi Development (Master Plan and Zonal Development Plan) Rules, 1959. In terms of the aforementioned Rules at least 90 days notice is required to be given.
It is a matter of great concern that a statutory authority which is statutorily open to protect and preserve the statutory schemes itself has been violating the provisions of law. In violation of the land rules attracts the penal clause contained in Section 29 of the Act. In terms of Section 30 of the Act in the event when the development commences in contravention of the Master Plan or Zonal Development Plan or without the permission, approval or sanction referred to in Section 12 or for other matter specified therein the first respondent is entitled to direct demolition of such CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 29 of 38 constructions. Section 31 empowers the authority to direct stoppage of such development in exercise of its power conferred upon it under Section 31 of the said Act. The said provisions to say the least are also applicable to the first respondent herein. We really wonder as to how a statutory authority who has the duty of maintaining the ecology of the city of Delhi had been violating the mandatory provisions of law with impunity. The submission of Mr. Jaitely, the learned Senior Counsel appearing on behalf of the first respondent is that no public interest would be sub-served if we direct stoppage of construction of the building at this stage particularly when steps are being taken for obtaining the approval of the Central Government for change in the land rules in terms of Section 11A of the Act. From what we have noticed here before, there cannot be any doubt whatsoever that all these steps taken by the first respondent herein are not only in violation of the statutory provisions, the same was highly unjust and arbitrary. Public interest in a case of this nature also demands that activities of the statutory authority be directed to confine it within the four corners of law. The statutory authorities cannot be allowed to act de hors the Statute.
However, high you may be the law is higher than you is also applicable to the first respondent who is authorised under the Act to implement the provisions thereof. In fact it is a fit case where the Chairman of the first respondent should see to it that how authorities of the first respondent herein were allowed to take such decisions which admittedly are wholly illegal and without jurisdiction.
Although we are not oblivious of the fact that ultimately it may be allotees of the flat who may suffer but once such illegalities are permitted, the same in our opinion would give further incentive to a statutory authority like the first respondent herein to per perpetuate the same and to indulge in other illegalities. So far as the submission of Mr. Jaitely to the effect that such a step had been taken with a view to prevent the land from being encroached upon. We are of the opinion that the first respondent has enough statutory power and resources not only to prevent the land from being encroached upon but also to see that such encroachments are removed.
We, therefore, at this stage have no other option but to direct that no further constructions should be allowed to be raised on the land in question. This order shall not, however, prevent the respondents herein from taking steps for preventing any encroachment on the land in question and/or use the material collected at the site for any other purpose. It will also be open to the parties herein to proceed with the matter of obtaining approval from the Central CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 30 of 38 Government in accordance with law. There cannot be any doubt whatsoever that, if any, approval is granted by the Central Government, permission is obtained first respondent herein would be entitled to resume the construction.
Keeping in view the fact that, if any subsequent event occurs, the petitioners or any other public spirited person may approach this Court again, we would not intend to keep this proceeding pending. It is disposed of.' (Emphasis supplied) 14.8 It is perplexing as to why DDA (defendant no.1) hedonisticaly without first obtaining CLU ventured into floating the tender and also representing in the NIT at Clause 1(b) that the 'site of work was available.' There was a heavy onus upon DDA (defendant no.1) to explain the same which has been conveniently skirted by it and much of the emphasis was laid upon the project being delayed by the plaintiff for not adhering to the contract schedule during the period when the work at site had not been suspended. When DDA (defendant no.1) was aware that it's proposals to Ministry of Urban Development for CLU had not been decided, it cannot be said that the situation was not self induced or on account of its neglect. It is not open for DDA (defendant no.1) to also urge that the order that followed in C.W. P No.4978 of 2002 which is Ex P-8 was not in its control. Rather, it was forthcoming in view of the violations mentioned in the order. Therefore, in the reasoned view of this Court, to apply Section 56 of The ICA and deem the contract to have frustrated would not be appropriate.
14.9 Be that as it may, as has been clearly observed in order dated 16.09.2002 (Ex P-8) that the act of the DDA (defendant no.1) was violative of Section 11A of DDA Act and Rule 5 read with Section 12 CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 31 of 38 of the Delhi Development (Master Plan and Zonal Development Plan) Rules, 1959, the object of the agreement was void on the day of it's execution and therefore, has to be held to be void.
14.10 However, the Delhi High Court in its order Ex. P-8 has also clarified that after obtaining the approvals from the Central Govt. in accordance with law, it could resume construction. However, Sh S.K. Sharma (DW-1) was unable to prove as to when the approval was obtained from the Central Government during his cross-examination on 05.05.2015. Therefore, DDA (defendant no.1) even failed to show that the project could be pursued, thereafter.
14.11 Yet, DDA (defendant no.1) started communicating with the plaintiff and vide letter dated 22.6.2004 (Ex P-16) stated as under;
'...You are hereby informed that DDA is willing to extend the stipulated date of completion of the work by the period for which the work had remained closed and that all other terms & conditions of the contract would remain the same and you would be accordingly entitled to any increase under clause-10 C.C. of the agreement for the extended period of the contract. This is with a clear understanding that you would not raise any other claim on any account whatsoever. In case this is acceptable to you, you may communicate/confirm immediately. However, in case we do not receive any communication from you or the work does not start at site, the agreement will be determined as per conditions of the agreement.' 14.12 Thus, an offer was extended to the plaintiff which tried to renegotiate the terms on which initial agreement was entered but before it, vide Ex. P-15 unilaterally provisional extension of time was afforded which Sh. S.K. Sharma (DW-1) could not explain under which clause of terms of the agreement and thereafter, issued CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 32 of 38 impugned show-cause notices.
14.13 The desperation of DDA (defendant no.1) to shift the blame for losses accruing from its conduct led to issuance of first show-cause notice dated 16.08.2004 (Ex. P-22) under Clause 3(a) to (c) of the conditions of the contract.
14.14 Clause 3 of the Conditions of Contract provides as under:
'...CLAUSE3:
The Engineer-in-charge may with out prejudice to his right take action against the contractor in respect of any delay or inferior workmanship or otherwise and may claim for damage in respect of any breach of contract with out prejudice to any right or remedies. Under any of the provisions of this contract or otherwise whether the date for completion of work has not elapsed by giving notice in writing absolutely to determine the contract in any of following cases :-
(i) If the contractor having been given by the Engineer-in-
Charge a notice in writing to rectify reconstruct or replace any defective work or that the work is being performed in any inefficient or otherwise improper or un workman like manner shall omit to comply with the requirements of such notice for a period of seven lays thereafter or, if the contractors shall delay or suspend the execution of the work so that either in the judgement of the engineers-in-charge (which shall be final and binding), he will be unable to secure completion of the work by the date of completion or he has already failed to complete the work by that day.
(ii) If the contractor being a company shall pass resolution or the court shall make an order that company shall be wound up or if a receiver or a manager on behalf of a creditor shall be appointed or if circumstances shall arise which entitle the court or creditor to appoint a receiver or a manger or any of which entitle the court to make winding up order.
(iii) If the contractor commits breach of any of the terms and conditions of this contract.
(iv) If the contractor commit any acts mentioned in Clause 21 here of, when the contractor has made himself liable for action under any of the clause aforesaid, the Engineer-in charge on CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 33 of 38
-behalf of the Delhi Development Authority shall have powers.
(a) To determine or rescind the contractor as aforesaid (of which termination or rescission notice in writing to the contractor under the hand of Engineer-in charge shall be conclusive evidence) Upon such determination or rescission the security deposit of the contractor shall be liable to be forfeited and shall be absolutely at the disposal of Delhi Development Authority.
(b) To employ labour paid by the Delhi Development Authority anc to supply materials to carry out of the work or any part of the work debiting the contractor with the cost of labor and the price of the materials (of the amount of which cost and price certified by the Engineer-in charge shall be final and conclusive against the contractor )and crediting him with the value of the work done in all respects in same manner and at the same rates as if it had been carried out by the contractor under the term of his contract. The certificate of the divisional officer as to the value of the work done shall be final and conclusive against the contractor, provided always that action under the sub-clause shall only by taken after giving notice in writing to the contractor. Provided also that if the expenses in cured by the authority are less then the amount payable to the contractor at the agreement rates, the difference shall not be paid to the contractor.
(c) After giving notice to the contractor to measure up to the work of the contractor and to take such part there of as shall be unexecuted out of his hands and to give it to another contract or to complete in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor if the whole work had been executed by him(of the amount of which excess the certificate in writing of the Engineer- in-charge shall be final and conclusive) shall be borne and paid by the original contractor and may be deducted from and money due to him by Delhi Development Authority under this contract or any other account whatsoever or from his security deposit 'or the proceeds of sales there of sufficient or part thereof as the case may be.
In the event of any one or more of the above courses being adopted by the Engineer-in- charge the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered in to any engagements or made any advance on account or with a view to the execution of the work or the performance of contract. and in case action is taken under any of the provisions aforesaid, The contractor shall not be entitled to recover or be CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 34 of 38 paid, any sum for any work there to for actually performed under his contract unless and until the Engineer-in - charge has certified in writing the performance of such work and the value payable in respect there of and he shall, only be entitled to be paid value so certified.' 14.15 Section 21 that it refers to caters to the eventuality of assignment or sub-letting of the contract without prior permission of Engineer-in-Chief. Ld. Counsel for DDA (defendant no.1) was unable to assist the Court as to why show-cause notice dated 16.08.2004 (Ex. P-22) was issued for such a breach which is which was never the case made out.
14.16 Thereafter, show-cause notice dated 25.08.2004 (Ex. P-25) was premised upon the fact that progress of work was only 14.16% in 12 months, when the work had not been suspended. Therefore, it was proposed to levy compensation under Clause 2 of the Condition of the Contract.
14.17 Clause 2 of the Conditions of Contract provides as under:
'...The time allowed for carrying out of work as entered in the tender shall be strictly observed by the contractor and shall be deemed to be of the essence of the contract on the part of the contractor and shall be reckoned from the tenth day after the date of which the order to commence the work is issued to contractor. The work shall throughout the stipulated period of the contract be proceeded with all due diligence and the contractor shall pay as compensation an amount equal to one percent, or such smaller amount as the Superintending Engineer, Delhi Development Authority (whose decision in writing shall be final) may decide on the amount of the estimated cost of the whole work as shown in the tender. For everyday that the work remains un-commenced or un-finished after the proper dates and further, to and ensure good progress CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 35 of 38 during the execution of the work, the contractor shall be bound in all cases in which the time allowed for any work exceeds, one month (save for special jobs) to complete one-eighth of whole of the work before one fourth of the whole time allowed under the contract has elapsed, three-eighth of the work before one half of such time has elapsed and three fourth of the work, before three fourth of such time has elapsed. However, for special jobs if a time- schedule has been submitted by the contractor and the same has been accepted by the Engineer-in- charge, the contractor shall comply with the said time-schedule. In the event of the contractor failing to comply with the condition, he shall be liable to pay as compensation an amount equal to one percent or such smaller amount as the Superintending Engineer Delhi Development Authority (whose decision in writing shall be final) may decide on the said estimated cost of the whole work for everyday for that the due quantity of work remains incomplete provided always that the entire amount of compensation to be paid under the provision of this clause shall not exceed ten percent, of the estimated cost of the work as shown in the tender.
The contractor shall be required to be submit a detailed program for completion of work with in the stipulated period in the form of a bar chart, covering all major activities, to the Engineer -in-charge with in 10 days from the date of award of work, modification suggested by the Engineer-in-charge shall be ensured by the contractor that the time schedule as laid down in the aforesaid bar chart is adhered to in the case of any slip, the time lost will have to be made good by the contractor by speeding up to the activities in such cases, he shall be bound to follow the Engineer-in-charge.' 14.18 The DDA (defendant no.1) once again examined Sh. S.K. Sharma (Executive Engineer) to prove slow progress of work by defendant DDA. He affirmed in his affidavit Ex. DW-1/A as under:
'...4. That there was delay on the part of the plaintiff therefore vide letter dated 25.2.2002 which is exhibited as Ex. DW-1/6, the plaintiff was requested to complete the excavation and was further requested to accelerate the speed of the work.
5. That vide letter dated 25.2.2002 which is exhibited as Ex.
DW-1/7, the plaintiff was advised to procure the material i.e. steel, cement etc. strictly from the list of acceptable material already incorporated in the agreement which shows that the CS No. 58223/2016 Unitech Limited vs. Delhi Development Authority Pages 36 of 38 plaintiff was not fully ready for execution of the work. Even the DDA intervene in the matter of procuring the material which is evident from the letter dated 17.5.2002 written by the TATA Steel and the same is exhibited as Ex. DW-1/9 and letter dated 14.6.2002 is exhibited as Ex. DW-1/9 which was sent in reply to plaintiff's letter dated 30.04.2002 (Ex. D-35).
6. That DDA vide letter dated 10.09.2002 which is exhibited as Ex. DW-1/10 submitted the reply to the letter dated 03.08.2002 written by the plaintiff i.e. Ex. D-34. It is evidence from these letter that material was not procured even at the time of stoppage of the work and the plaintiff's claim is totally frivolous and has been made with malafide intentions.
7. That vide letter dated 26.10.2002 which is Exhibited as DW- 1/11, the DDA in reply to letter dated 28.09.2002, requested for progress of the work.' 14.19 However, during cross-examination the witness denied personal knowledge about the matter and also stated that he had not seen the originals of letter Ex. DW-1/1 to Ex DW-1/11 whose photocopies were tendered in evidence. Thus, the documents remained unproved. It is pertinent to observe that the witness stated that he had not gone through the hindrance register and the drawing issuing register before signing his affidavit Ex. DW-1/A. 14.20 Thus, here, even the breach on account of slow progress of work was not proved by the witness examined by DDA (defendant no.1).
14.21 Therefore, DDA (defendant no.1) failed to prove any ground of breach of contract by the plaintiff whereas the plaintiff proved that the agreement (Ex. P-3) was void. Therefore, issues no.3, 4, 5 & 6 are decided against DDA (defendant no.1).
CS No. 58223/2016Unitech Limited vs. Delhi Development Authority Pages 37 of 38 RELIEF
15. In view of above discussions, as DDA (defendant no.1) was not entitled to invoke the bank guarantees (Ex. P-5 and Ex. P-6), the suit is decreed in favour of the plaintiff for prayer clause (a) to (e) with cost.
16. Before parting with the matter, the Court laments as to how, the Screening Committee approved for floating of the tender despite not obtaining CLU and also as to how the Engineers of DDA (defendant no.1) desperately attempted to recover loss to the public exchequer caused by their conduct without even any iota of material to justify breach on the part of the plaintiff.
17. Decree sheet be prepared, accordingly.
18. File be consigned to records.
Pronounced in open Court (Vijeta Singh Rawat)
on 26.04.2024 District Judge-01,
New Delhi District,
Patiala House Courts,
New Delhi/26.04.2024
CS No. 58223/2016
Unitech Limited vs. Delhi Development Authority Pages 38 of 38