Delhi District Court
Umesh Tyagi vs Mcd And Anr on 29 October, 2025
DLCT010053752023
IN THE COURT OF SH. VIDYA PRAKASH
SPECIAL JUDGE (PC ACT) (ACB)-01
ROUSE AVENUE COURT COMPLEX/ NEW DELHI
CNR NO.: DLCT010053752023
CS (COMM)/668/2023
IN THE MATTER OF:-
UMESH TYAGI
Sole Proprietor:
M/s Amit Elevator Services
732, Burari, Delhi-110094
... Plaintiff
VERSUS
1. Municipal Corporation of Delhi
Through its Commissioner
4th Floor, Dr. S. P. M. Civic Centre
J. L. Nehru Marg
New Delhi-110002
2. The Executive Engineer-1/MCD
Under Ground Car Parking Centre
Asaf Ali Road, Delhi.
... Defendants
Date of institution of suit [e-filing] : 18-04-2023
Date of Transfer to this Court : 14-10-2025
Date of reserving judgment : 14-10-2025
Date of pronouncement of : 29-10-2025
judgment
JUDGMENT
1. Vide this judgment, I shall dispose off the present suit for recovery of ₹12,39,653.78 Paise along with interest and costs, filed by plaintiff against the defendants.
CS (COMM)/668/2023 Page 1 of 45BRIEF FACTS OF THE CASE:
2. The case of the plaintiff, as culled out from the plaint and the documents filed therewith, is as under:-
2.1 It is stated that the plaintiff has been carrying on different works for the MCD (Previously known as North DMC) since long and is enrolled with it as a contractor.
2.2 Defendant no.1/ Municipal Corporation of Delhi is a body corporate of State of Delhi, established and governed under the D.M.C. Act. The defendant no.2 is working as Executive Engineer with defendant no.1/MCD and had awarded the work contract in dispute to the plaintiff.
2.3 It is further stated that the plaintiff, being a government contractor, had participated in the bid for tender invited by defendant no.2 on behalf of defendant no.1 and upon completion of required conditions at the stage of pre-work order, the plaintiff was awarded work for Annual Contract for deputing staff for maintenance of electrical installation in Kasturba Hospital City Zone, vide Work Order No. EE (E-I)/SYS/2017-2018/02 dated 24-04-2017 [hereinafter referred to as 'the work order in question' in short]. Accordingly, the plaintiff entered into an agreement with defendant no.2. It is claimed that the said work order was completed by plaintiff to the satisfaction of Engineer CS (COMM)/668/2023 Page 2 of 45 in Charge/ defendant no.2 without any negative remark.
2.4 It is averred that the plaintiff, vide Ref No. AES/2018-19/28 dated 28.05.2018, had raised Performa Invoice to defendant no. 2, thereby claiming a sum of ₹13,66,559/- towards main bill (Part A), ₹5,45,603/- towards 10C (Part B), and ₹1,99,880 towards ESIC & EPFO (Part C). After receipt of above invoice, the final measurements of the work done by plaintiff, was completed by defendant no.2 and the First RA bill for gross amount of ₹13,66,559/-, pertaining to work order, was passed on 31-05-2018 and said amount was released to the plaintiff by defendants on 28-08-2018. However, the defendants did not pay any amount towards 10C and ESIC &EPFO.
2.5 It is further averred that as per pre-condition of award of the work order, the plaintiff had also deposited earnest money of ₹26,900/- towards the abovementioned work order, which was paid by defendants to the plaintiff on 29.07.2019.
2.6 It is further averred that as per Para 5 of Work Order, it was mentioned that contractor shall not include ESIC & EPFO in its quoted rates and that the same shall be reimbursed to the contractor on submission of proof of depositing the same.
2.7 It is alleged that even after submitting proof
of deposit of ESIC & EPF by plaintiff,
CS (COMM)/668/2023 Page 3 of 45
vide Letter No.AES/2018-19/189 dated 04.02.2019 & AES/2022-23/59 dated 07.05.2022, the defendants failed to reimburse the sum of ₹2,10,026/- towards ESIC & EPF amount paid by plaintiff to the labourers towards the said work order.
2.8 It is further averred that since, the plaintiff had inadvertently claimed ₹1,99,880/- towards reimbursement of ESIC & EPFO, vide said Performa Invoice, therefore, he is confining his claim towards reimbursement of ESIC & EPFO to the tune of ₹1,99,880/-, in the present suit.
2.9 It is claimed that as per Office Memorandum No. DGW/MAN/150 dated 14.12.2007 of CPWD, the defendants are also liable to pay contractual profit @ 15% on the aforesaid ESIC & EPFO i.e. ₹29,982/-.
2.10 It is further averred that in the Notice Inviting Tender (NIT) dated 26.08.2016 (sic), there was a specific clause 10C, which provides, inter alia, for entitlement of additional amount in case of statutory increase of more than 10% in the wages. The Delhi Government increased the minimum wages by approximately 27% effective from 28.04.2017 and the plaintiff, in compliance of said orders, had paid the increased wages to its workers and informed the defendants, vide letter no. AES/2016-2017/222 dated 14.03.2017 that in case defendants were not CS (COMM)/668/2023 Page 4 of 45 inclined to reimburse the amount of increased wages, then they could cancel the financial bid of the plaintiff and refund its EMD money.
The defendants did not object to the said letter. The plaintiff also submitted the proof of claim under Clause 10C (difference of wages w.e.f. 28.04.2017 to 27.04.2018) and the ESIC & EPFO for payment to defendant no.2, vide letter no. AES/2018-2019/28 dated 28.05.2018, AES/2018-2019/189 dated 04.02.2019, AES/2018-19 dated 22.02.2019 and AES/2022-23/59 dated 07.05.2022, but all in vain. Thus, it is claimed that the total outstanding principal amount, including the amount of ESIC & EPF, Contractual Profit/ Over Head Profit @15% on ESIC & EPF Claim under 10 C, comes to ₹7,75,465/-.
2.11 It is further alleged that the defendants neither paid the said outstanding amount, despite repeated requests and demands made by plaintiff, vide letter no.AES/2016-17/222 dated 14.03.2017,AES/2018- 19/28 dated 28.05.2018, AES/2018-19/189 dated 04.02.2019,AES/2018-19 dated 22.02.2019 and AES/2022-23/59 dated 07.05.2022, nor the plaintiff was informed about the reason for withholding the aforesaid amount.
2.12 It is also averred that the plaintiff filed a commercial suit bearing No.761/2020 (Old No. 1573/2020) titled as 'Umesh Tyagi v. NDMC' in respect of said work order, however, same was dismissed being non-
CS (COMM)/668/2023 Page 5 of 45maintainable due to non-compliance of S. 12 A of the Commercial Court Act, 2015 in real sense and the suit being pre mature due to non-adoption of in- house dispute resolution procedure, vide order dated 09-11-2020.
2.13 It is further averred that the plaintiff also made representations before concerned Executive Engineer (E)/Chief Engineer (E) of defendant no.1, vide letters No. AES/2022-2023/195 dated 16.09.2022 and AES/2022-2023/209 dated 06.10.2022, but no reply was received. Thus, aggrieved by the acts of defendants, the plaintiff got issued a legal notice dated 13.10.2022, U/s 477/478 of M.C.D. Act r/w Section 80 CPC, thereby calling upon the defendants to release payment of ₹7,87,133/- in respect of the work order in question along with interest @ 18% per annum w.e.f. 31.05.2018 till the date of payment and a sum of ₹11,000/- towards charges of legal notice, within a period of 60 days from the date of receipt of notice. The legal notice was duly served upon defendants, but it was neither replied to, nor acted upon by the defendants.
2.14 It is averred that though the plaintiff is entitled to ₹7,87,133/-, yet, he is confining his claim to ₹7,75,465/- towards outstanding principal amount.
2.15 It is stated that due to non-payment of dues by the defendants, the plaintiff has been put to loss of CS (COMM)/668/2023 Page 6 of 45 investment and interest accrued thereupon and thus, it is claimed that the defendants are liable to pay interest @ 14% per annum on the said outstanding amount of ₹7,75,465/-. In view thereof, the plaintiff has claimed ₹4,54,188.78 Paise towards interest calculated @ 14% per annum on the outstanding amount, w.e.f. 04-02-2019 i.e. the date of the reimbursement, till the date of filing of the present suit.
2.16 It is further averred that the plaintiff also initiated pre-institution mediation proceedings [in terms of S.12A of the Commercial Courts Act, 2015] before Delhi State Legal Service Authority [DSLSA], Central, THC, Delhi, but the defendants failed to participate therein despite service of notice and hence, a Non-Starter Report was issued by concerned Authority, vide letter no.2211/MEDIATION/DLSA/CENTRAL/2022 dated 18.03.2022.
2.17 Under these facts and circumstances, the present suit came to be filed for recovery of ₹12,39,653.78 Paise (₹7,75,465/- towards principal outstanding amount + ₹4,54,188.78 Paise towards interest @ 14% per annum + ₹11,000/- towards Legal notice expenses) along with pendent-lite and future interest.
3. On being served with the summons of the suit, the defendants put their appearance through counsel and also CS (COMM)/668/2023 Page 7 of 45 filed joint written statement contesting the suit along with application under Order VIII Rule 1 CPC read with S. 151 CPC for condonation of delay in filing the written statement. The said application was allowed and written statement was taken on record, vide order dated 24-07-2023, passed by Ld. Predecessor of this Court.
4. In their joint written statement, the defendants have taken certain preliminary objections, inter-alia stating that:-
4.1 The suit of the plaintiff is pre mature and without any cause of action.
4.2 The plaintiff has not come to the Court with clean hands and has concealed that he is in material breach of the agreement between the parties that disentitles him from any relief as sought.
4.3 It is stated that the plaintiff is not entitled for any claim raised under 10C, as it is not applicable to the work order in question.
4.4 The Notice Inviting Tender (NIT) sets out the relevant terms and conditions and makes it clear that the General Conditions of Contract [hereinafter referred to as 'GCC' in short] and Special Conditions of Contract shall be applicable. The defendants have released the payment of bill of the work done by the plaintiff, however, the defendants could not release the payment of ESIC and EPF, as the claim towards payment of increased wages to the workmen/employee as per Delhi Government order raised by plaintiff, was declared invalid and quashed CS (COMM)/668/2023 Page 8 of 45 by Hon'ble High Court of Delhi in the matter of Federation of Okhla Industrial Association (Regd.) vs. Lt. Governor of Delhi & Anr, WP (C) 8125/2016 & CM No.3362/2016 on 04.08.2016. Thereafter, the plaintiff failed to submit any documentary proof, which could make him entitled for the reimbursement of ESIC & EPF. It is denied that the Circular of the Memorandum of DG/SE/CM/CON/MISC/01 dated 30.06.2015 of CPWD, is applicable to the work order in question.
5. Similarly, by way of 'Para-Wise Reply', the defendants have controverted and denied the averments made in corresponding paras of the plaint and have prayed for dismissal of the suit. However, it is admitted by the defendants that the plaintiff was awarded work order in question and they had paid ₹13,25,562/- and ₹26,900/-
towards earnest money to the plaintiff on 28-08-2018 and 29-07-2019 respectively, while denying that the plaintiff submitted any bill as per GCC. It is also submitted that the plaintiff had failed to provide any clarification regarding payment of the claim raised by him and therefore, the defendants could not release the said payment raised by him.
6. The plaintiff filed replication, thereby controverting and denying the averments made in the written statement, while reaffirming the averments made in the plaint. The judgment of Hon'ble Apex Court in the case of 'Associate Builders vs. DDA', Civil Appeal No.10531/2014 decided CS (COMM)/668/2023 Page 9 of 45 on 25.11.2014, has been relied upon in support of 10C claim and contractual/overhead profit.
ISSUES:
7. From pleadings of the parties, the following issues were framed, vide order dated 24-07-2023, passed by Ld. Predecessor of this Court:-
i. Whether the plaintiff is entitled to recover suit amount from defendants? OPP.
ii. Whether the plaintiff is entitled to any interest? If so, for which period and at what rate? OPP iii Relief.
EVIDENCE LED BY THE PARTIES:
8. It may be noted here that in support of his case, the plaintiff has examined 6 witnesses, including himself and closed his evidence on 24-01-2024. The defendants have examined only one witness namely Sh. Prateek, AE as DW1, towards DE and closed evidence on 02-12-2024.
Plaintiff's Evidence:
9. Plaintiff /PW1 led his chief examination by way of affidavit (Ex. PW1/1) and deposed on the lines of averments made in the plaint. He has also relied upon/proved the following documents:-
Srl. no Document/Particulars Exhibit(s)
1. Registration Certificate Ex.PW-1/1 CS (COMM)/668/2023 Page 10 of 45 Srl. no Document/Particulars Exhibit(s)
2. Work Order no.2 dated 24-04- Ex.PW-1/2 2017 (Colly.)
3. Office Memorandums dated 08- Ex.PW-1/3 06-2009 and 30-06-2015 (Colly.)
4. Demand letter dated 07-05-2022 Ex.PW-1/4
5. Office Memorandum dated 14-12- Ex.PW1/5 2007.
6. Downloaded order of Delhi Ex.PW1/6 Government regarding increasing of wages.
7. Downloaded copy of order of suit Ex.PW1/7 bearing CS(COMM.) 761/2020
8. 1st Representation of the plaintiff Ex.PW1/8 to EE dated 16-09-2022
9. 2nd Representation of the plaintiff Ex.PW1/9 to the Chief Engineer and Commissioner MCD dated 06-10- 2022
10. ESIC Contribution of the Ex.PW1/10 employees of the plaintiff w.e.f.
April, 2017 to April, 2018
11. Challan of EPF Contribution w.e.f. Ex.PW1/11 April, 2017 to April, 2018
12. ESIC Receipts of monthly Ex.PW1/12 contribution w.e.f. April, 2017 to April, 2018
13. EPF Contribution details w.e.f. Ex.PW1/13 April, 2017 to April, 2018
14. Legal Notice dated 13-10-2022 Ex.PW1/14
15. Non-Starter Report Ex.PW1/15
16. Notice under Order XII Rule 8 Ex.PW1/16 CPC dated 06-05-2023
17. Certificate under S. 65B of Indian Ex.PW1/17 Evidence Act CS (COMM)/668/2023 Page 11 of 45 Srl. no Document/Particulars Exhibit(s)
18. Letters given by the plaintiff for Ex.PW1/18 disbursement of salary of his employee to Axis Bank
19. Invoice dated 28-05-2018 Mark P1
20. Details of depositing ESIC & EPF Mark P2
21. Letter dated 14-03-2017 written by Mark P3 plaintiff regarding increase of wages
22. Letter dated 22-02-2019 for Mark P4 submission of 10C Form
10. PW1 has been cross-examined by the defendants.
However, the same is not being mentioned herein and shall be considered in subsequent paras of this judgment, while rendering findings on the issues.
11. PW2 Sh. Sanjay Gautam, LDC, Chief Electric-II, Civil Centre, Delhi, who was a summoned witness, brought and proved copies of Dak Register, having diary nos. 810, 930 and 1485 dated 16-09-2022, 06-10-2022 and 26-02-2019 respectively, as Ex.PW2/1 (Colly.), vide which, documents Ex.PW1/8, Ex.PW1/9 and Mark P4, were received by the defendants. He deposed that all these documents were sent to SE (E)-1.
12. Similarly, PW3 Sh. Suresh Kumar, JSA, Commissioner MCD, Dak Section, who was also a summoned witness, brought and proved copies of Dak Register having diary nos. 7640/GA and 7213/GA on 17-10-2022 and 06-10- 2022 respectively, vide which, documents Ex.PW1/9 and Ex.PW1/14 were received by the defendants. He also deposed that Ex.PW1/9 was sent to E&C-I and Ex.PW1/14 CS (COMM)/668/2023 Page 12 of 45 was sent to Additional Commissioner (Engineering) for further action.
13. PW4 Sh. Vipin Gupta, ASO, Office of the Superintending Engineer (Electric-IV), 8th Floor, Civic Centre, MCD, Delhi, was also a summoned witness. He brought and proved copy of Dak Register bearing Diary No. 4600 on 05-02-2019 as Ex.PW4/1, vide which, document Mark P2 was received by the defendants. He deposed that it was sent to Executive Engineer (Electrical), City SP Zone for further action.
14. PW5 Sh. Ankit Singh Rajput, Assistant Engineer (Electrical), City SP Zone, MCD, Delhi, who was also a summoned witness, deposed that as per record, Mark P1 i.e. invoice dated 28-05-2018 was received, vide Diary no.303 dated 31-05-2018 and was marked to JE/Kasturba Hospital. Mark P3 i.e. Letter dated 14-03-2017 written by the plaintiff to Ex. Engineer (E)/NDMC regarding claim under Clause 10C, which was received, vide Diary no. 1629 dated 15-03-2017 by AE (E)/CSPZ, but the same is not available at present, however, he could produce it, if it is found. It is recorded that Mark P3 has not been disputed by the defendants and hence, the same was exhibited as Ex.PW5/1.
15. PW5 also brought the original of Ex.PW1/4 and Ex.PW1/14, which were received on 10-05-2022 and 21-03-2023 respectively. First representation Ex.PW1/8 of the plaintiff, is marked to JE, Hindu Rao Hospital for further action.
CS (COMM)/668/2023 Page 13 of 4516. PW6 Sh. Deepak Chauhan, JE (Electrical), Kasturba Hospital, Jama Masjid, Delhi-110006, was also a summoned witness. He brought the original Proforma Invoice dated 28-05-2018 and reimbursement of ESIC & EPFO claim, on which, the said Proforma Invoice, which was earlier marked P1, was exhibited as Ex.PW6/1.
17. Pertinently, despite grant of opportunities, the defendants through their counsel, chose not to cross-examine PW2 to PW6 and hence, their testimonies have gone unchallenged.
Defendant's Evidence:
18. DW1 namely Sh. Prateek, AE (Electric-I), City SP Zone, MCD, Asaf Ali Road, Delhi-110002, also led his examination in chief by way of affidavit (Ex.DW1/A) and deposed on the lines of averments made in the written statement. In response to Notice under Order XII Rule 8 CPC, he brought originals of Measurement Book, Test Check Statement, 3rd Party Quality Check Report, Completion Report of the Work Order in question and GCC and proved copies thereof as Ex.DW1/P1, Ex.DW1/P2, Ex.DW1/P3, Ex.DW1/P4 and Ex.DW1/P5 respectively.
19. He has been cross-examined at length by the plaintiff.
However, the same is not being mentioned herein and shall be considered in subsequent paras of this judgment, while rendering findings on the issues.
20. I have already heard Sh. Akhil Rana, Advocate on behalf of the plaintiff and Sh. Sanjeet Malik, Advocate on behalf CS (COMM)/668/2023 Page 14 of 45 of the defendants. I have also gone through the material available on record, including the pleadings of the parties, evidence, oral as well as documentary, led by both the sides, as available on record. I have also duly considered the written submissions filed on behalf of plaintiff and the authorities cited at the Bar.
21. My issue-wise findings are as under:-
ISSUE NO.1
22. Firstly, I shall take up the issue no.1, which is reproduced hereunder:-
Issue no. (i) -Whether the plaintiff is entitled to recover suit amount from defendants? OPP.
23. The onus to prove aforesaid issue was placed upon the plaintiff. In order to discharge the burden, the plaintiff has examined six witnesses, including himself, as already noted above.
ARGUMENTS ADVANCED ON BEHALF OF PARTIES:
24. After referring to the pleadings of the parties and the evidence, oral as well as documentary, led during trial, Ld. Counsel of plaintiff vehemently contended that the plaintiff had already completed the entire work pertaining to the work order in question to the satisfaction of defendants and had submitted Proforma Invoice dated 28- 05-2018 [Ex.PW6/1], thereby claiming ₹13,66,559/- [Part A]; ₹5,45,603/- towards Claim under 10C [Part B], and ₹1,99,880/- towards ESIC & EPF [Part C] and after completing final measurement of the work order in CS (COMM)/668/2023 Page 15 of 45 question, the defendants passed the First Running Bill having gross amount of ₹13,66,559/- on 31-05-2018 and paid the same on 28-08-2018, however, they did not pay any amount whatsoever claimed under 10C and ESIC & EPF, despite various requests and demand.
25. He further contended that as per Para no.5 of the Work Order in question and Para no.3 of GCC, ESIC & EPF were to be reimbursed to the successful bidder after production of necessary receipt(s) in this regard. He pointed out that the plaintiff had duly submitted the necessary receipt(s) in the office of defendants, vide letters dated 04-02-2019 and 07-05-2022, [Ex.PW4/1 and Ex.PW1/4], however, the defendants did not reimburse the said amount till date.
26. Ld. Counsel further argued that in compliance of orders dated 31-05-2017 and 04-04-2018 [Ex.PW1/6 (Colly.)] regarding increase in minimum wages, the plaintiff was entitled to reimbursement of increased minimum wages, amounting to ₹5,45,604/- paid by him to the engaged employees, as per Clause 10C of GCC.
27. Ld. Counsel further contended that the entire testimony of PW1, has almost gone unchallenged from the side of defendants. He also pointed out that the defendants did not cross-examine the remaining witnesses i.e. PW-2 to PW-6 and thus, testimonies of said remaining witnesses also remained unchallenged from the side of defendants, and amount to admission thereof on their part. He, therefore, contended that the plaintiff has been able to prove from the CS (COMM)/668/2023 Page 16 of 45 testimonies of these witnesses that he had submitted the letters dated 04-02-2019 [Mark P2] and 07-05-2022 [Ex.PW1/4] in the office of defendants and had also submitted necessary receipts regarding payment of ESIC and EPF, as also the relevant documents regarding payment of minimum wages at enhanced rate in terms of order issued by Government of NCT of Delhi. In this regard, he also referred to and relied upon ESIC Contribution of the employees of plaintiff, Challans of EPF Contribution, ESIC Receipts of monthly contribution and EPF contribution details for the period from April, 2017 to April, 2018, which are duly proved by PW1 as Ex.PW1/10 to Ex.PW1/13 respectively. He, thus, submitted that the plaintiff has been able to prove his case on the basis of preponderance of probability to recover the suit amount from the defendants. He, therefore, urged that this issue should be decided in favour of the plaintiff and against the defendants.
28. In support of his aforesaid submissions, he also relied upon the following judgments:-
28.1 'M/s Aarthi Enterprises Vs. Southern Railways & Ors.' bearing WP No.17160 of 2019 passed by Madras High Court;
28.2 Associate Builders vs. Delhi Development Authority', bearing Civil Appeal No.10531 of 2014 decided on 25.11.2014 by Hon'ble Supreme Court;
28.3 'Hindustan Construction Co. vs. Delhi Development Authority & Anr.' reported as 98(2002) DLT 519;CS (COMM)/668/2023 Page 17 of 45
28.4 'Umesh Tyagi v. MCD & ANR.' bearing CS(COMM.)1596/2019, passed by Ld. District Judge (Commercial Court)-07, Central District, Tis Hazari Courts, Delhi;
28.5 'Umesh Tyagi v. MCD & ANR.' bearing CS(COMM.)848/2023, passed by Ld. District Judge (Commercial Court)-03, Central District, Tis Hazari Courts, Delhi;
28.6 'Vikas Verma v. MCD & ANR.' bearing CS(COMM.)1966/2012, passed by Ld. District Judge (Commercial Court)-05, Central District, Tis Hazari Courts, Delhi; and 28.7 'Umesh Tyagi v. Municipal Corporation of Delhi & ANR.', bearing CS(COMM.)/419/2023 passed by Ld. District Judge (Commercial Court)-06, Central District, Tis Hazari Courts, Delhi.
29. Per contra, while refuting the arguments advanced on behalf of plaintiff, Ld. Counsel of defendants vehemently argued that the claim under Clause 10C of GCC to the tune of ₹5,45,604/- raised by plaintiff, is not sustainable in view of Para No.6 of Work Order [Ex.PW1/2], wherein it is expressly provided that Clause 10C and 10CC shall not be applicable to this contract. He contended that both the parties are strictly bound by the terms and conditions contained in the contract executed between the parties and thus, the plaintiff is estopped under the law from claiming any amount under Clause 10C of GCC.CS (COMM)/668/2023 Page 18 of 45
30. He further argued that increase in minimum wages of the workmen/employees by Delhi Government, as claimed by plaintiff, could not otherwise have been released as the said increase in wages was declared invalid and quashed by Hon'ble High Court of Delhi in the case of Federation of Okhla Industrial Association (Regd.) (supra).
31. Ld. Counsel of defendants, in all fairness, submitted that he is not opposing the claim of plaintiff regarding ESIC and EPF to the tune of ₹1,99,880/-, in the light of Para no.5 of the work order [Ex.PW1/2], since it has been duly established on record that the plaintiff had already submitted all the relevant documents relating to claim under the said head.
32. Ld. Counsel of defendants, however, vehemently opposed the claim of ₹29,982/- raised by plaintiff on account of contractual / overhead profit @ 15% on ESIC and EPF on the ground that there is no express stipulation regarding payment of said amount either in the work order in question, or even in General Conditions of Contract and/or Special Conditions of Contract. He submitted that the plaintiff has claimed the said amount merely on the basis of Office Memorandums dated 08-6-2009 and 30-06-2015 [Ex.PW1/3 (Colly.)] issued by CPWD. He contended that said office memorandums relate to the contracts awarded by CPWD and have no applicability to the contracts awarded by MCD. He, therefore, urged that claim of plaintiff under said head, is liable to be dismissed.CS (COMM)/668/2023 Page 19 of 45
ANALYSIS & FINDINGS:
33. Before embarking upon the rival submissions made on behalf of both the sides, it would be apposite to summarize the admitted position, which has emerged on record by way of pleadings of the parties and the evidence led during trial. Same is delineated as under:-
33.1 The plaintiff is a government contractor enrolled with defendants/MCD;
33.2 The plaintiff had participated in the bid invited by defendant/ MCD for Annual Contract for deputing staff for maintenance of electrical installation in Kasturba Hospital City Zone,;
33.3 The work order [Ex.PW1/2] was awarded to the plaintiff by defendant no.1/MCD through defendant no.2;
33.4 The plaintiff had completed the work order in question to the entire satisfaction of defendant/ MCD within the stipulated period;
33.5 There was no complaint whatsoever in the work completed by the plaintiff qua the work order in question and no deficiency whatsoever was pointed out on behalf of defendant/MCD either during completion of said work, or even thereafter, till the date of filing of the suit;
33.6 The plaintiff had submitted the Proforma Invoice [Ex.PW6/1] with defendant no.2;CS (COMM)/668/2023 Page 20 of 45
33.7 The defendant no.2 had carried out final measurement of the work order in question and thereafter, the defendants had paid gross amount of ₹13,66,559/-, which constitutes the claim raised by plaintiff against Part A, on 28-08-2018;
33.8 The defendants have not made payment of ₹5,45,603/- towards 10C; ₹1,99,880 towards ESIC & EPF; and ₹29,982/- towards Contractual/ Overhead Profit @ 15% on ESIC, as was raised by the plaintiff, till date.
34. Before proceeding further, it may be noted here that claim of the plaintiff is on three counts i.e. (i) non-payment of amount of ₹5,45,603/- towards 10C; (ii) non-payment of ₹1,99,880 towards ESIC & EPF; and (iii) non-payment of ₹29,982/- towards Contractual / Overhead Profit @ 15% on ESIC and EPF Claim, apart from interest becoming due thereupon and costs of the proceedings. Hence, it would be apposite to examine each claim individually in order to ascertain as to whether or not the plaintiff is entitled to recover the same from the defendants and if so, then from which of the defendants.
35. As regards the question relating to plaintiff's claim under Clause 10 C of General Conditions of Contract (GCC) between the parties, it would be apposite to extract the said clause, which reads as under:-
"Clause 10C Payment on account of Increase in Prices/Wages due to Statutory Order(s) If after submission of the tender the price of any material incorporated in the works (not being a material supplied CS (COMM)/668/2023 Page 21 of 45 from the Engineer - in -charge's stores in accordance with Clause 10 thereof) and/or wages of labour increases as a direct result of the coming into force of any fresh law, or statutory rule or order (but not due to any changes in sales tax) and such increase exceeds ten per cent of the price and / or wages prevailing at the time of the last stipulated date for receipt of the tenders including extensions if any for the work, and the contractor thereupon necessarily and properly pays in respect of that material (incorporated in the works) such increased price and / or in respect of labour engaged on the execution of the work such increased wages, then the amount of the contract shall accordingly be varied, provided always that any increase so payable is not, in the opinion of the Superintending Engineer (whose decision shall be binding on the contractor) attributable to any delay in the execution of the contract within the control of the contractor).
Provided, however, no reimbursement shall be made if the increase is not more than 10% of the said prices / wages, and if so, the reimbursement shall be made only on the excess over 10% and provided further that any such increase shall not be payable if such increase has become operative after the contract or extended date of completion of the work in question.
If after submission of the tender, the price of any material incorporated in the works (not being a material supplied from the Engineer - in -Charge's stores in accordance with Clause 10 thereof) and / or wages of labour is decreased as a direct result of the coming into force of any fresh law or statutory rules or order (but not due to any changes in sales tax) and such decrease exceeds ten per cent of the prices and / or wages prevailing at the time of receipt of the tender for the work. M.C.D. shall in respect of material incorporated in the works (not being materials supplied from the Engineer - in - Charge's stores in accordance with Clause - 10 hereof) and / or labour engaged on the execution of the work after the date of coming into force of such law statutory rule or order be entitled to deduct from the dues of the contractor such amount as shall be equivalent to the difference between the prices of the materials and / or wages as prevailed at the times of the last stipulated date for receipt of tenders including extensions if any for the work minus ten per cent thereof and the prices of materials and / or wages of labour on the coming into force or such law, statutory rule or order.
The contractor shall, for the purpose of this condition, keep such books of account and other documents as are necessary to show the amount of any increase claimed or CS (COMM)/668/2023 Page 22 of 45 reduction available and shall allow inspection of the same by a duly authorized representative of the M.C.D. and further shall, at the request of the Engineer - in - Charge may require any documents so kept and such other information as the Engineer - in - Charge may require. The contractor shall, within a reasonable time of his becoming aware of any alteration in the price of any such material and / or wages of labour, give notice thereof to the Engineer - in - Charge stating that the same is given pursuant to this condition together with all information relating thereto which he may be in position to supply."
36. It is, thus, evident from the above reproduced clause 10C of GCC that in the event of increase in rates of wages of labourers beyond 10%, it shall be obligatory on the part of defendants to reimburse the minimum wages at such enhanced rates to the concerned contractor. However, no such reimbursement shall be made if the increase is not more than 10% of the said prices/ wages.
37. In the case in hand, the plaintiff has based his claim of ₹5,45,604/- on the basis of Clause 10 of GCC, by contending that he had to pay minimum wages at such enhanced rate in view of relevant orders Ex.PW1/6 (Colly.) regarding increase in minimum wages issued by Delhi Government. The defendants, however, are opposing such claim on two counts i.e. (i) the orders Ex.PW1/6 (Colly.) have already been quashed by Hon'ble Delhi High Court; and (ii) Clause 10C of GCC has been expressly excluded, vide Para no.6 of the work order in question.
38. PW1 is found to have deposed on the lines of the averments made in the plaint, by way of his evidence CS (COMM)/668/2023 Page 23 of 45 affidavit (Ex.PW1/A).
39. DW1, on the other hand, has testified during chief examination by way of evidence affidavit (Ex.DW1/A) that Clause No.5 of General Terms and Conditions of NIT clearly stipulates that Clause 10C and 10CC are not applicable to work order in question. However, complete copy of NIT has not been placed on record by defendants, for the reasons best known to them. Pertinently, the defendants have filed only two pages thereof, out of which, the first page refers to the factum of issuance of said NIT dated 27-06-2016 and the relevant details regarding nature of works, date of submission of bid, date of opening of technical and financial bid etc., whereas, the second page contains Clause 8B, Clause 9 and Clause 9A only. In this backdrop, the stand taken by defendants in their written statement that the plaintiff is not entitled to any amount under Clause 10C of GCC, has to be examined by the Court.
40. As regards the contention of Ld. Counsel of defendants that Notification bearing no. F.Addl.LC/Lab/MW/2016 dated 3rd of March 2017, on the basis of which Notifications dated 31.05.2017 and 04.04.2018 [Ex.PW1/6 (colly.)] were issued, has been declared invalid and quashed by the Hon'ble High Court of Delhi in the matter of 'Federation of Okhla Industrial Association (Regd.) vs. Lt.Governor of Delhi & Anr.' bearing WP (C) 8125/2016 & CM No.3362/2016 on 04.08.2018, it may be noted that the said contention is misconceived and is liable to be rejected. It may be noted here that the defendants have apparently CS (COMM)/668/2023 Page 24 of 45 concealed the fact that the said order passed by Hon'ble High Court, was subsequently challenged before Hon'ble Supreme Court by way of Special Leave to Appeal (C) titled as 'Government of National Capital Territory of Delhi vs. FLT Lt. Rajan Dhall Charitable Trust & Ors.' bearing Nos. 26185-26228/2018, which were finally disposed off on 14.10.2019 with the following observations:-
"Having considered the rival submissions, we allow the petitioner State to take the Draft Notification, as stated above, to the logical conclusion and direct that till said Notification comes into effect, the relationship shall be governed by and in terms of the Notification dated 03.03.2017 as directed in the order dated 31.10.2018. Once the Notification is issued, the appropriate legal and consequence sequitur shall follow. It goes without saying that if any person is aggrieved by the Notification, he shall be entitled to take recourse to legal remedies available in law."
41. No material has been placed on record by the defendants, from which, it can be ascertained that any subsequent Notification, including Notifications dated 31.05.2017 and 04.04.2018, were challenged on their behalf by taking recourse to appropriate legal remedy. Thus, the defendant Corporation is bound to make payment of wages to its own employees, as also to the employees/workers whose services were engaged by it through Contractors in terms of the said Notifications dated 31.05.2017 and 04.04.2018.
42. Even otherwise, this Court is of the considered view that being Principal Employer, the defendant Corporation would be liable and responsible to make payment of wages in full, or the unpaid balance wages in case the contractor fails to make payment, or makes short payment. It cannot CS (COMM)/668/2023 Page 25 of 45 wash off its hands from its liability by taking a plea that the contractor alone is responsible to bear expenditure incurred by him on account of payment of enhanced wages to labourers/employees in terms of Government Notifications issued in this regard during the subsistence of any work order.
43. The other contention raised on behalf of defendants that Clause No.5 of General Terms & Conditions of NIT excludes the applicability of Clause 10 C of GCC qua the work order in question, cannot be sustained for the simple reason that the defendants have not filed complete copy of NIT issued by them qua the work order in question on record, what to say of proving it during trial. In the absence of said document, it is not possible for this Court to appreciate the said contention. In so far as Para No.6 of the work order in question is concerned, it may be noted that the said work order is dated 24-04-2017, whereas NIT was issued on 27-06-2016 and the plaintiff had already participated in the bid by submitting his quotations on the basis of minimum wages as were applicable during the relevant period.
44. As already noted above, the relevant notification No.Addl.LC/Lab/MW/2016/4859 dated 03-03-2017 regarding enhancement of minimum wages, came into existence subsequent to the submission of bid and award of contract qua the work order in question in favour of the plaintiff. In this regard, it may be noted that PW1 has categorically deposed that he had submitted letter dated 14-03-2017 (Mark P3) to the defendants, whereby he had CS (COMM)/668/2023 Page 26 of 45 informed the defendant Corporation about the hike upto 37% in the minimum wages of labour by Govt. of NCT of Delhi, its approval by Hon'ble Lt. Governor, Delhi and display of approved Notification/ Circular by Labour Department of Govt. of NCT on their website, vide Notification No.F.Addl.LC/Lab/MW/2016/4859 dated 03.03.2017. Not only this, he had also attached copy thereof with the said communication. Further, the plaintiff also informed the defendants that they were bound to pay this increased salary/ minimum wages while assuring them that he would provide the necessary documents as per the requirements and the defendant Corporation was requested to pay the difference amount of the increased labour wages, as applicable to the work order in question for the relevant period, or else to cancel his financial bid and to refund the earnest money deposited by him. Such communication was followed by subsequent letter dated 22-02-2019 [Mark P4], whereby, the plaintiff categorically mentioned that all the documents in respect of its claims including claim under Clause 10C, had been deposited with the office of Executive Engineer about one year back, despite which, no payment had been received. Said letter was followed by subsequent representations dated 16-09-2022 (Ex.PW1/8) and dated 06-10- 2022 (Ex.PW1/9). It is an admitted case of the defendants that they did not respond to any of such letters/ representations of the plaintiff, for the reasons best known to them. In this regard, it would be useful to refer to the relevant portions of the testimonies of the witnesses examined during trial.
CS (COMM)/668/2023 Page 27 of 4545. As already mentioned hereinbefore that PW1 has deposed almost on the identical lines of the averments made in the plaint during his chief-examination by way of evidence affidavit (Ex.PW1/A) and had duly proved all the relevant documents, including the letters dated 14-03-2017, 22-02-2019 and representations dated 16-09-2022 and 06-10-2022 (supra). It is noteworthy that in the entire cross-examination of PW-1, not even a single suggestion was put to him on behalf of defendants that the said documents were not sent by plaintiff, or that the same were not received by the defendants, or that either of them were ever responded to by the officials of defendant Corporation.
46. In view of ocular testimony of PW1 and the above referred documents, the authenticity of which is beyond dispute, this Court is of the considered view that the plaintiff has succeeded in proving that he had sent various communications to the defendants in this regard, but the defendants never paid any heed for releasing the outstanding amount under this head to the plaintiff.
47. At this juncture, it is relevant to note that along with the aforesaid letter dated 22-02-2019 and the representations dated 16-09-2022 and 06-10-2022 sent to defendant Corporation, which are duly proved by PW1 as Ex.PW1/8 and Ex.PW1/9 respectively, the claim under Clause 10C was specifically raised by the plaintiff. These letters were also accompanied by summary of claim of ESIC & EPFO, Claim under 10C and contractual profit @ 15%.
CS (COMM)/668/2023 Page 28 of 4548. Moreover, it stands duly proved from the testimony of PW2 that 1st representation dated 16-09-2022 and 2nd representation dated 06-10-2022 [Ex.PW1/8 and Ex.PW1/9] and letter dated 22-02-2019 [Mark P4] were duly received in the office of MCD, vide Diary nos. 810, 930 and 1485 on 16-09-2022, 06-10-2022 and 26-02-2019 respectively. Copies of Dak Register containing said Diary numbers are proved by PW2 as Ex.PW2/1 (Colly.)
49. Similarly, PW4 has proved copy of Dak Register bearing Diary No. 4600 on 05-02-2019 as Ex.PW4/1, vide which, letter dated 04-02-2019 [Mark P2] was received by the defendants, which according to him, was sent to Executive Engineer (Electrical), City SP Zone for further action.
50. Likewise, it stands duly proved from the testimony of PW5 Sh. Ankit Singh Rajput, AE (Electrical) City SP Zone, MCD, Delhi, that the letter dated 14-03-2017 [Mark P3] written by plaintiff to the Executive Engineer (E)/NDMC i.e. defendant, regarding claim under Clause 10C, was also duly received in the office of said defendant, vide Diary no.1629 dated 15-03-2017. Indisputably, none of the said communications sent by plaintiff to defendants, were responded to by the defendants, for which, no explanation is forth coming from their side till date.
51. The PW1/plaintiff has also proved downloaded copy of order of Delhi Government as Ex.PW1/6, as per which, the wages of different category of workmen/ employees is shown to have been enhanced during the relevant period.
CS (COMM)/668/2023 Page 29 of 4552. In view of the overwhelming evidence, as has been brought on record from the side of plaintiff and in the absence of any explanation whatsoever being offered by defendants for not responding to the first communication dated 14-03-2017 (Mark P3) sent by plaintiff, the only inference which can be drawn, is that even the defendant Corporation was not disputing its liability to pay minimum wages at such enhanced rate by way of reimbursement to the plaintiff, by virtue of Clause 10C of GCC.
53. Even if, it be presumed for the sake of convenience that Para no.6 of the work order in question had stipulated regarding exclusion of Clause 10C and 10CC of GCC qua the work order in question, still this Court is of the view that the defendants are not justified in repudiating the claim of plaintiff under this head. As a matter of fact, the plaintiff had requested through letter dated 14-03-2017 (Mark P3) to the defendants for cancellation of his financial bid and for refund of his earnest money deposit in case they were not willing to reimburse the minimum wages at such enhanced rate in terms of relevant Notification issued by Delhi Government. No one had prevented the defendants to cancel the financial bid of the plaintiff and to award the contract to L-2, in case they were not inclined to pay minimum wages of the workers/employees of plaintiff at such enhanced rate. Instead of allowing such request made by plaintiff, the defendants still proceeded ahead by issuing the work order dated 24-04-2017 [Ex.PW1/2] to him. In these facts and circumstances, no fault can be found on the part of CS (COMM)/668/2023 Page 30 of 45 plaintiff in proceeding to execute the work order in question under the hope and belief that his claim under Clause 10C shall be duly paid by the defendants. Pertinently, the plaintiff had no other choice, but to go ahead with the execution of such work, since in the event of default on the part of plaintiff in carrying out such work, it would have been open for defendant Corporation to impose penalty and/or to forfeit the security amount deposited by plaintiff. Hence, it could not have been expected from the plaintiff not to carry out the work order in question, and to suffer financial loss for no fault of him. In the backdrop of these facts and circumstances, taking consent of plaintiff to any such term in contract, willingly or unwillingly, would be of no avail for any such term in contract would be void ab-initio being contrary to the provisions of the Constitution of India, as well as Labour Laws, which have been enacted for the benefit of an employee/labour, who otherwise has no means to meet the challenge of exploitative acts of employer/principal employer. Thus, there is no room for doubt that the defendant/Corporation, being the Principal Employer, is liable to pay the difference in claim arising out of enhancement of minimum wages as per Notification of Government of NCT of Delhi. While saying so, this Court is also fortified, in its opinion, with the decision of Hon'ble Apex Court in the cited case of Associate Builders (supra), and the decisions of Hon'ble High Courts in the cited cases of M/s Aarthi Enterprises (supra) and Hindustan Construction Co. (supra). Hence, the plaintiff is held entitled to recover the amount of ₹5,45,604/- on CS (COMM)/668/2023 Page 31 of 45 account of claim under Clause 10C of GCC.
54. Now, let's examine the claim of ₹1,99,880/- raised by plaintiff on account of ESIC and EPF in terms of Para No.5 of the work order in question. Before proceeding to deal with the contentions raised on behalf of both the sides, it would be apposite to reproduce said Para no.5 of the work order for proper appreciation. Same is extracted here as under:-
xxxx
5. The above quoted prices shall be inclusive of all applicable taxes & duties (but excluding Service Tax, EPF & ESI) and all allowances. NDMC will not entertain any claim whatsoever in respect of the same. Service Tax (if applicable), EPF and ESI shall be reimbursed to the successful bidder after production of necessary receipt(s) in this regard.
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55. In their written statement, the defendants have alleged that the plaintiff did not maintain labourer's record and the requisite documents, whereas, it has been the case of plaintiff that he had been depositing ESIC & EPF contributions in respect of the employees/workers engaged by him for execution of the work order in question assigned by defendants and that the defendants, being the Principal Employer, is responsible for compliance by the contractor.
56. A bare perusal of the letter 04-02-2019 [Mark P2] sent by plaintiff to the defendant Corporation, would show that the plaintiff has clearly mentioned therein, while seeking reimbursement of ₹8,76,723/- towards claim of ESIC & EPF and Claim under 10C, that the relevant documents i.e. CS (COMM)/668/2023 Page 32 of 45 M.B. Test Check JE (E)/AE (E)/EE (E) with contractor, Final Inspection Report of QC Cell, Attendance Register, Labour Report, Bill Summary, Request of Bill Form duly verified by EE(E), EPF & ESIC' Challan, ECR of Employees' EPF & ESIC and 10C claim etc., pertaining to its claim of ESIC & EPF and claim under Clause 10C, had already been deposited with the defendant Corporation.
57. As far as the proof of deposit of ESIC and EPF contributions of employees are concerned, the plaintiff has placed on record printouts of ESIC contribution deposited by him in respect of his employees from April, 2017 to April, 2018; challans of EPF contribution for the said period; the receipts of deposit of ESIC monthly contribution; and details of EPF contribution for the said period, which have been duly proved by PW1 as Ex.PW1/10 to Ex.PW1/13 respectively. The genuineness of these documents, which have been printed from the websites of www.esic.in and www.epfindia.gov.in, has not been disputed from the side of defendants.
58. Apart from above, PW1 has also proved letters written to Bank Manager of Axis Bank for disbursement of salary of his employees for the period from April 2017 to April 2018 as Ex.PW1/18. Not only the relevant portion of ocular testimony of PW1, whereby he has testified that he had submitted proof of claim regarding payment under ESIC and EPF to the defendant no.2 while letters dated 28-05-2018, 04-02-2019, and 22-02-2019 and 07-05-2022, has gone unchallenged and un-rebutted from the side of defendants, but also the documents Ex.PW1/10 to CS (COMM)/668/2023 Page 33 of 45 Ex.PW1/13 showing deposit of ESIC contribution and EPF contribution of his employees for the period from April, 2017 to April, 2018, along with relevant receipts thereof, have also not been disputed by the defendants throughout trial. In fact, no question whatsoever is found to have been asked from PW1 on behalf of defendants relating to said documents.
59. It is quite evident from perusal of said documents Ex.PW1/10 to Ex.PW1/13 that the plaintiff had deposited the entire amount of ESIC and EPF contribution of his employees engaged for executing the work order in question for the period from April, 2017 to April, 2018, with the concerned Authorities and had submitted relevant documents/ proofs thereof with defendant no.2.
60. Para No.5 of the work order in question, as already reproduced hereinbefore, would leave no scope of doubt that the amount quoted by plaintiff in the bid, was exclusive of Service Tax, EPF and ESI. Further, said clause clearly stipulates that EPF and ESI shall be reimbursed to the successful bidder after production of necessary receipt(s) in this regard. In this view of the matter, there is no iota of doubt that the defendant Corporation is under legal and contractual obligation to pay the amount of ₹1,99,880/- under the head of ESI and EPF to the plaintiff. It is so held accordingly.
61. This brings me down to the claim of plaintiff under the head of Contractual Profit & Overhead charges @ 15% on ESIC CS (COMM)/668/2023 Page 34 of 45 and EPF. For this purpose, the plaintiff has relied upon Office Memorandums dated 08-06-2009 and 30-06-2015 issued by Central Public Works Department (CPWD), as proved by PW1 as Ex.PW1/3 (Colly.).
62. Ld. Counsel for defendants contended that CPWD Manual is not applicable to MCD and that MCD does not give any overhead profit over ESIC and EPF contribution.
63. Although, Ld. Counsel of plaintiff vehemently argued that the defendants are legally bound to pay such amount in lieu of overhead/ contractual profit on ESIC & EPF by virtue of Office Memorandums dated 08-06-2009 and 30-06-2015 [Ex.PW1/3 (Colly.)] issued by CPWD, however, he failed to explain as to how such Office Memorandums would be applicable to the contract(s) awarded by defendant Corporation. As rightly submitted by Ld. Counsel of defendants, the contractual rights and obligations arising between the parties to the present suit, would be governed by the terms and conditions contained in the contract qua the work order in question, as also GCC and SCC, as are made applicable thereto. The plaintiff has failed to point out any clause appearing in the contract in question, which entitles him to seek contractual profit and overhead @15% on ESI & EPF, as claimed. Rather, it is apparent from the judgment dated 08-06-2023 passed in CS (COMM.)/1596/2019 titled as 'Mr. Umesh Tyagi v. MCD & Anr.' which was filed by plaintiff herein against the same very defendants and is being relied upon from the side of plaintiff, the plaintiff through counsel had made statement before that Court on 17-04-2023 that he was not pressing his claim relating to 15% of CS (COMM)/668/2023 Page 35 of 45 contractor's profit, as recorded in Para no.19 of the said judgment. That being so and in view of the reason that the plaintiff has not led any cogent and positive evidence establishing his entitlement to claim overhead/ contractual profit @ 15% on ESI and EPF, this Court is of the view that such claim cannot be sustained under the law. Accordingly, the claim of plaintiff to the extent of ₹29,982/- is hereby declined.
64. Coming to the amount of legal notice expenses of ₹11,000/-. The plaintiff has not placed on record any document to show that an amount of ₹11,000/- was incurred on legal notice. Hence, the plaintiff is held not entitled for reimbursement of legal notice expenses and his claim in this regard, is hereby declined.
65. Hence, the plaintiff is held entitled to recover a sum of ₹7,45,483/- [₹5,45,603/- towards claim under Clause 10C of GCC + ₹1,99,880/- towards ESIC & EPF Claim].
66. Now the next question, which arises for consideration before this Court, is as to which of the defendants is liable to pay such interest amount. As already noted above, the present suit has been filed against two defendants, out of which, the defendant no.2 is Executive Engineer concerned. It is trite law that any officer of an organization / statutory body cannot be held personally liable for the liability of such organization / statutory body. That being so, this Court is of the view that no decree can be passed against defendant no.2 in his/her personal capacity, since, the concerned Executive Engineer was discharging his CS (COMM)/668/2023 Page 36 of 45 duties on behalf of defendant no.1/ MCD in his/her official capacity and nothing beyond that. Thus, it is held that defendant no.1/MCD alone shall be liable to pay the amount to the plaintiff.
67. In the light of above discussion, the issue no.1 stands decided in the aforesaid terms.
ISSUE NO.2
68. Now, I shall take up the issue no.2, which is reproduced hereunder:-
Issue no. (ii) -Whether the plaintiff is entitled to any interest? If so, for which period and at what rate? OPP
69. The onus to prove the aforesaid issue was placed upon the plaintiff. The plaintiff has computed pre-suit interest @ 14% on the entire outstanding principal amount of ₹7,75,465/- from the date of letter i.e. 04-02-2019 concerning reimbursement till the date of filing of the present suit, and thus, has claimed ₹4,54,188.78/- towards pre suit interest. Besides, the plaintiff has also claimed pendent-lite and future interest @ 14% per annum on the principal outstanding amount of ₹7,75,465/- and costs of the proceedings.
PLAINTIFF'S ARGUMENTS:
70. Ld. Counsel of plaintiff has submitted that since the defendants have illegally withheld the payments against the work order in question, the plaintiff is entitled to recover interest from them.
CS (COMM)/668/2023 Page 37 of 4571. However, Ld. Counsel of plaintiff fairly conceded that there is no express contractual arrangement between the parties to pay interest at the rate of 14% per annum, as claimed by plaintiff. He, however, contended that interest at the appropriate rate as is deemed reasonable by the Court, may be awarded in favour of the plaintiff.
DEFENDANTS' ARGUMENTS:
72. Per contra, while repelling the aforesaid arguments advanced on behalf of plaintiff, Ld. Counsel of defendants vehemently argued that the plaintiff has failed to discharge the initial burden to prove this issue and thus, he is not entitled to recover any amount towards interest.
73. After referring to the relevant portion of Clause No.9 of GCC [Ex.DW1/P5], which is an admitted document by both the sides, he further submitted that there is a clear stipulation agreed between the parties, that no interest shall be payable to the contractor(s) in case of delay in payment, due to non-availability of funds in the particular head of accounts of MCD. He, therefore, contended that the plaintiff being bound by the contractual terms and conditions thereof, is estopped from claiming any interest from the defendant. He, therefore, urged that this issue may be decided against the plaintiff and in favour of the defendant.
ANALYSIS & FINDINGS:
74. In order to appreciate the above-stated arguments advanced on behalf of both the sides, it would be apposite CS (COMM)/668/2023 Page 38 of 45 to reproduce the Clause 9 of the GCC, which is an admitted document, which has been referred to by both the parties. Same is extracted here as under:-
CLAUSE 9 Payment of Final Bill:
The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in-Charge whichever is earlier.No further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payment of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer- in- Charge, will, as far as possible be made after the period specified hereinunder, the period being reckoned from the date of receipt of bill by the Engineer-in-Charge or his authorised Asstt. Engineer, complete with account of materials issued by the department and dismantled materials. The payment of passed bills will depend on availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first the past liabilities will be cleared and after that the release of payment for passed bills will be in order of the demand received at HQ under particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non- availability of funds in the particular head of accounts of MCD.
(i) If the tendered value of work is : 6 months upto ₹5 lacs
(ii) If the tendered value of work : 9 months exceeds ₹5 lacs: 9 months
75. In the light of Clause No.9 of GCC, as reproduced above, it has to be seen as to whether or not the plaintiff is entitled to seek any interest from the defendant.
76. No doubt, there is an express stipulation in the form of Clause 9 of GCC to the effect that defendant/MCD is not liable to pay interest in case of delay in payment(s) on CS (COMM)/668/2023 Page 39 of 45 account of non-availability of funds in particular heads of account of MCD, however, the core issue is whether such a stipulation is enforceable under the law. This issue directly came before Hon'ble Delhi High Court in the case titled as 'North Delhi Municipal Corporation V. Sanjeev Kumar', bearing RFA 430/2017 decided on 22-03-2018. In the said case, similar stipulation in the form of Clause No.9 GCC was subject matter for consideration before Hon'ble Delhi High Court and similar arguments were advanced on behalf of appellant/MCD. After considering the said clause and the arguments advanced on behalf of both the sides, Hon'ble Delhi High Court has held as under:-
"...It is therefore, necessary and important that all the steps of the Contract are followed by the Contractors And the Corporations. The following guidelines are being passed:
1. Along with the work order, all the Clauses of the General Conditions of Contract should be attached;
2. On the award of the Work order, periodic inspections of the work being carried out should be done by the Engineer- in- Charge;
3. If possible, photographs of the works at different stages should be taken and maintained on the record;
4. Interim bills should be submitted by the Contractor - duly certifying the work, which has been carried out;
5.Final bills should be submitted by the Contractor -duly certifying the work carried out along with photographs;
6. The Bill should be scrutinized by the Engineer- in- Charge, works should be recorded in the measurement book and thereafter, the bill should be passed;
7. Once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to. Delay in payments would result in Interest being levied;
8. For Refunds of Security deposit and Earnest Money deposit, the Contractor should unscrupulously comply with the conditions in Clauses 17 and 45. For refunds to be made, payment of final bill need not be awaited. Once the conditions of Clauses 17 and 45 are complied with CS (COMM)/668/2023 Page 40 of 45 and the final bill is passed, refunds ought to be made;
9. In suits relating recovery of Contractor's Dues, all the evidence including the NIT. General Conditions of Contract, periodic inspection reports, Final bill as submitted, Final bill as passed, Measurements carried out, Photographs etc., should be produced and duly exhibited.
10. It infrastructure ought to be created to maintain records of the work orders, inspection reports, final bills, photographs etc., digitally, as it is noticed that the trial court record does not contain all the relevant documents and in several cases, different versions of clauses are relied upon by both sides, bills are not properly understandable and there is no evidence of actual inspections on measurements having been taken.
Maintenance of digital records will make it more transparent and easily accessible for the officials and for production in the Court in case of future litigation. Adherence to the above shall ensure that the works are duly carried out as per the quality standards prescribed and there is proper record of work being done. Once The work is carried out payments ought not to be delayed, inasmuch as delay in payments compromise on availability of quality civil work for the Corporations, who take care of basic amenities for citizens such as roads, pavements, civil works, sewerage lines etc."
77. In batch matters including the case of 'EDMC Vs. Raj Kumar Jain', bearing RFA 397/2017 decided on 22-03-2018, similar issues were also raised, which were discussed at length and after due consideration thereupon, Hon'ble Delhi High Court came to the following conclusion:-
" By applying the above said principles, in respect of final bills raised by Contractors for works executed, that have been approved by the Engineer-in-Charge, the Clauses have to be read in the following manner:
(a ) Reasonable time for making of payments of final bills in respect of work orders up to ₹5 lakhs shall be 6 months and work orders exceeding ₹5 lakhs shall be 9 months from the date when the bill is passed by the Engineer-in-Charge.
(b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be CS (COMM)/668/2023 Page 41 of 45 exceeded, while applying the queue system.
(c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non-payment would attract payment of interest for the delayed periods.
(d) A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7.
Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
(e) To the extent that queue basis is applied only for clearing of payments, which do not extend beyond the period of 6 months and 9 months period, it is reasonable. However, if the queue basis is applied in order to make Contractors wait for indefinite periods for receiving payments, then the same would be unreasonable and would have to therefore be read down.
(f) The Security amount/Earnest money deposited would be refundable upon the fulfillment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments. "
78. The facts of the present case are squarely covered by the above-referred decisions of Hon'ble Delhi High Court. It is an admitted position that the defendant no.1 /MCD has already released the principal billed amount and also refunded the security amount. Thus, applying the ratio of law laid down by Hon'ble Delhi High Court in above referred decisions and in view of discussion made hereinabove, this Court is of the considered view that the CS (COMM)/668/2023 Page 42 of 45 plaintiff is entitled to recover interest for the delayed period beyond period of 9 months from the date of passing of Bill i.e. 31-05-2018.
79. As per the guideline No.7, as laid down in the case of Sanjeev Kumar (supra) and the decision of Hon'ble High Court in the case of Raj Kumar Jain (supra), once the Bills are passed, the payment schedule of 6 months and 9 months should be adhered to and delay in payments would result in interest being levied. In the present case, there is no denial of the fact that payments have been delayed beyond the aforesaid period. Accordingly, it is held that the plaintiff is entitled to interest for the period from 01-03-2019 till realization of amount.
80. This brings me down to the next question as to the rate of interest to be awarded in favour of the plaintiff. The plaintiff has claimed the interest @ 14% p.a., but as already mentioned above, nothing has been brought on record by plaintiff indicating that there was any agreement between the parties that he shall be entitled for interest @ 14% per annum in case the payment is delayed by the defendant Corporation.
81. Section 34 CPC clearly provides that where the liability in relation to the sum so adjudged had arisen out of commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate of interest, or where, there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to the CS (COMM)/668/2023 Page 43 of 45 commercial transactions.
82. In view of overall facts and circumstances of the case and keeping in view nature of transactions between the parties, the claim of plaintiff to award interest @ 14% per annum, from due date till the date of actual payment, in the opinion of this Court, is excessive and on higher side. Interest of justice would be met by awarding such interest to the plaintiff @ 8% per annum for the above said period. It is so ordered accordingly. The plaintiff is also held entitled to pendent-lite and future interest @ 8% per annum from the date of filing of the suit till realization of amount, on the principal outstanding amount of ₹7,75,465/-.
83. The plaintiff has also claimed the cost of the suit. Keeping in view the provisions contained in Sections 35 and 35A CPC, it has been established that the defendant no.1 failed to pay the outstanding dues not only despite service of legal notice, but also, despite service of summons of the suit upon it. Therefore, the said defendant is responsible for the cost of the litigation to the extent of court fee and lawyers fee etc. as per the relevant rules. In my view, the plaintiff is accordingly entitled for the cost of litigation against the defendant no.1/ MCD.
84. The issue no.2 stands decided in the aforesaid terms.
RELIEF:
85. In the light of the aforesaid discussion, Court is of the view that the plaintiff has been able to prove its case on the basis of preponderance of probability.CS (COMM)/668/2023 Page 44 of 45
The suit is partly decreed in favour of the plaintiff and against the defendant no.1/MCD and thus, the following reliefs are granted:-
85.1 The plaintiff is entitled to recover a sum of ₹7,45,483/- [₹5,45,603/- towards claim under Clause 10C of GCC + ₹1,99,880/- towards ESIC & EPF Claim];
85.2 The plaintiff is entitle to pre-suit simple interest @ 8% per annum from 01-03-2019 till the date of filing of the suit i.e. 18-04-2023 on principal outstanding amount of ₹7,45,483/-;
85.3 The plaintiff is also entitled to pendent-lite and future interest @ 8% per annum for the date of filing of the suit till realization of amount, on the principal outstanding amount of ₹7,45,483/-; and 85.4 Proportionate costs of the proceedings is also awarded in favour of the plaintiff.
86. Decree sheet be prepared accordingly. File be consigned to Digitally signed Record Room, after due compliance. VIDYA by VIDYA PRAKASH Date: PRAKASH 2025.10.29 Announced in the open Court 12:58:35 +0530 On 29th Day of October,2025.
(VIDYA PRAKASH) SPECIAL JUDGE (PC ACT) (ACB)-01 ROUSE AVENUE COURT COMPLEX/ NEW DELHI PREVIOUSLY POSTED AS DISTRICT JUDGE (COMMERCIAL COURT)-01, CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI.
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