Delhi District Court
M/S R.P. Singhal Builders P. Ltd vs The Executive Engineer M I West Zone ... on 14 May, 2025
In the Court of Shri Ashutosh Kumar, District Judge (Commercial
Court)-01, Tis Hazari Courts, West District, Delhi
CS (Comm.) No. 505/2019
CNR No. DLWT01-008414-2019
M/s R.P. Singhal Builders Pvt. Ltd.
Regd. Office At 4, Shakti Vihar,
Pitampura, Delhi.
Through Its Director Mr. R.P. Singhal
........Plaintiff
Versus
1. The Executive Engineer M I West Zone
Municipal Corporation of Delhi
Opp Madhav Park, Rajouri Garden,
New Delhi-110027.
2. The Commissioner
Municipal Corporation of Delhi,
Office at : Dr SPM Civic Centre,
Pt. JLN Marg, P.S. Kamla Market,
New Delhi 110 002
........Defendants
Date of Institution : 14-10-2019
Date of hearing of arguments : 01-05-2025
Date of decision : 14-05-2025
Plaintiff's Counsel : Mr. A.K. Trivedi
Defendant's Counsel : Mr. Anupam Sharma
JUDGMENT
1. The present suit is filed by the plaintiff, a private limited company CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.1 of 31 & a recognized contractor by the defendant department as well as other Govt Departments, through Sh R.P. Singal, one of its directors & authorized representative, vide minutes of meeting & resolution dated 10-10-2019 executed in his favour, for declaration of letters dated 23.09.2019 and 01.10.2019 issued by the defendant no.1 as null & void, for recovery of an amount of Rs.26,73,556/- from the defendants and also for passing a decree of permanent injunction in its favour thereby restraining the defendants, its officers, representatives etc. to take any coercive action or implement the above letters against the plaintiff.
2. Plaintiff's case is that defendant no. 1, who is an officer of defendant no. 2, which is a Government body providing civic amenities to the public at large, had signed the agreement on behalf of its department with the plaintiff for the work awarded on 09.07.2015. It is further the case of the plaintiff that even after completion of work on 15.12.2015 and closure of contract by the defendant department, the defendant no. 1 had written a letter bearing no. D/EE(M)I/SDMC/19-20/D-1289 dated 23.09.2019 to the plaintiff thereby directing the plaintiff to deposit an amount of Rs. 26,73,556/- on the basis of illegal findings that the rate of bitumen was lower than the agreement rate during the execution of the work along with one letter addressed to the Oriental Bank of Commerce (issuing bank of bank guarantee) bearing ref. no.
CS (COMM.) No. 505/2019M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.2 of 31 D/EE(M)I/SDMC/19-20/D-1345 dated 01.10.2019 thereby requesting the Bank to release the bank guarantee in its favour.
3. It is further case of the plaintiff that the defendant department had awarded the work of "(i) imp. and Stg. of roads in Tagore Garden having ROW 25' (7.50m), 36' (11.00m), 40'(12.20m), 45' (13.50m), 48' (14.50m) in C-105/SDMC SH:- Stg. of Carriageway (remaining work) from DESU office to BA-225, BA-253 to BA-239, BA-279 to BA-274 and BA-324 to BA-310 Tagore Garden) and (ii) Imp. and Stg. of roads having ROW 30 (9.00m), 40 (12.20m) and 50 (15.20m) in blocks D,E,N,W,V, Q, R, T, J-9, J-10, J-11 and Service Lane in Red MIG Rajouri Garden in Ward no. C-105/SDMC, SH:- Stg. of Carriageway (remaining work) from V-224 to V-54, V-308 to V-210, V-247 to V-50, V-248 to V-263, V-294 to V-307, J-10/36 to 39/117, J-11/54 to J-11/82, J-11/55 to J-11/80, J-11/90 to J-11/101 in Tagore Garden & (iii) Imp. & Stg. of roads having ROW 30'(9.00m), 40'(12.20m) & 50'(15.20m) in blocks A, C, F, J, H, J-4, J-12, A-1 & A-2 Rajouri Garden in Ward No. C-105/SDMC SH:- Stg. of Carriageway (remaining work) from J-122 to H-75, J-39 to J-65, A-31A to A-70, A-48 to A-58 & A-67 to A-71 in Rajouri Garden"
to the plaintiff vide work order bearing No. EE (M-WZ)-[EE VII]/SYS/2015-2016/126 dated 09.07.15 on total contractual amount of Rs. 1,82,40,770/-, qua which an agreement dated 09- CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.3 of 31 07-2015 was executed between the plaintiff and defendant no. 1 and the period of completion was 6 months commencing from 18.07.2015 and the same was to be completed on 17.01.2016 as per the terms of agreement. As per the case of the plaintiff the work was completed on 15.12.2015 i.e. within the time provided as per the agreement and the date of completion of work was recorded in the measurement book as 15.12.2015 and also the 1 st and final bill was passed on 31.12.2015 for an amount Rs. 1,82,00,392/- and payment was made to the plaintiff after necessary deductions.
4. Plaintiff's further case is that the plaintiff had submitted a bank guarantee bearing no. 08760005816 dated 30.07.2016 for an amount of Rs. 18,24,000/-, which was valid till 31.12.2020, in lieu of the security amount for the maintenance period, which started from date of completion of the work i.e. 15.12.2015 for five years and came to an end on 15.12.2020 and further claimed that defendant no. 1 or any other concerned officer of the defendant's department had not issued any letter thereby pointing out any defects in the executed work till date and surprisingly the plaintiff received a letter bearing ref. no. D/EE(M)I/SDMC/19-20/D-1289 dated 23.09.2019 along with one letter addressed to the Oriental Bank of Commerce (issuing bank of bank guarantee) bearing ref. no. D/EE(M)I/SDMC/19-20/D-1345 dated 01.10.2019 sent CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.4 of 31 through speed post bearing receipt no. ED337394349IN dated 03.10.2019 thereby directing the plaintiff to deposit an amount of Rs. 26,73,556/- on the basis of illegal findings that the rate of bitumen was lower during the execution of the work. It is claimed that so far as the letter dated 01.10.2019 is concerned, the same was written by the defendant no. 1 to the Bank of the plaintiff from where the bank guarantee was obtained, with a request to the Bank for release of the amount of bank guarantee in favour of the defendant no.2 i.e. the Commissioner, SDMC.
5. Plaintiff's further claim is that it is an admitted fact that the bitumen was procured by the plaintiff for execution of the work and the rate of bitumen was nowhere mentioned in the Notice Inviting Tender of the work or in the rate of agreement items and therefore, the question of the rate of bitumen cannot be subject of consideration of the defendant department while passing the bills of the executed work.
6. Plaintiff further claimed that if the work executed by the plaintiff was not as per the specification at the relevant time in compliance of the terms of General Conditions of Contract of this work, then the defendants' department was entitled to either accept the executed work on lesser rate or direct the plaintiff to remove the executed work and re-do the same bearing the costs within the period specified in the notice but for that purpose, it was CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.5 of 31 mandatory for the defendant to give prior notice in terms of the contract to the plaintiff/contractor showing such intent and directing for compliance. However, no such notice was given by the defendant to the plaintiff prior to issuance of aforesaid letter either during currency of contract or from the date of completion till date of issue of the letter and accordingly, the letters dated 23.09.2019 and 01.10.2019 are illegal and time barred. It is claimed that it is settled law that any recovery can be made within three years from the date of its cause of action and cause of action in the present case started either from date of completion of work i.e. 15.12.2015 or from the date of final bill i.e. 31.12.2015 and not thereafter. It is further claimed by the plaintiff that the bank guarantee was given in lieu of the security for the maintenance period and the same cannot be forfeited against any recovery, which does not pertain to the expenses incurred after refusal of the plaintiff to rectify the pointed out defects even after receipt of the notice of defendant in the executed work or in rectification of the defects and not otherwise.
7. Plaintiff further claimed that the plaintiff had sent a legal notice u/s 478 of DMC Act dated 10.10.19 through speed post on 11.10.19 to the defendants requesting the defendants to withdraw the aforesaid letters dated 23.09.2019 and 01.10.2019 and also to not recover the aforesaid amount of Rs. 26,73,556/- by CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.6 of 31 implementing the letter dated 23.09.2019. It is claimed that the plaintiff had reasonable apprehension that the defendants had recovered the amount despite receipt of this notice and the plaintiff had filed the present case without completion of the statutory period of this notice as the plaintiff was seeking ad- interim injunction against the letter dated 23.09.2019.
8. In their written statement, the defendants in their preliminary objections inter-alia claimed that the suit is liable to be dismissed as the suit is bad for mis-joinder and non-joinder of parties, neither of the defendants has any privity of contract with the plaintiff, plaintiff is guilty of suppressio-veri and suggestion-falsi as the plaintiff has deliberately concealed that as per Clause 29 (ii) of the General Conditions of the Agreement, Corporation had the right to cause an audit after the final bill is paid and if in the said audit it is found that any overpayment has been made, then such payment has to be returned by the Contractor and the Corporation has the right even to deduct the same from the security amount.
9. On merits in the written statement, while denying that Sh R.P. Singhal was authorized to file the present suit, the defendants have claimed that since there was no privity of contract between the plaintiff and the defendants (defendant no. 1 Executive Engineer M-I (West Zone) and defendant no. 2 (The Commissioner) working with South Delhi Municipal Corporation CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.7 of 31 as its employees as the agreement dated 9 th July 2015, was executed between the Plaintiff and the South Delhi Municipal Corporation and plaintiff has not impleaded South Delhi Municipal Corporation as party to the suit.
10.Defendants have further claimed that there is neither illegality in issuing the letters dated 23-09-2019 and 01-10-2019 nor the contract has as such been closed. It is claimed that although it is not denied that the bank guarantee was given by the Plaintiff as per the terms & condition of the Agreement dated 09.07.2015, however, as per Clause 29 (i) of the General Conditions of the aforesaid Agreement, Corporation has the right to recover the extra amount paid to the Plaintiff from the said guarantee, even if the same was given towards security. It is further denied by the defendants that the aforesaid letters had been written on any illegal finding and claimed that as per Clause 29 (ii) of the General Terms & Conditions, Corporation has the right to cause an audit after the final bill is paid and if in the said audit it is found that any overpayment has been made, then all/any such payment has to be returned by the Contractor and Corporation has the right even to deduct the same from the security amount. Relevant portion of said Clause 29 is reproduced below:
Clause 29 With holding and lien in respect of sums due from contractor.CS (COMM.) No. 505/2019
M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.8 of 31
(i) Whenever any claim or claims for payment of a sum of money arises out of or under the contract or against the contract, the Engineer-in-charge of the MCD shall be entitled to withhold and also have a lien to retain such sum of sums in whole or in part from the security, if any deposited by the contractor and for the purpose aforesaid, the Engineer-in-charge of the MCD shall be entititled to withhold the security deposit, if any, furnished as the case may be and also have the lien over the same pending finalization or adjudication of any such claim, XXXXXXXXXXXXXX
(ii) MCD shall have the right to cause an audit and technical examination of the works and the final bills of the contractors including all supporting vouchers, abstract etc. to be made after payment of final bill and if as a result of such audit and technical examination any sum is found to have been overpaid in respect of any work done by the contractor under the contractor or any work claimed to have been done by him under the contract and found not to have been executed, the contractor shall be liable to refund the amount of overpayment and if shall be lawful for MCD to recover the same from him in the manner prescribed in sub-clause (I) of this clause or in any other manner legally permissible;
XXXXXXXXXXXXXXXXX"
11. It is further claimed by the defendants that as per Clause 10C of aforesaid G.C.C., if rates of any material or labour decreases, the contact amount was to reduce proportionately, relevant portion of which is reproduced below:
"Clause 10C Payment on Account of Increase in Prices/Wages due to Statutory Order (s) XXXXXXXXXXX If after submission of the tender the price of any material incorporated in the work (not being a material supplied from the CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.9 of 31 Engineer-in-Charge's store 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 change 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 time of the last stipulated date for receipt of tenders including extensions, if any for the work minus ten percent thereof and the prices of material and/or wages of labour on the coming into force of such law, statutory rule or order.
XXXXXXXXXXXXX"
12.The defendants have further claimed that the work done by the plaintiff required 263.75 MT of Bitumen, which is a controlled commodity and rates of the same are decided by the concerned authority/government and that the rate of the bitumen applicable on the date of issuance of tender was duly mentioned in the Schedule F of the NIT, which was Rs. 46,675/- (VG-10) & Rs.47,639/- (VG-30) per metric ton and Plaintiff was well aware thereof. It is further claimed that even otherwise, bitumen being a controlled product and not available in the open market, its rates were fixed and usually do not differ. It is further claimed by the defendant that after the final bill was paid on 19 th August 2016, CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.10 of 31 Corporation had caused a financial audit of various works, which included the work under aforesaid Agreement and that in the said audit conducted during June 2017, it was found that as per the orders of the Competent Authority, the rates of bitumen had decreased during the period when work in question was executed and a sum of Rs.26,73,556/- was paid in excess to the plaintiff. It is further claimed that the rate of bitumen as mentioned in Schedule F of the NIT was considered as the base rate and the aforesaid over-payment was a clear loss to the South D.M.C. and as such it has every right to recover the said loss and the aforesaid overpayment along-with interest to make good the loss it has suffered. It is further claimed that as per the aforesaid Clause, the said amount can be recovered even from the security amount lying with it in the form of bank-guarantee. The defendants have further claimed that a letter dated 23-09-2019 was also sent to the Plaintiff but when it did not respond to the said letter, South D.M.C. decided to encash the bank-guarantee, which is an independent contract in itself and as per the terms & conditions of the guarantee dated 30-07-2016 given by the plaintiff, the Bank has undertaken to pay to the South D.M.C. any money so demanded notwithstanding any dispute by the plaintiff in any suit or proceeding pending before any Court of Tribunal relating thereto. It is further claimed that bank's liability under the CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.11 of 31 aforesaid guarantee is absolute and unequivocal and it is bound to pay the same to the Corporation without any demur, merely on demand from the Corporation stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by it or by reason of any breach by the plaintiff of the terms & conditions of the agreement. It is further claimed that South D.M.C. is well within its right to invoke the aforesaid guarantee and plaintiff cannot restrain it from doing so.
13.The defendants have denied that the contract between the plaintiff and the Corporation had been closed with the payment of final bill and the letter dated 23-09-2019 was issued by the Corporation pursuant to the audit caused as per Clause 29 (ii) of the General Conditions of Contract and there is no error in doing the same, rather the plaintiff on its own should have calculated the rates of bitumen and returned the extra amount received by it.
14.Defendants while denying the claim of the plaintiff that rate of bitumen was not mentioned in the NIT (Notice Inviting Tender) claimed that the same was properly mentioned in the Schedule-F of the NIT wherein it was stated that Clause 10 CA would be applicable and as such even during the pendency of the work, the rates of bitumen or for that matter any other material or labour could have changed and payment had to be made as per the said increase/decrease in rates and therefore upon calculation of CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.12 of 31 payment of bitumen / work on the basis of the rates mentioned in the Schedule F of NIT, demand for recovery was raised by the Audit department. The defendants have further claimed that the recovery sought to be made has nothing to do with the quality or deficiency of the work executed by the Plaintiff.
15. The defendants have further claimed that the notice sent by the Plaintiff was not as per the provisions of Section 478 of the DMC Act, 1957 nor had the stipulated time of notice was over before the filing of the present suit and hence the said notice is neither proper nor as per law. It is further claimed that it was not needed for the Plaintiff to send the alleged notice as the sum of Rs.26,73,556/- had been paid over and above the actual amount payable to the Plaintiff towards the work done by it under the aforesaid Agreement.
16. Plaintiff filed replication (wrongly nomenclatured as re-joinder, which be read correctly as replication) and denied that the suit was bad for mis-joinder and non-joinder of parties stating that plaintiff had challenged the letters dated 23.09.2019 and 01.10.2019 issued by defendant no.1 and the agreement was also executed between the plaintiff and defendant no.1 on behalf of SDMC and defendant no.2 was the head of SDMC. Bank guarantee was also given by the plaintiff in favour of the defendant no.1. It is denied that plaintiff had not served proper CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.13 of 31 legal notice upon the defendants as per provisions of Section 478 of DMC Act. While admitting clause 29 of GCC, plaintiff stated that defendant department has arbitrarily concluded that the department was entitled to recover some amount from the plaintiff.
17.On merits, plaintiff while denying the averments made by the defendants has reiterated the contents of the plaint.
18.From the pleadings of the parties, following issues were framed on 02.11.2021:
1. Whether the plaintiff is entitled for decree of declaration for declaring the letter dated 23.09.2019 and 01.10.2019 Annexure P-1 and Annexure P-2 as null and void as alleged?(OPP)
2. Whether the suit is bad for non joinder and mis joinder of the parties as alleged by the defendant?(OPD)
3. Whether the suit is liable to be dismissed as no proper legal notice as per provision of Section 478 of DMC Act has been issued?(OPD)
4. Relief.
19. One additional issue was framed vide order of this court dated 15- 01-2025 :-
"Whether the plaintiff is entitled for decree of permanent injunction against the defendants thereby restraining the defendants, its officers, representatives etc. to take any coercive action/actions or implement the letter dated 23-09-2019?" OPP
20.Plaintiff examined his Director Sh RP Singhal as its sole witness as PW-1 and defendants on the other hand examined two CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.14 of 31 witnesses viz Sh Rakesh Ahuja Assistant Engineer Division (M)- I, West Zone, South Delhi Municipal Corporation as DW-1 and Sh Surander Singh, Assistant Engineer in Division (M)-I, West Zone, South Delhi Municipal Corporation as DW-2
21.PW-1 tendered his affidavit of evidence Ex. PW-1/A in his evidence and exhibited following documents:-
1. Resolution dated 10-10-2019 - Ex. PW-1/1
2. Notice Inviting Tender dated 12-01-2015 - Ex. PW-1/2
3. Work Order dated 09-07-2015 - Ex. PW-1/3
4. Final bill dated 31-12-2015 - Ex. PW-1/4
5. Bank Guarantee dated 30-07-2016 - Ex. PW-1/5
6. Letters dated 23-09-2019 & 01-10-2019 are Ex. PW-1/6 & Ex. PW-1/7 respectively
7. Legal notice dated 10-10-2019 - Ex. PW-1/8, Postal receipts -
Ex. PW-1/9 to Ex. PW-1/12 and acknowledgments Ex. PW-1/13 & Ex. PW-1/14.
22.DW-1 tendered his affidavit of evidence Ex. DW-1/A in his evidence and while relying on documents already exhibited as Ex. PW-1/2 to Ex. PW-1/4, Ex. PW-1/6 & Ex.PW-1/8, also relied upon following documents:-
1. Rates of bitumen - Ex. DW-1/1
2. Part of NIT dated 12-01-2015 - Ex. DW-1/2
3. Downloaded copy of the rate list from the website of Indian Oil Corporation Limited - Ex. DW-1/3
4. General rules and Directions by MCD - Ex. DW-1/5
5. Audit Inspection Report dated 12-06-2017 - Ex. DW-1/6
23. DW-2 Surander Singh, Assistant Engineer in Division (M)-I, West Zone, South Delhi Municipal Corporation as DW-2 tendered CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.15 of 31 his additional affidavit of evidence Ex. DW-2/A in his evidence and relied upon following documents:-
i) Copy of Circular No. D/EE(P)-I/2012-13/14 dated 11.07.2012, Ex. DW2/1 (Attested copy seen and returned).
24.As regards limitation, two letters, first bearing ref. no.
D/EE(M)I/SDMC/19-20/D-1289 addressed to plaintiff company along with second letter addressed to the Oriental Bank of Commerce (issuing bank of bank guarantee) bearing ref. no. D/EE(M)I/SDMC/19-20/D-1345 were sent by the defendant no.1 on 23-09-2019 and 01-10-2019 respectively for recovery of Rs. 26,73,556/- and for forfeiture of bank guarantee of the plaintiff. The plaintiff has filed the present suit on 14-10-2019, for declaration of the above two letters as null and void and also for permanent injunction restraining the defendants, their officers, representatives etc., from taking any coercive action pursuant to or in implementation of the above two letters, which is within three years of the cause of action i.e. aforesaid letter dated 23-09- 2019. Hence, I hold that the present suit is filed within limitation.
25. My issue-wise findings are as under:
ISSUE No. 11. Whether the plaintiff is entitled for decree of declaration for declaring the letter dated 23.09.2019 and 01.10.2019 Annexure P-1 and Annexure P-2 as null and void as alleged? OPP CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.16 of 31
26. The onus to prove this issue was on the plaintiff.
27. It is an admitted case of the parties that the South DMC, vide NIT dated 12th January 2015 (Ex. D-5) had invited tenders for execution of the work of improvement and strengthening of roads and pursuant thereto, work order dated 9th July 2015 (Ex. PW-1/3) of the aforesaid work was awarded to the plaintiff and an agreement dated 09-07-2015 Ex. P-8 was executed between South Delhi Municipal Corporation through defendant no.1 and the plaintiff wherein stipulated period of the work was six months. Also admittedly there is no dispute qua completion of work within the time framed as prescribed under work order dated 09-07-2015 Ex. PW-1/3 and final payment made to the plaintiff on 19-08- 2016.
28. However, after full and final payment made to the plaintiff by the defendants on 19-08-2016, the financial audit of the office of the defendant was conducted on 12-06-2017 wherein it was found that an over/excessive payment of Rs.26,73,556/- had been made to the plaintiff on account of decrease in the price of bitumen under clause 10-CA of the agreement and therefore, vide letter dated 23-09-2019 (Ex. P-3), defendant no.1 acting for and on behalf of the South DMC, directed the plaintiff to return/deposit the aforesaid amount.
CS (COMM.) No. 505/2019M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.17 of 31
29.The principal controversy in the present matter pertains to whether Clause 10-CA, read with Schedule-F, forms an integral part of the agreement dated 09.07.2015 and whether the same are applicable to the facts of present case.
30.During the course of arguments, Ld. Counsel for the defendants has drawn my attention to Notice Inviting Tender dated 12-01- 2015 NIT (Ex. D-5) to claim that clause 10CA alongwith its schedule-F, are applicable in the present case, relevant part of which is reproduced as under-:
".....The amendment to General Conditions of the Contract to Clause of 10CA and insertion of table Schedule F in tender vide Order No. D/E.E. (P) 1/2013-14/14 dated 11.07.2012, shall be applicable. Its copy can be seen from the notice board of EE../SDMC......"
31.Ld counsel for the defendants has further drawn my attention to Ex. DW-1/2 at running page no. 3 of the documents filed by the defendants, which admittedly forms part of NIT, to claim that the table mentioned in the aforesaid document is the schedule-F.
32.However, a Notice Inviting Tender (NIT) is not an offer in itself but merely an invitation to offer, inviting interested parties to submit bids or proposals. There is distinction between an offer and an invitation to an offer. An invitation to an offer is merely a preliminary communication that does not manifest an intention to be bound. Therefore, unless expressly incorporated into the final CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.18 of 31 contract, the terms contained in the NIT do not form a binding part of the contract. The binding contractual terms are those contained in the accepted offer and the letter of acceptance or contract agreement subsequently executed. In essence, the NIT merely initiates the negotiation process. It is not an enforceable promise or obligation, and hence not a part of the contractual obligations unless explicitly adopted by mutual consent. Therefore, the contention of the learned counsel for the defendants that a mere mentioning of Clause 10-CA and Schedule-F in Notice Inviting Tender (NIT) is sufficient to make them binding upon the plaintiff, under the contract Ex. P-6 does not hold water as neither clause 10-CA nor schedule F are formally part of the written contract Ex.P-6 between the parties.
33.The learned counsel for the defendants has further drawn my attention to point No. 7 of Ex. P-7 (Work Order dated 09.07.2015) to claim that all circulars issued by the MCD are automatically applicable to the plaintiff. Ld. Counsel for the defendants has also relied upon Ex. DW-1/PX-2 (General Conditions of Contract) to argue that the contract comprises all documents forming the tender and its acceptance. Per contra, Ld. Counsel for the plaintiff has referred to Section 23 of the CPWD Works Manual, 2014, which outlines the essential features of a valid agreement in alignment with the Indian Contract Act, 1872, which is applicable CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.19 of 31 to the defenants' department also. As per Section 23.3 of the CPWD Manual, two sets of the contract documents must be prepared and signed by both parties on each page, one of which is to be marked as the original and the other as the duplicate. It further mandates that a copy must be provided to the contractor free of cost. In the present case, admittedly no such copy was provided to the plaintiff nor is there any evidence of the plaintiff signing any additional documents alleged to form part of the contract. Ld Counsel for the defendants had not specifically denied that aforesaid CPWD manual is not applicable to the defendants' department contracts.
34.Section 23.4(2) of the CPWD Manual provides that the executed agreement shall remain in the custody of the Executive Engineer of the defendant, re-affirming the requirement of a formally executed document. In the present case, the only executed agreement between the parties is Ex. P-6 (at running page 23 of the defendant's documents), which bears the signatures of both parties. At no stage was the plaintiff ever asked to sign or agree to any other document now sought to be enforced. Thus, the attempt by the defendants to enforce documents such as Clause 10-CA or Schedule-F without formal execution or express acceptance by the plaintiff, is not tenable.
CS (COMM.) No. 505/2019M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.20 of 31
35.It is also important to take into consideration the cross- examination of DW-1 dated 18-07-2022, the relevant part of which is reproduced as under:-
"....................
Q- Can you bring the copy of the terms and condition containing schedule F signed by both the parties?
A- No, I cannot bring the same as we do not have any signed copy by the plaintiff. Schedule F is the general condition applicable in all contracts and categorically mentioned in the document Ex. D5. Q- Can you bring the unsigned copy of schedule F and GCC (general condition of contract) signed by the department? The signed copy of the schedule F is the part of the file which I am carrying today and is already Ex. DW1/2.
It is wrong to suggest that Ex. DW1/2 is not the schedule F or that it is a general direction given by the higher officials of the defendant department to insert this clause in schedule F......"
36.Relevant part of Ex. DW-1/2 (table) is reproduced as under:-
Table to be inserted in schedule "F" for clause 10 CA S No. Materials Nearest materials other than Base price and its convered under cement* steel reinforcement bars corresponding period of all this clause and structural steel for which all material covered under India Wholesale Price Index to be clause 10 CA** followed Base Corresponding Price Period 1 VG-10 Bitumen Rs. 46675/-
01/01/15 2 VG-30 Bitumen Rs. 47639/-3 CS (COMM.) No. 505/2019
M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.21 of 31
37.Alternatively, it is the admitted position of the defendant that the final payment made in respect of the work executed by the plaintiff was on 19.08.2016. The defendant, however, issued a letter seeking recovery of the alleged excess amount on 23.09.2019, and subsequently sent a letter regarding forfeiture of the bank guarantee on 01.10.2019. Both these actions were taken beyond the prescribed limitation period of three years from the date of the alleged cause of action, i.e., the final payment made to the plaintiff. Accordingly, the defendants' letters seeking recovery, are barred by limitation.
38.Hence in view of the aforesaid discussion and the cross-examination of DW-1, the arguments advanced by the learned counsel for the defendants that mere reference to Clause 10CA in the Notice Inviting Tender (NIT) and its acceptance being part of the contract mentioned in the General Conditions of Contract (GCC) renders it binding, is untenable and is also contrary to the mandatory procedures prescribed in the CPWD Manual. Furthermore, it is an admitted position of the defendants in the written submissions that the original Schedule 'F' has not been placed on record. The defendants are relying on Exhibit DW-1/2 (part of NIT relied upon by the defendants but denied by the plaintiff) to establish the existence of Schedule 'F'. However, the heading of the said referred table itself states, "Table to be CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.22 of 31 inserted in Schedule 'F' for Clause 10CA" and not the schedule "F" itself. Hence, I find force in the reasoning advanced by the learned counsel for the plaintiff and accordingly hold that Clause 10CA, along with Schedule 'F', does not form part of the contract Ex. P-6 and hence same are not binding on the plaintiff.
39.Also the Hon'ble Supreme Court of India in the case titled as 'Tamil Nadu Electricity Board & Anr vs N. Raju Reddiar & Anr on 24 April, 1996', 1996 AIR 2025, has held as under :-
"........................At the outset it must be borne in mind that the agreement between the parties was a written agreement and therefore the parties are bound by the terms and conditions of the agreement. Once a contract is reduced to writing, by operation of Section 91 of the Evidence Act it is not open to any of the parties to seek to prove the terms of the contract with reference to some oral or other documentary evidence to find out the intention of the parties. Under Section 92 of the Evidence Act where the written instrument appears to contain the whole terms of the contract then parties to the contract are not entitled to lead any oral evidence to ascertain the terms of the contract. It is only when the written contract does not contain the whole of the agreement between the parties and there is any ambiguity then oral evidence is permissible to prose the other conditions which also must not be inconsistent with the written contract...................".
40.Keeping in view the aforesaid judgment of Hon'ble Supreme Court and applying the settled principles of Sections 91 and 92 of the Indian Evidence Act, 1872 to the facts of the present case, it is clear that the parties are bound strictly by the terms explicitly set CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.23 of 31 out in the written contract Ex. P-6. Since Clause 10CA and Schedule 'F' are neither forming part of the executed contract dated 09-07-2015 Ex. P-6 nor Schedule F placed on record in their final and binding form, no inference can be drawn to bind the plaintiff to those terms. Consequently, Clause 10CA alongwith its schedule F cannot be enforced against the plaintiff, and any claim based thereon is liable to be rejected.
41.Furthermore, this court is of the view that the SDMC (South Delhi Municipal Corporation), by virtue of its position as a dominant party in the contractual framework, is attempting to unilaterally enforce certain documents specifically Clause 10-CA and Schedule-F, which were neither signed nor expressly accepted by the other contracting party i.e. the plaintiff. The SDMC clearly had superior bargaining power but it cannot abuse the same, which is contrary to the settled principles of contract law, which mandate mutual consent and consensus ad idem as prerequisites for a valid and enforceable agreement.
42. In view of the aforesaid discussion, issue no. 1 is decided in favour of the plaintiff and against the defendant and the letters dated 23.09.2019 and 01.10.2019 are declared null and void.
ISSUE NO. 2"2. Whether the suit is bad for non joinder and mis joinder of the parties as alleged by the defendant?" (OPD) CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.24 of 31
43. The onus to prove this issue was on the defendant.
44.The plaintiff's grievance is primarily against Defendant No.1, who acted for and on behalf of the South Delhi Municipal Corporation (South DMC), and against Defendant No.2, who was then serving as the Head of South DMC. The plaintiff has instituted the present suit seeking a declaration that the two impugned letters issued by defendant no. 1 are void, and for a permanent injunction restraining the defendants from taking any coercive action to implement those letters.
45. It is an admitted position that Defendant No.1 acted as the duly authorized officer/representative of South DMC. The dispute revolves around a contract entered into between the plaintiff and South DMC, executed through Defendant No.1 and Defendant No.2, both acting in their official capacities. All actions that have given rise to the present dispute are connected with the Defendant No.1 in his official role. No third party has been shown to have any independent or substantial interest in the controversy. At the time of institution of the suit, the plaintiff impleaded the Executive Engineer (M-I), West Zone as Defendant No.1 and the Commissioner, South DMC, as Defendant No.2.
46. Further, the Municipal Corporation of Delhi was trifurcated into the South, North, and East Delhi Municipal Corporations by legislative enactment. However, during the pendency of the CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.25 of 31 present suit, all three entities were unified through The Delhi Municipal Corporation (Amendment) Act, 2022, which came into effect on 22.05.2022. Following the unification, a single Commissioner was appointed by the government in place of the erstwhile three Commissioners. In light of this development, the plaintiff moved an application under Order I Rule 10(2) CPC for amendment of the memo of parties to reflect the changed administrative structure and avoid any ambiguity. This application was allowed by this Court vide order dated 12.09.2023, with no objection from the defendants side. Consequently, the Executive Engineer (M-I), Municipal Corporation of Delhi was impleaded as Defendant No.1, and the unified Commissioner was impleaded as Defendant No.2, both in their official capacities. The objections raised by the defendants are merely technical and are not fatal to the case of the plaintiff.
47.In view of the above discussion, no necessary party remains to be impleaded, and the suit is not bad for non-joinder or misjoinder of parties. The defendants apart from taking this bald plea, have failed to substantiate that any omitted party was necessary to the adjudication of the dispute or that any effective relief cannot be granted in their absence. Accordingly, this issue is decided in favour of the plaintiff and against the defendants.
CS (COMM.) No. 505/2019M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.26 of 31 ISSUE NO. 3 "3. Whether the suit is liable to be dismissed as no proper legal notice as per provision of Section 478 of DMC Act has been issued?" (OPD)
48. The onus to prove this issue was on the defendant.
49.The defendant has taken objection in written statement that the present suit is barred under section 478 of DMC Act,1957 as the plaintiff has not served a proper notice. The objection is not legally tenable. The basic object of section 478 of DMC Act is to prevent matters from coming to court and once the matter has reached the court and is contested, the suit ought not be dismissed on technical grounds. In this regard, reliance can be had to the judgment of Col. A. B. Singh (through LRs) v. Shri Chunnilal Sawhney and Others, 2011 SCC OnLine Del 4289 :-
"16. To the aforesaid finding of the trial court, I may add that in fact, the appellants/defendant no.1 had no locus standi to raise this issue as it is only the DDA which can raise this issue, and which is not raising this issue. In any case, this issue is no longer res integra inasmuch as, it has been held by a Division Bench judgment of this court in the case of Yashoda Kumari Vs. MCD AIR 2004 Del 225 that once there is a contest to the suit, the suit cannot be held to be barred for not giving of the notice under Section 53-B inasmuch as the basic object of Section 53-B, like Section 80 CPC is to prevent the matters from coming to court and once the matter reach the court and are contested, the suit CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.27 of 31 should not be dismissed on such technical grounds. The relevant observations of the Division Bench of this court in the decision of the case Yashoda Kumari (supra) are as under:-
7. Section 80, CPC affords two options to the plaintiff. He may either file a suit against the Government or the public officer after serving two months notice under Sub-section 1 or he may file it without serving the notice and for this seek the leave of the Court under Sub-section 2 on satisfying it that an immediate and urgent relief was required in the facts and circumstances of the case. He can do this by filing an accompanying application to show the urgency which is to be considered and disposed of by the Court. In the event it is rejected, the Court has to return the plaint to the plaintiff who could refile it after service of two months notice under the proviso of Section 80.
8. The object of Section 80 notice is to afford the Government or the public officer an opportunity to examine the nature of the claim to settle it, if so advised and to avoid any futile litigation and to save the public money and time which would be otherwise wasted on unnecessary litigation.
9. The Supreme Court in Raghunath Das v. Union of India and Anr., MANU/SC/0406/1968 : [1969]1SCR450 , holding this:
"The object of the notice contemplated by Section 80, CPC is to give to the concerned Government and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised without litigation. The legislative intention behind that section is that public money and time should not be wasted on unnecessary CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.28 of 31 litigation and the Government and the public officers should be given a reasonable opportunity to examine the claim made against them lest they should be drawn into avoidable litigation. The purpose of law is advancement of justice. The provisions in Section 80 are not intended to be used as booby trap against ignorant and illiterate persons."
50.In the present case, Defendants have already entered appearance and have actively contested the suit. Thus, the purpose underlying Section 478 of the DMC stands fulfilled. Moreover, the reliefs sought by the plaintiff include a permanent injunction against the defendants from taking coercive steps to implement the impugned letters an urgent and continuing cause that cannot be rendered infructuous on the ground of a procedural lapse.
51.Therefore, in view of the settled legal position and the facts on record, the objection raised under Section 478 of the DMC Act, is rejected as untenable. Accordingly, this issue is decided against the defendants and in favour of the plaintiff.
52. Finding on additional issue framed vide order dated 15-01-2025 :-
"Whether the plaintiff is entitled for decree of permanent injunction against the defendants thereby restraining the defendants, its officers, representatives etc. to take any coercive action/actions or implement the letter dated 23-09-2019?" OPP
53. The onus to prove this issue was upon the plaintiff.
54.The core question regarding the legality and validity of the letter CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.29 of 31 dated 23-09-2019 and 01-10-2019, has already been adjudicated under issue No. 1, which has been decided in favour of the plaintiff. When once it has been held that the coercive action on the basis of aforesaid letter dated 23-09-2019 is legally unsustainable, any further action pursuant to such letters would be unlawful and accordingly, in view of the the above and in view of my findings to issue no. 1, this issue is also decided in favour of the plaintiff and against the defendants.
55.Accordingly, in view of the same a decree of permanent injunction is passed in favour of the plaintiff restraining the defendants, their officers, representatives etc., from taking any coercive action pursuant to or in implementation of the letter dated 23.09.2019 and 01-10-2019.
56.During the course of arguments, learned counsel for the plaintiff submitted that bank guarantee furnished by the plaintiff was not actually encashed in favour of the defendants and no actual recovery has been effected by the defendants from the plaintiff to date. Accordingly, the relief sought by the plaintiff for recovery of Rs. 26,73,556/-, is not made out. Hence, the said relief is not pressed and is hereby dropped.
RELIEF
57. In view of my findings to above issues, the suit is decreed in CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.30 of 31 favour of the plaintiff and against the defendants and following reliefs are granted to the plaintiff :-
1. Letter bearing ref. no. D/EE(M)I/SDMC/19-20/D-1289 dated 23.09.2019 along with one letter addressed to the Oriental Bank of Commerce (issuing bank of bank guarantee) bearing ref. no.
D/EE(M)I/SDMC/19-20/D-1345 dated 01.10.19 are declared null and void.
2. A decree of permanent injunction is passed in favour of the plaintiff restraining the defendants, their officers, representatives etc., from taking any coercive action pursuant to or in implementation of the letter dated 23.09.2019.
3. Plaintiff is awarded costs of the suit.
Decree sheet be drawn accordingly. File be consigned to record Digitally signed room. by ASHUTOSH ASHUTOSH KUMAR KUMAR Date:
2025.05.14 04:59:55 +0530 (Announced in the open (Ashutosh Kumar) Court) District Judge (Commercial Court)-1 West, Tis Hazari Courts, Delhi / 14-05-2025 CS (COMM.) No. 505/2019 M/s R.P. Singhal Builders Pvt. Ltd. Vs. The Executive Engineer M I West Zone & Anr. Page No.31 of 31