Bangalore District Court
Veolia Eau Compagnie Generale Des Eaux vs Karnataka Urban Infrastructure ... on 31 January, 2025
KABC170012092021
IN THE COURT OF THE LXXXII ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AT BENGALURU CITY [CCH-83]
:Present:
Sumangala S. Basavannour,
B.Com, LL.M.,
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this 31st day of January 2025
COM.O.S.No.6061/2018
Plaintiff Veolia Eau - Compagnie Generale
des Eaux,
having its registered office at:
52, rue d' Anjou,75008, Paris
Through its authorized representative
Mr.S.V.K Babu.
Regional Office at:
1144, 12th Main, 1st Cross,
HAL 2nd Stage, Bengaluru-560008.
(By Sri.Nishal Dev B R, Advocate)
// versus //
Defendants 1. Karnataka Urban Infrastructure
Development and Finance Corporation
Through its Managing Director
Nagarabhivridhi Bhavan,
#22, 17F Cross, Binnamangala II Stage
Old Madras Road, Indiranagar,
Bengaluru-560038.
Karnataka, India.
2
CT 1390_Com.O.S.6061_2018 Judgment.doc
2. Karnataka Urban Water Supply and
Drainage Board,
Through its Managing Director,
Head Office at Jala Bhavan No.6,
1st Phase, 1st Stage, BTM Layout,
Bannerghatta Main Road,
Bengaluru-560029.
Karnataka, India.
3. Municipal Corporation of
Hubli-Dharwad
Through its Commissioner
Having its office at:
No.20, Laminton Road,
Hubli-580020, Karnataka,
India.
4. Municipal Corporation of Belgaum
Through its Commissioner
Having its office at:
Swamy Vivekananda Marg,
Belgaum, Karnataka,
India.
5. Municipal Corporation of Gulbarga
(Now known as Kalaburagi City
Corporation)
Through its Commissioner,
Having its Office at:
Near Jagat Circle, Main Road,
Kalaburagi, Karnataka,
India.
(D1, D3 to D5 by Sri.D.R.R, Advocate,
D2 by Sri.H.N.S, Advocate)
Date of Institution of suit : 20/08/2018
Nature of the suit : Injunction suit
Date of commencement of : 18/11/2022
recording of the evidence
3
CT 1390_Com.O.S.6061_2018 Judgment.doc
Date on which the : 31/01/2025
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
06 05 11
JUDGMENT
This suit is filed for recovery of money. The plaintiff prays that direct the defendants for making payment on account of Bonus entitlement in terms of savings in total expenditure under First Category amounting to INR.1,13,50,000/- and Euro 45,469.
Pass a decree against the defendants and in favour of the plaintiff for making payment on account of Bonus entitlement in terms of the percentage increase in billed volume to the base volume of bulk supplied water under Third Category for an amount of INR 81,72,000 and Euro 32,738.
Pass a decree against the defendants and in favour of the plaintiff for making payment on account of Bonus attributable for the additional seventeen (17) months in the contract period amounting to INR 1,83,76,190 and Euro 73,615.
4
CT 1390_Com.O.S.6061_2018 Judgment.doc Pass a decree against the defendants and in favour of the plaintiff thereby granting interest on delayed bonus payments in consonance with Clause 10.3 of the Contract from the date on which the payments fell due till the date of actual payment.
2. Case of plaintiff in brief is as under:
The plaintiff is a joint venture formed pursuant to a joint venture agreement dated 11/01/2005 between (i) Compagnie Genrale Des Eaux, a partnership limited by shares duly organized and existing according to the laws of France and (ii) Seureca, a company duly organized and existing according to the laws of France. The defendant No.1 - Karnataka Urban Infrastructure Development and Finance Corporation is a company duly incorporated under the Companies Act 1956, having its registered office at address mentioned in the cause title.
The defendant No.1 was incorporated as a public limited company with the objects to prepare, formulate and implement projects, schemes and programmes relating to infrastructure development in the urban areas of the State of Karnataka and to provide technical, financial consultancy and other assistance to urban bodies of development schemes, including implementation of 5 CT 1390_Com.O.S.6061_2018 Judgment.doc master plans. Considering its expertise in project formulation, appraisal, management and implementation, the defendant No.1 has been appointed as Nodal Agency of the State of Karnataka for implementation of various urban infrastructure development projects in the state.
The defendant No.2 - Karnataka Urban Water Supply and Drainage Board is a statutory corporation established under the Karnataka Urban Water Supply and Drainage Board Act, 1973.
The defendant No.3 - Municipal Corporation of Hubli-Dharwad, defendant No.4 - Municipal Corporation of Belgaum and defendant No.5 - Municipal Corporation of Gulbarga are statutory corporations established under the Karnataka Municipal Corporations Act, 1976.
The plaintiff further stated that the defendant No.1 had issued a notice inviting tender (NIT) dated 2/10/2003 in respect of providing services for rehabilitation, operation and management of water provision in selected demonstration zones in Belgaum, Gulbarga and Hubli-Dharwad Municipal Corporations for providing continuous pressurized water to customers for 24 hours a day, 7 days a week and 365 days in a year, for a period of 42 months subject to extension (project). The project was promoted by the 6 CT 1390_Com.O.S.6061_2018 Judgment.doc Government of Karnataka. The plaintiff duly participated in the competitive tender process and submitted its bid in response to the NIT. The bids submitted by various bidders including the bid submitted by the plaintiff were evaluated by the defendant No.1 consequent to which the project was awarded to the plaintiff. A contract No.KUWASIP-CC001-ICB-OCC dated 25/4/2005 was executed between the plaintiff and the defendant No.1 to 5 to carry out the project. The contract was entered for total period of 42 months which was divided into following phases:
a. Preparatory period A - From effective date i.e. 25/4/2005 to Initial Takeover Date i.e. 25/09/2005.
b. Preparatory period B - From Initial Takeover Date i.e. 26/09/2005 to Final Takeover Date i.e. 2/11/2006.
c. O & M period - From Final Takeover Date i.e 3/11/2006 to 24 months thereafter i.e. ending on 2/11/2008.
The plaintiff further stated that as per the contract, the plaintiff was required to achieve performance targets that mainly centered around the following (i) continuous pressured water to all customers; (ii) meter all consumption points; (iii) read and bill 100% customer every month; (iv) threshold for water losses; (v) provide 7 CT 1390_Com.O.S.6061_2018 Judgment.doc water connections within 7 days of request; (vi) 24 x 7 customer service centre and (vii) resolve customer complaints in stipulated time. The plaintiff as per clause 10.1 of the Contract was entitled to "OC Remuneration" which comprised of (a) Management which was payable in two parts, i.e. Fixed Remuneration (60% on quarterly basis from 1st quarter) and (b) Performance Remuneration (40% on half-yearly basis). The total OC Remuneration payable as per Clause 10.1 of the Contract amounted to INR 18,16,00,000 and in Euros - amounting to Euro 727,500. Further, the said OC Remuneration was to be paid to the Plaintiff in the manner specified in "Schedule 18" of the Contract. Relevant clauses of the Contract have been extracted below for ease of reference:
"10.1 The OC's entire remuneration ("OC Remuneration") for the Services and performance under this Contract shall include two components viz. the fixed remuneration ("Fixed Remuneration") and the performance remuneration ("Performance Remuneration"). The OC Remuneration under this Contract shall be Rs. 18,16,00,000 (Rupees One Hundred and Eighty-One Million, Six Hundred Thousand) plus Euros 727,500 (Euros Seven Hundred and Twenty-Seven Thousand Five Hundred) only payable in the manner set out in Schedule 18." 8
CT 1390_Com.O.S.6061_2018 Judgment.doc The definition of "OC Remuneration" contained in Clause 1, Sub clause 1.1 as provided under the Contract.
Apart from receiving "OC Remuneration", the Plaintiff under clause 10.2 was also entitled to receive "Bonus", for achieving performance better than the mandatory performance. As per schedule 18 of the Contract, the "Bonus" component was to be paid by Defendant No. 1 at the end of Contract period and was capped at maximum of 25% of OC (Operator) Remuneration. Subsequently the defendant No. 1 in its meeting held on 01.04.2008 extended the initial contract period of 42 months by another 17 months (approx.) without any penalty on the Plaintiff and for reasons not attributable to Plaintiff vide letter dated 12.06.2008, on the existing terms and conditions of the Contract. In terms of the said letter, an extension was granted to the Plaintiff under "Preparatory Period-B', whereby the tenure of 'Preparatory Period-B' was extended from 03.11.2006 till 02.04.2008. Thus, the total time period of the contract was extended from 42 months to 59 months.
The plaintiff further stated that the Plaintiff duly completed each of its obligations as set out in the Contract and completed the assignment within the extended contract period i.e. 42+17 months 9 CT 1390_Com.O.S.6061_2018 Judgment.doc and further handed over the assets of the Project to the Defendants on 31.03.2010. Subsequent to the handover by the Plaintiff, the Defendants involved with the Project and party to the Contract have been running the water supply systems effectively under a different contract. It is relevant to highlight that as per Clause 2 titled as "Bonus for higher performance" given under "Schedule 18 - OC Remuneration and Bonus" of the Contract, the Plaintiff, post completion of the Project and handover date, is duly entitled for claiming "Bonus". The Plaintiff has duly achieved higher performance better than the mandatory performance targets in improving the service levels which are prerequisite to satisfy the Bonus relating to the three components specified under Schedule 18 of the Contract. Schedule 18 specifying the Bonus relating components to be paid to at the end of the Contract period has been extracted below:
2. Bonus for higher performance:
The OC would be paid a Bonus on achieving higher performance better than the mandatory performance targets in improving the service provision. The maximum permissible bonus will be 25% of the OC Remuneration.10
CT 1390_Com.O.S.6061_2018 Judgment.doc The Bonus relating to the three components would be paid at the end of the contract period as per the following schedule:
Sl.No. Component Target Bonsu:
Percent of
remunerati
on
1. Savings in total Upto 25% 3.75%
expenditure (as a % of
estimated investments of ------------------------ ---------------
Rs.420 million as stated ------ ---
in section 4) >25% 10.00%
2. Real Losses reduction Between 20-15 5.00%
(litre/connection/day/mete
r pressure) ------------------------ ---------------
------ ---
<15 7.50%
3. Percentage increase in Upto 25% increase 3.00%
billed volume to the base ------------------------ ---------------
volume of bulk supplied ----- --
water >25% 7.50%
25%
Base quantum of water is the cumulative absolute quantum of water being supplied at inlet of all DZs measured on completion of implementation period. Billed volume is cumulative quantum of water billed for property connections."
Pursuant to completion of the Contract period i.e. 59 months on 31.03.2010, the Plaintiff vide letter dated 08.09.2010 requested the Defendant No. 1 to release Bonus on account of achieving maximum targets as per Schedule 18 of the Contract. The Plaintiff 11 CT 1390_Com.O.S.6061_2018 Judgment.doc duly submitted its claims for the Bonus vide Letter No. KUIDFC/KAJ/OCC/Bonus/2010/277 dated 08.09.2010 (Invoice No. KUWASIP/OCC/2010-11/01 and 02 dated 08.09.2010) for the period of 42 months calculated at 25% of the remuneration, which is the maximum permissible limit for claiming Bonus as specified in Schedule 18 of the Contract.
The claim raised by the Plaintiff vide letter dated 08.09.2010 was also duly approved and authenticated by the Technical Auditor (independently appointed by the Defendant No. 1) vide its Letter No. CNT6705/Extn/ KUWASIP/TA/Operator Bonus Payment/ 2010/ 47 dated 21.09.2010. In the said Letter, the Technical Auditor appointed by the Defendant No. 1 have itself acknowledged and recommended that the Plaintiff is entitled to receive the maximum Bonus of 25% as set out in Schedule 18 of the Contract.
In response to the claim raised by plaintiff vide its letter dated 08.09.2010, the Defendant No. 1 sometime around October 2011 (i.e. after a period of more than 1 year) released an amount of INR 2,58,78,000 and Euro 100,822.72 ('Partial Payment') in favor of the Plaintiff. Aggrieved by the Partial Payment and arbitrary deductions made by Defendant No. 1, the Plaintiff vide its letter dated 12 CT 1390_Com.O.S.6061_2018 Judgment.doc 17.10.2011 requested the Defendant No. 1 to provide reasons for its malafide and arbitrary deductions and for rejecting its claim of entitlement of maximum 25% Bonus.
A Letter dated 03.11.2011 issued by the Defendant No.1, it was communicated to the Plaintiff that the total Bonus attributable to the Plaintiff is only 14.25% and not 25% as claimed by the Plaintiff for a period of 42 months. The Defendant No. 1, in its letter had stated that the Plaintiff is only entitled for 3.75% Bonus in the First Category, 7.5% percent in the Second category and 3% in the Third Category, thereby amounting to a total of 14.25% Bonus overall.
Thereafter, various letters and communications were exchanged between the Defendant No. 1 and the Plaintiff, in relation to the actual outstanding Bonus amount payable to the Plaintiff as per the terms of the Contract. The Plaintiff requested the Defendant No. 1 to make the payment of balance Bonus amount and to resolve the matter amicably between the parties, however all requests made by Plaintiff fell on deaf ears.
13
CT 1390_Com.O.S.6061_2018 Judgment.doc Subsequently, vide letter dated 21.11.2011, the Defendant No.1 also provided reasons and its justifications for not considering the claim of 25% as advanced by the Plaintiff. Accordingly, the Defendant No. 1 based on its understanding proceeded to release the Partial Payment in favor of the Plaintiff. Thereafter, vide letter dated 05.12.2011 (Invoice No. KUIDFC/KAJ/Bonus/2011/248 dated 05.12.2011), the Plaintiff apart from claiming maximum Bonus for the 42 months, also made a claim towards Bonus attributable for the extended contract period i.e. for the additional 17 months, for which OC Remuneration was also paid to the Plaintiff. In addition, the Plaintiff also made a claim towards interest on delayed payments in consonance with Clause 10.3 of the Contract.
On account of lack of positive response from the Defendant No. 1 and after failure to settle the dispute amicably, the Plaintiff was constrained to invoke the dispute resolution clause under the Contract. That vide letter dated 25.01.2012 Plaintiff invoked Clause 22.2 titled as "Reference to Adjudicator" and requested Defendant No. 1 to appoint an Adjudicator in order to resolve the pending dispute which had arisen between the parties. Pursuant to the request made by the plaintiff vide its letter dated 25.01.2012, 14 CT 1390_Com.O.S.6061_2018 Judgment.doc various meetings were held between the parties, however no resolution to the dispute would be achieved. The Defendant No. 1 eventually via email dated 12/05/2016 requested Mr.R.Vasudevan, Chief Engineer (Retd.) for adjudication of dispute and vide Letter No. KUIDFC/KWASIP/98/2016-2017/823 dated 04.07.2016, Mr. R. Vasudevan, Chief Engineer (Retd.) was finally appointed as the Adjudicator for resolving the dispute amongst the parties.
Both the Plaintiff and the Defendant submitted their case before the Adjudicator for it to adjudicate upon the dispute between the parties. That the Ld. Adjudicator vide the Adjudicator Report dated 11.03.2017 ('Adjudicator Report') received by the Plaintiff on 15.03.2017, has rendered his decision on the persisting disputes between the parties with respect to the Bonus component payable under the Contract. Vide Letter dated 04.04.2017, the Defendant No. 1 informed the Plaintiff that the Adjudicator Report is not acceptable to them and further no amount in relation to balance Bonus is due to Plaintiff from the Defendant No. 1.
Similarly vide Letter dated 06.04.2017 the plaintiff has also raised an objection on the findings of the Adjudicator Mr. R.Vasudevan and reiterated its stand that all claims of the Plaintiff 15 CT 1390_Com.O.S.6061_2018 Judgment.doc in relation to balance Bonus amount including payment of interest on of delayed payments by the defendants are outstanding and still liable to be paid by defendant No.1.
Though the plaintiff is not in concurrence with the views expressed by the Ld. Adjudicator in the Adjudicator Report, however it may not be out of place to mention that the Ld. Adjudicator in the Adjudicator Report had recommended that the Plaintiff is liable to receive a maximum of 10% Bonus under the First Category. Even further observation of the learned Adjudicator has not been accepted by the defendant No.1 continues to withheld the payment in respect of the first category.
As per clause 22 of the Contract, in case either of the parties refuse to accept the decision of the Adjudicator, then in such a scenario the aggrieved party may approach the Hon'ble courts in Karnataka of competent jurisdiction within 28 days from the date of receipt of the Adjudicator Report to further adjudicate the dispute, That since, the Defendants in this case are government bodies/agencies, the Plaintiff through its legal counsels issued a statutory Legal Notice dated 24.04.2017 ('Legal Notice') in compliance with the provisions of Section 80 of the Code of Civil 16 CT 1390_Com.O.S.6061_2018 Judgment.doc Procedure, 1908, ('CPC') thereby calling upon the Defendant No.1 to pay the outstanding dues of the plaintiff as per the agreed terms under the contract.
The despite receiving the Legal Notice and post the expiry of 2 months from the date of receipt of the Legal Notice, no payment has been received from the Defendants. That even after the issuance of Legal Notice, numerous meetings have happened between the Parties, wherein the Plaintiff has been trying to amicably settle the matter with the Defendant No. 1. However, more than one year has expired now and it seems that the Defendant No.1 is now merely trying to avoid its payment obligations.
The further stated that the plaintiff is entitled to a maximum of 25% Bonus as per the terms of the Contract on account of achieving higher performance better than the mandatory performance as per the terms of the Contract. Accordingly, the Plaintiff submits its claims against the Defendants; A.Bonus entitlement in terms of savings in total expenditure as stipulated in clause 2, S.No.1,- Schedule 18 of the Contract i.e. under the First Category.
17
CT 1390_Com.O.S.6061_2018 Judgment.doc As per Clause 3.2.3 of the Contract, Plaintiff was required to submit a "Draft Investment Programme" ('DIP') to the Defendant No. 1 thereby outlining the estimated investment amount for the entire Project. As per Clause 3.2.6 of the Contract, the invested amount was capped at INR 42,00,00,000. Hence, with a view to carry out its contractual obligations during the Preparatory Period - A and as per Clause 3.2.3, the Plaintiff after carrying out various studies, due- diligence and keeping in mind the commercial efficacy of the Project, duly submitted the DIP for an amount of INR 41,95,11,837. The DIP was reviewed by the Defendant No. 1 in consultation with Technical Auditor's appointed as per the Contract, and only after getting approval from Defendant No.1 a "Final Investment Programme" was signed and finalized. Subsequently, the agreed amount of INR 41,95,11,837 was duly approved by the Defendant No. 1 vide Letter No. KUIDFC/KUWASIP/OP/GEN/41/2005- 06/1917 dated 23/09/2005 and a 'Final Investment programme' was signed and finalized. While calculating the Bonus component under this head, the estimated value of investments has to be considered as INR 41,95,11,837 which is the same amount as approved and finalized by the Defendant No. 1 in the "Final Investment Programme". The same value also been indicated in Clause 2, Sl.No.1 of the schedule 18 under the head "Component'. 18
CT 1390_Com.O.S.6061_2018 Judgment.doc Keeping in mind the savings achieved by the plaintiff amounting to INR 14,11,42,566.73 as against an estimated Final Investment Programme of INR 41,95,11,837 when calculated, the Plaintiff has achieved a total saving level of 34% under this head, which is greater than 25% target, thus enabling and entitling Plaintiff to a Bonus of maximum limit of 10% as prescribed under Clause 2 of the Contract, which is titled as "Bonus for higher performance"
given under "Schedule 18 - OC Remuneration and Bonus" of the Contract. The Plaintiff's claim has been rejected by the Defendant No.1 on merely frivolous grounds.
The plaintiff further stated that the defendant No.1 is required to pay a sum of INR 1,81,60,000 and Euro 72,750 , as a Bonus of maximum limit of 10% as prescribed under Clause 2, S. No. 1, Schedule 18 of the Contract. Out of this sum, the Defendant No. 1 has already paid INR 68,10,000 and Euro 27,281 to the Plaintiff.
Therefore, a balance amount of INR 1,13,50,000 and Euro 45,469 is to be paid by the Defendant No. 1 to the Plaintiff.
B. Bonus entitlement in terms of the percentage increase in billed volume to the base volume of bulk water supplied i.e. under Third Category in Refer Clause2 S.No.3 - Schedule 18 of the Contract.19
CT 1390_Com.O.S.6061_2018 Judgment.doc With respect to the Third Category, the Plaintiff claims for the maximum Bonus i.e. 7.5% on account, of achieving more than 25% increase in the percentage in billed volume to the base volume of bulk water supplied. No specific definition has been provided in the Contract in relation to the term "Billed Volume" as given under Schedule 18 of the Contract. However, a clarification that sets out the intent of the words' mentioned in Clause 2, S. No. 3 under the head "Component" is provided under the footnote '6'. The footnote clearly states that in order to calculate the Bonus component only the 'cumulative' figures on account of base quantum of water supplied and billed volume have to be taken into account and not the average of billed volume over twenty-four (24) months as calculated by Defendant No. 1. Neither Clause 2 in entirety nor the footnotes given below either refer or relate any other method for calculation of Bonus component under this head. Accordingly, keeping the true intent of the draftsmen intact, the following calculation was made by the Plaintiff to determine the Bonus component:
Sl. Component Hubli DZDharwa Bengalu Bengalur Gulbar Total No. d DZ ru Southu Northga DZ DZ DZ
1. Month of Dec.07 Apr-08 Jul-07 Nov-07 Apr-08 implementation period completed
2. Base quantum of 159,628 94,780 76,544 136,302 57,767525,021 water supplied at 20 CT 1390_Com.O.S.6061_2018 Judgment.doc inlet to demo zones as on completion of implementation period (m3/ month.
3. Billed volume for 143,665 87,151 71,569 93,694 57,681453,760 month of completion of implementation of implementation period (m3/month)
4. % of billed volume 86.43% to the base i.e quantum of water (453760/ supplied (a) 525021 *
100)
5. Billed volume for 171,372 104,934 125,128 139,159 71,435612,028 month of March 2010 completion of O & M period (m3/month)
6. % of billed volume 116.57% to the base i.e quantum of water (612028/ supplied (b) 525021*
100)
7. Percentage 30.15% increase in billed i.e volume to the base (116.57 quantum of water % supplied (a b) 86.43%) The above-mentioned calculation sheet clearly depicts that the percentage increase in billed volume to the base volume of water supplied calculated based on cumulative numbers is 30.15%, 21 CT 1390_Com.O.S.6061_2018 Judgment.doc which is much higher than the target of 25%, and thus the Plaintiff is duly entitled for receiving 7.50% as Bonus under this head.
Apart from the above mentioned criteria, no other procedure or method has been laid down in the ' Contract for proper assessment of Bonus under this head. It must be iterated that in commercial contracts, the underlying objective of Bonus/ incentive is often provided to motivate the contractors they have achieving better performance than the mandatory set standards. Therefore, the intention of the Contract is to reward the Plaintiff through 'Bonus' as per Clause 3.2.3 as long as the Plaintiff is able to achieve better number of billed volume in relation to water billed for property connections than what was already existing at the time of Final Takeover Date. That in terms of the above, the Defendant No. 1 was required to pay a sum of INR 1,36,20,000 and Euro 54,563 as a Bonus of maximum limit of 7.5% as prescribed under Clause 2, SI.No.3, Schedule 18 of the Contract. Out of this sum, the Defendant No. 1 has already paid an amount of INR 54,48,000 and Euro 21,825 to the Plaintiff. Therefore, the Defendant No. 1 is required to make payment of an amount of INR 81,72,000 and Euro 32,738 on account of percentage increase in billed volume to the 22 CT 1390_Com.O.S.6061_2018 Judgment.doc base volume of bulk supplied water. Bonus attributable for the additional seventeen months in the contract period.
Vide letter 12.6.2008 Defendant No. 1 had also extended the time period of the implementing phase 'Preparatory Period-B' of the Contract by 17 months. Thereby extending the over all project from 42 to 59 months as per existing terms and conditions of the contract. That along with the extension of time, without any levy of penalty or on account of any fault of the plaintiff, defendant No.1 had also extended the time period for which OC remuneration was to be given to the plaintiff and has duly paid OC remuneration to the plaintiff for additional 17 months. It may not be out of place to mention that no terms and conditions of the contract were changed/modified for the period of additional 17 months and the extension was granted and full remuneration was paid by Respondent No. 1 on the existing commercial terms and conditions as earlier agreed between the parties under the Contract.
The plaintiff further stated that the OC Remuneration is directly and inextricably interlinked with payment of Bonus under Schedule 18 of the Contract inasmuch as Bonus has to be calculated as a percentage (%) of the total OC Remuneration, 23 CT 1390_Com.O.S.6061_2018 Judgment.doc irrespective of the fact that the maximum percentage of Bonus is being capped at 25% of the total OC Remuneration. Accordingly, it must be understood that, on account of increase in value of total OC Remuneration, the percentage of additional Bonus to be paid to the Plaintiff would naturally increase. Hence, such a benefit directly arising out of the obligations carried out by the Plaintiff for the entire contract period of 59 months cannot be arbitrarily declined without any lawful justification. In lieu of the above-mentioned fact, the Defendant No. 1 is liable to make Bonus payments for additional 17 months i.e. for the entire period of the Contract inasmuch the Defendant No. 1 cannot arbitrarily choose to pay Bonus for the time period which suits itself. Such an act of Defendant No. 1 clearly amounts to extension of Contract and for which Defendant No. 1 has also paid OC Remuneration to the Plaintiff.
Interest of delayed payment in consonance with Clause 10.3 of of the contract.
"10.3 If the KUIDFC unreasonably delays the payment of any amounts due to the OC for a period in excess of 15 days from the date on which such amount falls due as stipulated in Schedule 18, the KUIDFC shall be liable to pay interest on the said amount for each day of delay at the rate of 24 CT 1390_Com.O.S.6061_2018 Judgment.doc prevailing medium-term State Bank of India prime lending rate_ calculated weekly."
The plaintiff stated that the defendant No. 1 is deemed to be liable to pay for interest on account of each day of delay in payment of Bonus made to the Plaintiff as per Schedule 18 of the Contract and this head the plaintiff is entitled to receive interest on delayed Bonus payments under the First Category and Third Category starting from 01.10.2010 till date. Further, the Plaintiff is also entitled to receive interest on delayed bonus payment attributable for additional 17 months of extended contract in consonance with Clause 10.3 of the Contract.
In order to authenticate the claims made by the Plaintiff, it is relevant to bring before this Court that that the claims submitted by the Plaintiff under the First Category and third category as mentioned above have also been authenticated and verified by the Technical Auditor (independently appointed by Defendant No. 1vide its Letter No. CNT6705/Extn/ KUWASIP/TA/OperatorBonus Payment/2010/47 dated 21.09.2010. In the said Letter, the Technical Auditor appointed by the Defendant No. 1 have itself stated and acknowledged that the Plaintiff is entitled to receive the maximum Bonus of 25% as set out in Schedule 18 of the Contract. 25
CT 1390_Com.O.S.6061_2018 Judgment.doc However, even after receiving the said Letter, the Defendant No. 1 has remained silent and has instead acted in an arbitrary unfair and prejudicial manner thereby declining the Plaintiff its legitimate share in the Bonus. The plaintiff is legally liable to be paid by the Defendant No. 1 to the Plaintiff as per the terms of the Contract:
Sl.No. Particulars Amount
INR Euro
1. Bonus entitlement in 1,13,50,000 45,469
terms of savings in
total expenditure i.e.
under First Category.
2. Bonus entitlement in 81,72,000 32,738
terms of the
percentage increase in
billed volume to the
base value of bulk
supplied water i.e.
under Third Category.
3. Bonus attributable for 1,83,76,190 73,615
the 17
months of extended
contract period.
Total 3,78,98,190 1,51,822
The figures mentioned in the above-stated table are subject to revision and reconciliation. The Plaintiff further states that the figures mentioned in the above-stated table are exclusive of any interest payable by the Defendants under the terms iof of the 26 CT 1390_Com.O.S.6061_2018 Judgment.doc contract which is specifically pleaded in the preceding paragraphs and are liable to be paid by the defendants.
Despite making numerous reminders by the plaintiff, submitting all possible remedies to resolve the pending payment and after waiting for considerable time period in good faith, it is vehemently clear that the defendants with a malafide intent have turned deaf ear and are not willing to fulfill their obligations as per the terms of the contract. Hence this suit.
3. The Defendant No.1 filed written statement stating that the suit filed by the plaintiff is neither maintainable in law not on facts and hence the same is liable to be dismissed. The Defendant had invited the tenders as per notice inviting tenders (NIT), dated 02.10.2023 in respect of providing services for rehabilitation, operation and management of water provision in selected Demonstration Zones in Belgaum, Gulbarga now Kalburgi and Hubli-Dharwad Towns for providing continuous pressurised water supply to the customers namely the members of the public who are the residents of these towns. In pursuant to the tenders invited by the Defendant No.1, bids were submitted by various bidders including the bid submitted by the plaintiff. The bids so submitted were evaluated by the Defendant No.1 and on such evaluation, the 27 CT 1390_Com.O.S.6061_2018 Judgment.doc project was awarded to the plaintiff as per the contract dated 25.04.2005 entered into between the parties. It is to be noted at this juncture that, the statement made by the plaintiff in para 7 and 8 are part of the contract dated 25.04.2005 and the clauses made therein alone would prevail and not the interpretation provided by the plaintiff in this regard.
The Defendant further contended that, clause-10 of the contract, dated 25.04.2005 deals with OC remuneration and Bonus and the said clause-10 contains the details about the OC Remuneration, which include tow components, fixed remuneration and the performance remuneration which is payable in the manner set out in the schedule 18 of the contract document. The clause 10.2 provides that, OC is entitled to receive bonus for higher performance of its performance obligations and performance targets in addition to OC remuneration as specified in Schedule-18. The other sub-clauses under clause-10 provides for payment of interest on delayed payments and other details as set out in the said clause
-10 of the contract document. The other statements made in the paragraphs Nos 9,10 and 11 are referable to the relevant clauses and schedule of the contract documents referred to by the plaintiff in these paragraphs. Any interpretation placed by the plaintiff on 28 CT 1390_Com.O.S.6061_2018 Judgment.doc the said clauses and the schedules referred to in the contract document are not acceptable. The contract document has to be looked in to while appreciating the statements made by the plaintiff in paragraphs No. 9,10 and 11 of the plaint.
The Defendant further stated that the plaintiff had requested for extension of time in the course of his letters dated 16.08.2007, 11.08.2007, 14.11.2007, 04.01.2008 and 17.03 2008 and he has requested for extension of time in the course of his letters, without penalty for delay in completion of the work by the sub-contractor (JISL) due to inclement weather and delay in trench excavation and in pursuant to the request made by the plaintiff, the defendant No. 1 extended time regarding preparatory Period-B from 03.11.2006 to 02.04.2008, approximately 17 months. It is to be noted that the reason for extension of time is not attributable to the defendants. But on the other hand, the extension of time is directly attributable to the plaintiff and such an extension has been granted in pursuant to the request made by him. The defendants with the good intention of taking the project forward, have extended time without penalty.
The Defendant further contended that the project was completed and the plaintiff handed over the assets of the project to 29 CT 1390_Com.O.S.6061_2018 Judgment.doc the defendants on 31.03.2010 and thereafter the defendants involved with the project have been running the water supply system within their jurisdiction. The further statement of the plaintiff as set out in paragraph No. 14 of the plaint are mainly relatable to Clause-2 and Schedule 18 relating to payment of bonus components to the plaintiff at the end of the contract period and the extracted portion in paragraph No. 14 is part of the contract document and the defendant requests this Hon'ble Court to appreciate the contentions made by the plaintiff in paragraph No. 14 and 15 in the light of the wordings used in the relevant clauses and schedules of the contract document referred to by the plaintiff in paragraph No. 14 and 15 of the plaint. The plaintiff has submitted his claims for bonus as per his letter, dated 08.09.2010 wherein he has claimed 25% of the remuneration which is the maximum permissible limit for claiming Bonus as specified in Schedule 18 of the contract document. However, the interpretation sought to be placed on any of the clauses or the schedules, referred to in those paragraphs are not acceptable to the defendant No. 1 and the same is hereby denied.
The Defendant further contended that claim raised by the plaintiff as per his letter, dated 08.09.2010 which according to the 30 CT 1390_Com.O.S.6061_2018 Judgment.doc plaintiff was recommended by the technical auditor in the course of his letter, dated 21.09.2010 and the invoices raised by the plaintiff claiming bonus were placed before the empowered committee for its consideration by the Defendant No. 1 who had received those letters submitted by the plaintiff claiming bonus. The empowered committee had suggested to form an Officers Committee to look in to the Clauses relating to the payment of bonus provided under the contract document and also the performance of the plaintiff. The committee which consisted three Officers of KUIDFC, the Defendant No. 1, namely Chief Engineer (NKUISP), General Manager (Tech), and General Manager (PF), have submitted a report in this regard. The empowered committee considered the report in its 21 meeting held on 08.09.2011. Accordingly the Defendant No. 1 has released the amount of Rs. 2,58,78,000/- during October 2011 to the plaintiff. Aggrieved by this action of the Defendant No. 1, the plaintiff wrote letter, dated 17.10.2011 to the Defendant No.1 reiterating its claim for maximum 25% bonus and the plaintiff also sought for reasons for not accepting its claim in its entirety by the Defendant No. 1. The Defendant No. 1, in response to the letter, dated 17.10.2011, has sent a letter, dated 3.11.2011 referred to in paragraph No. 18 of the plaint communicating the Plaintiff that, the total bonus payable to the plaintiff was only 14.25% and not 25% 31 CT 1390_Com.O.S.6061_2018 Judgment.doc as claimed by the plaintiff for the period of 42 months. It is true that, as stated in paragraph No. 18 of the plaint that the defendant No. 1 has set out in detail, stating that the plaintiff is entitled for 3.75% of the operator remuneration for the original contract period of 42 months towards savings in total expenditure, regarding bonus towards real losses reduction, he was entitled for 7.50% of the operator remuneration for the original contract period of 42 months and bonus regarding percentage increase in billed volume to the base volume of bulk supplied water, it was held that, the plaintiff was entitled for 3% of the operator remuneration for the original contract period of 42 months and thus the defendant No. 1 has communicated to the plaintiff that in all, he was entitled to 14.25% of the operator remuneration for the original contract period of 42 months. It is true that, the plaintiff had written several letters and there has been exchange of communication between the plaintiff and the defendant No. 1 as stated in paragraph 19 of the plaint. In pursuant to the letter of the plaintiff, dated 14.11.2011, the defendant No. 1 has justified its action regarding payment of bonus at the rate of 14.25% and it was also made it clear that, the amount of Rs. 2,58,78,000/- has been paid to the plaintiff on this count which satisfies the claim put forth by the plaintiff. In this regard the Defendant No. 1 had written letter, dated 21.11.2011 explaining 32 CT 1390_Com.O.S.6061_2018 Judgment.doc component wise calculation of bonus and justified its action of deciding to pay 14.25% as bonus. It is to be noted at this juncture that as detailed in the letter, dated 21.11.2011 the defendant No. 1 has clarified that, under investment programme of 42 crores and four items referred to in the said letter were not executed or operated by the plaintiff. It is also made clear that, the amount spent on training on seminar insurance, contingencies and taxes were not included in investment programme as lumpsum and money spent on those items cannot be treated as the effect of O and M performance and accordingly savings under the items referred to in their letter were not considered for calculating bonus. In this view of the matter, the first defendant came to the conclusion that savings on total expenditure works out to be 21.48% and as the savings is less than 25%, it was concluded that the plaintiff was entitled for bonus at the rate of 3.75% under component No. 1. In so far as the component No. 2 is concerned, the defendant No. 1 has agreed with the calculation of Maximum Bonus at 7.50% claimed by the plaintiff. In so far as the component No. 3 is concerned, it was decided by the defendant No. 1, that the percentage increase in the billed volume to the base volume of the bulk supplied water works out to be 8.71% and as the percentage increase is less than 25%, the plaintiff was entitled for bonus of 3% 33 CT 1390_Com.O.S.6061_2018 Judgment.doc as against the claim of 7.50% made by the plaintiff. Accordingly the defendant No. 1 came to a definite conclusion as indicated in its letter, dated 21.11.2011 that as per the contract conditions, the plaintiff would be entitled to a total bonus of 14.25% of operators remuneration for the original contract period of 42 months and accordingly as stated above, an amount of Rs. 2,58,78,000/- has been paid to the plaintiff by the defendant No. 1. The claim putforth by the plaintiff is not justified in law and accordingly it is not acceptable to the defendant No. 1. All other averments made by the plaintiff in the course of the paragraph 16 to 20 which have not been specifically traversed herein are hereby denied.
The Defendant further contended that the plaintiff as per his letter, dated 05.12.2011 made a further claim towards bonus attributable to the extended period namely for additional 17 months and also he made a claim towards interest on the alleged delayed payments by invoking Clause 10.3 of the Contract Document. In this regard, the claim putforth by the plaintiff for payment of bonus for the extended period of 17 months is not justified in law. The plaintiff has been paid the OC remuneration for the extended period of additional 17 months and asthe plaintiff is not entitled for bonus for the extended period, the defendant No. 1 has declined to 34 CT 1390_Com.O.S.6061_2018 Judgment.doc pay the same. It is to be noted at this juncture that the preparatory period-B was extended approximately by 17 months based on the request made by the Operator in the course of his letters referred to above in the course of this written statement. The Operator had requested for extension of time without any penalty for delay in completion of works from his side. The defendant No. 1 with good intention of continuing the project has extended time without penalty and as already stated above the plaintiff has been paid remuneration for the said extended period. It is to be noted that, as the delay which resulted in extending time was attributable to the plaintiff and therefore the plaintiff is not entitled for any bonus for the period of the said extended period and he was entitled for only OC remuneration which has admittedly been paid to him by the defendant No. 1. In so far as claim for payment of interest on the alleged delay in payment of bonus is concerned, the same is not legally sustainable. There is no delay in payment of bonus in as much as the defendant No. 1 has paid the bonus to an extent of Rs. 2,58,78,000/- for which the plaintiff was legally entitled. There is no dispute that OC remuneration has been paid within the time allowed as per the terms of the contract and the plaintiff has not raised any objections in this regard. The payment of bonus cannot be compared with the payment of OC remuneration for which time 35 CT 1390_Com.O.S.6061_2018 Judgment.doc frame is fixed under the terms of the contract and the said time frame prescribed under the contract document cannot be extended to the payment of bonus provided under the contract document and therefore the contention of the plaintiff that, he is entitled for payment of interest towards the alleged delayed payment of bonus is not legally sustainable.
The Defendant further contended that as there was a dispute with regard to payment of bonus and also regarding payment of interest on the alleged delayed payment of bonus between the plaintiff and the defendant, the dispute was referred to the adjudicator as provided under the contract document. The plaintiff and the defendant No. 1 submitted their case before the adjudicator and on conclusion of proceedings; the adjudicator has rendered his decision as per his report, dated 11.03.2017. The learned adjudicator on the basis of the contentions urged by the parties before him has formulated the points raised in the dispute, as could be seen at paragraph No. 3.15 of his report. With regard to claim of the plaintiff/operator, for maximum rate of bonus of 10% on item No. 1, namely reduction in expenditure, the learned adjudicator has upheld the claim putforth by the plaintiff. In so far as the bonus real losses reduction, the claim putforth by the plaintiff at 7.5% was 36 CT 1390_Com.O.S.6061_2018 Judgment.doc accepted by the defendant No. 1 and accordingly there was no occasion for the adjudicator to go in to the matter in detail. In so far as the claim of 7.5% bonus in respect of percentage increase in billed volume to the base volume of the bulk supplied water, the learned adjudicator accepted the contentions of the defendant No. 1, holding that, the plaintiff was entitled for 3% bonus on this count which has already been paid by the defendant No. 1. Similarly, the claim putforth by the plaintiff for payment of bonus towards the extended period of 17 months is concerned, the learned adjudicator has opined that, the plaintiff is not entitled for bonus and he is entitled only for OC remuneration which has already been paid by the first defendant.
The Defendant No.1 further contended that, as per the letter dated 04.04.2017, the defendant No. 1 has informed the plaintiff that, the adjudicators report is not acceptable to them and no further amount in relation to payment of bonus is due to the plaintiff and whatever the plaintiff is legally entitled, the same has been paid by the defendant No 1 as stated in the previous paragraphs of this written statement. The plaintiff niso as per his letter, dated 06.04 2017 has also raised objections on the findings of the learned adjudicator and he has stated that he is entitled for 37 CT 1390_Com.O.S.6061_2018 Judgment.doc the claim putforth by him in relation to balance bonus amount and also the interest on the alleged delay in making payments. Hence the contention of the plaintiff that the defendant No. 1 has withheld the payment is incorrect in view of the fact that, the defendant No. 1 has not accepted the report. As per the Clause 22 of the Contract Document, in case either of the parties refuse to accept the decision of the adjudicator, the aggrieved party may approach the competent court within 28 days from the date of receipt of the adjudicators report to further adjudicate the dispute. The plaintiff has issued a legal notice, dated 24.04.2017 Under Section 80 of the CPC to the defendant No. 1 and the said notice has been replied suitably by the defendant No. 1 as per his reply notice, dated 31.07.2017. In the light of what is stated in the reply notice, the plaintiff is not entitled for any of the claim putforth by him in the course of his legal notice dated 24.04.2017 and also the claim putforth by him in the course of the suit and accordingly the suit liable to be dismissed.
The plaintiff has claimed 10% bonus on the investment programme interalia contending that savings on total expenditure is more than 25% and therefore he is entitled to 10% of the investment as per the terms of the agreement. This claim of the 38 CT 1390_Com.O.S.6061_2018 Judgment.doc plaintiff has been rejected and the defendant No. 1 has awarded 3.75% of the estimated amount and this figure has been arrived at by the defendant No 1, after considering the fact that, the savings in capital cost was less than 25% and accordingly the first defendant has paid 3.75% of the estimated amount as stated above and the said action of the defendant No. 1 is correct and legal and in accordance with the terms of the contract document. In this regard, the plaintiff has included in the investment plan, expenses towards public fountains, public awareness programme, paper advertising and provision of medical expenses which were not executed by the plaintiff during the implementation of the investment plan. In this view of the matter, the sald amount cannot be considered as savings for the purpose of determining the performance bonus as demonstrated in the table below:-
Item As per Investment Expenditure
Programme (In incurred (in lakhs)
Lakhs)
Training and 80-00 13.98
Seminars
Insurance 40-00 0.51
Contingencies 261-77 0.00
Taxes 443.11 282.00
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The items referred to in the table above which are items like tax, insurance, etc. absolutely have no nexus to performance of the plaintiff. However, these items have been included in the investment programme provided by the plaintiff. If these items are excluded, the total expenditure works out far less than what has been computed by the plaintiff and the same is not acceptable to the defendant No. 1. In these background facts the amount of bonus calculated at 3.75% is correct and the same has been paid by the defendant No. 1 to the plaintiff and therefore no amount is due to be paid to the plaintiff by the Defendant No.1 under this heading. The interpretation placed by the plaintiff with regard to the claim putforth by him in respect of percentage increase gard to the volume to the base volume of bulk water supply is totally incorred and the defendant No. 1 denies the same. The first defendant submits that, as per decision of the 21% Meeting of the Empowered Committee held on 08.09.2011, 3% of the operators original remuneration has been paid by the first defendant to the plaintiff and the calculation made by the defendant is correct and no amount is due to the plaintiff under this heading as the first defendant has already paid the amount for which the plaintiff is entitled as stated in the previous paragraphs of this written statement.
40
CT 1390_Com.O.S.6061_2018 Judgment.doc The Defendant No.1 further contended that in para No. 39-42 of the plaint, the plaintiff has putforth his claim for payment of bonus for extended period of 17 months in respect of which the OC remuneration has already been paid by the defendant No. 1. In this regard, the preparatory Period-B was extended form 03.11.2006 to 02.04.2008, approximately 17 months based on the request made by the plaintiff as there was delay in completion of the works. The delay caused by the plaintiff in executing the works which has resulted in extension of time was attributable to the plaintiff. The defendant No. 1 with good intention of taking forward the project has extended time on the request made by the plaintiff and the remuneration payable to the plaintiff towards the work executed by him has been admittedly paid by the defendant No. 1. The extension of time was granted withou imposing any penalty on the plaintiff and it does not mean that, the delay was attributable to the Defendant No. 1 If the sxtension was not granted as requested by the plaintiff ne would have been penalised for not adhering to the time frame accepted by both the parties. By accepting the extension of time the defendant Ne 1 has helped the plaintiff in completing the work though he has delayed the execution of the work. In these background facts, the plaintiff would be entitled for only OC 41 CT 1390_Com.O.S.6061_2018 Judgment.doc remuneration but not for the bonus amount claimed by him for the extended period in as much as the bonus Clause envisaged in the contract document is only for the cost accepted in the original contract but not for the extension granted by the defendant. No. 1 which was done by him with good Intention as stated above. Accordingly, the claim of the plaintiff for payment of bonus for the extended period of 17 months is not legally justified and the defendant No. 1 has rightly declined to accept the claim made by the plaintiff on this aspect of the matter.
The Defendant No.1 further contended that the plaintiff has sought for payment of interest on the alleged delay in payment of bonus in the course of the paragraph Nos. 43 to 45 of the plaint. In this regard, there was no delay in payment of bonus payable to the plaintiff. It is to be noted that, the defendant No. 1 has come to the conclusion as depicted in his letter dated 03.11.2011 that, the plaintiff was entitled only 14.25% bonus and not 25% as claimed by the plaintiff. It is made clear by the defendant No. 1 in the letter referred to above that, the plaintiff was entitled for 3.75% of the bonus amount in respect of Component No. 1, 7.5% in respect of Component No. 2 and 3% in respect of Component No. 3, thus making a total of 14.25% in all. It is to be noted at this juncture, 42 CT 1390_Com.O.S.6061_2018 Judgment.doc the defendant No. 1 has released an amount of Rs. 2,58,78,000/- to the plaintiff towards bonus and this amount should be considered as full and final settlement of all the bonus amount due to the plaintiff under the contract. In this view of the matter, absolutely there is no delay in payment of bonus by the Defendant No.1 to the plaintiff and accordingly the question of paying the interest on the said alleged delay does not arise. The plaintiff is not entitled for any interest much less the one claimed by them in the above suit and the claim made by the plaintiff in this regard is liable to be rejected.
The averments made by the plaintiff in para No. 46 to 49 of the plaint are not correct. The plaintiff has referred to the report of the Technical Auditor who has allegedly acknowledged the claim of the Plaintiff and alleged to have stated that he is entitled to receive maximum bonus of 25% of the contract amount. In this regard, the Technical Auditor has rendered his opinion without going to the intricacies of the bonus to be calculated and therefore the opinion expressed by the Technical auditor is of no avail to the plaintiff to strengthen his claim for bonus as putforth by him in this suit. The first defendant after thoroughly going through the terms of the contract document and the field performance of the plaintiff, has calculated the bonus and has come to the conclusion that he was 43 CT 1390_Com.O.S.6061_2018 Judgment.doc entitled for 14.25% and accordingly the said amount has been paid in October 2011 as stated in the previous paragraphs of this written statement. The calculations made by the plaintiff are not acceptable to the defendant No. 1 as they are on a higher side when compared to the relevant clauses in the contract document and the plaintiff has received the bonus which he is legally entitled and there is no further amount due from the defendant No. 1 to the plaintiff towards bonus or any other amount including interest claimed by the plaintiff in this suit. The suit is barred by time. Hence, the suit of the plaintiff is dismissed. Hence, he prayed dismiss the suit.
The Defendant No.2 filed written statement stating that, the suit against the Defendant No.2 is not maintainable. Since, admittedly, the tenders were invited by the Defendant NO.1 in respect of providing rehabilitation, operation and Management of water provision in selected demonstration zones in Belagum, Gulbarga, Hassan and Dharward, Municipal Corporation for providing continuous preserve water supply continuous for 24x7 basis for 365 days in a year for a period of 42 months. The Defendant No.2 have not invited the tender. Therefore, the above suit is liable to dismissed against this defendant on this ground alone. However, the agreement dated 24.02.2005 between the 44 CT 1390_Com.O.S.6061_2018 Judgment.doc Defendant No.1 and plaintiff, for which this defendant is also party. This defendant is also made a party to supply bulk water to the plaintiff. However, in respect of all other aspects the contract is purely between the plaintiff and Defendant No.1. As per the terms and conditions of the contract the plaintiff has to achieve the performance target. The contract was extended by the Defendant No.1, in its meeting held on 01.04.2008, the time was extended at the behest of plaintiff only. However this defendant is not party to the extension of contract for further period by 17 months and it is specific case of plaintiff that it is the defendant No.1 which extended the contract without levying penalty. However, as per the information term of contract was extended with good intentions of taking the project forward and it is also based on the request made the plaintiff in various correspondences between the plaintiff and Defendant No.1. The plaintiff has not executed the contract with in the time under the time dated 24.02.2005, on the other hand the same have been completed during the extended period. Later the project was handed over to the defendant No. 3 to 5 respectfully. Any amount claimed by the plaintiff in the present suit, under the agreement is purely between the plaintiff and Defendant No.1. The payment of any amount under the contract is not the responsibility of defendant No.2 and it is not the pleading of the plaintiff in the 45 CT 1390_Com.O.S.6061_2018 Judgment.doc suit. Any resolution or decision by the adjudicator Sri. R. Vasudevan, is not binding on this defendant. However the decision of the adjudicator was not accepted by the Defendant NO.1. As this defendant neither a party nor participated in the adjudication proceedings by the adjudicator, any decision or order passed by the adjudicator is not binding on the Defendant No.2. As per the conditions of the contract the aggrieved person has to go to the court of law within 28 days from the date of the decision of the adjudicator. In the present case the plaintiff has filed the above case after long lapse of more than 3 years of the decision. Admittedly, the Adjudicator passed order on 11.03.2017. The Plaintiff received the same on 15.03.2017, from 11.03.2017, 28 days expires on 08.04.2017, the last day for Invoking the jurisdiction of this Hon'ble Court in the above suit. The above suit was filed a 14.08.2018. Therefore, there is an Unexplained, inordinate delay in Filing the above suit. Hence it is liable to be dismissed on the ground of limitation. The parties to the contract agreed to the terms and Conditions. The same cannot be waived nor either party can choose conveniently explain the delay. The question of issuing legal notice under section 80 of Code of Civil Procedure does not arise. Since, the proceedings have already taken place before the Adjudicator hence the Plaintiff cannot maintain the 46 CT 1390_Com.O.S.6061_2018 Judgment.doc above suit. The same is liable to be dismissed. Further the claims are in respect of the year 2010, the present suit is filed after lapse of 8 years.
The Defendant No.2 further contended that the role of this defendant is only to the extent of providing bulk water and the plaintiff has not alleged anything against this defendant. The plaintiff's grievance is only against the defendant No.1 and the claim is also against the Defendant No.1 only, as such above suit is liable to be dismissed against this Defendant. This defendant never received any notice claims or any correspondence from any of the parties. The averment made in Para 38 of the Plaint that there is no procedure has been provided by the Defendant to calculate the Bonus, does not mean that the Plaintiff can provide and laid down his own procedure for assessment of the bonus. The contract between the Plaintiff and Defendant No.1 along with other Defendants is governed under the Terms and Conditions of the contract. The Plaintiff cannot draw inference that in commercial contracts incentives are provided for achieving the performance targets. The incentives are provided under the contract is under the terms and conditions in the contract, the Plaintiff cannot claim it as a matter of right. However, the Plaintiff is claiming 47 CT 1390_Com.O.S.6061_2018 Judgment.doc Rs.1,36,20,000/- and 54,563 Euro, as bonus from the defendant No.1. This Defendant has not paid any amount and is not liable for any contractual obligation with the plaintiff. The plaintiff has not made any allegations or pleadings in the plaint averments against this defendant as such the suit itself is bad for Mis-Joinder of parties. The plaintiff is not entitled for Rs. 1,83,76,190/- and Euro as 73615. The plaintiff is not entitled for any amount, the question of paying interest on the alleged amount due to the plaintiff does not arise. The plaintiff case is against the Defendant No.1 and not against the this Defendant. Therefore, the above suit is liable to be dismissed against the Defendant as mis-joinder. The secuirty of technical auditor appointed by the Defendant No.1 as per the letter dated 21.09.2010, cannot be taken and relayed upon by the plaintiff to demand for maximum of 25%. The findings of such reports are not binding on the parties. It is not legitimate claim of plaintiff as contended in para 46 of the plaint. The plaintiff is claiming imaginary sums under the guise of wrongly interpreting the clauses in the contract. Hence, the suit is liable to be dismissed. The adjudicator was appointed at the instance of plaintiff and as such will not save the limitation. The decision of the adjudicator is not binding on the parties and particularly against the Defendants. Since the same was not decided as per law. Since 48 CT 1390_Com.O.S.6061_2018 Judgment.doc any claims should be decided as per law. The retired Chief Engineer of BWSSB was appointed, who has no legal knowledge in deciding the rights of the parties under the contract. Hence the plaintiff can neither rely upon the decision of the adjudicator not can take shelter to avoid limitation. The plaintiff had not issued any notice to this defendant, with regard to the any alleged payment or any monetary benefits payable by this Defendant under the contract. Hence, the above suit is liable to be dismissed. Further, the quantity of the bulk water supplied by this Defendant cannot be the basis for the plaintiff to seek any monetary benefits under the contract. There is no clause in the contract to that effect. Hence, he prayed to dismiss the suit.
4. I have heard the arguments for the Advocate for the both parties.
5. Based on the above pleadings, my predecessor in office has framed the following issues :-
1. whether the plaintiff proves that he is entitled for payment of bonus in terms of savings in total expenditure under first category amounting to INR 1,13,50,000 and Euro 45,469 from the defendants ?
2. Whether plaintiff proves that he is entitled for payment on account of bonus entitlement in terms of the percentage increase in billed volume 49 CT 1390_Com.O.S.6061_2018 Judgment.doc to the base volume of bulk supplied water under third category for an amuont of INR 81,72,000 and Euro 32,738/- ?
3. Whether plaintiff proves that he has entitled for payment on account of bonus attributable for additional seventeen months in the contract period amounting to INR 1,83,76,190/- and Euro 73,615 from the defendants ?
4. Whether plaintiff proves that he is entitled for interest on delayed bonus payments in cononance with clause 10.3 of the contract from the date on which t he payments fell due till the date of actual payments from the Defendant ?
5. Whether the defendant NO.1 proves that court fee paid is insufficient ?
6. Whether the plaintiff is entitled for suit reliefs sought for ?
7 What order or Decree ?
Additional issue framed on 06.08.2019 [
1. Whether the suit of the plaintiff is barred by time ?
6. My answer to above issues are as under:
1. Issue No.1:- In the Affirmative.
2. Issue No.2:- In the Affirmative.
3. Issue No.3:- In the Negative.
4. Issue No.4:- In the Negative.
5. Issue No.5:- In the Affirmative.
6. Issue No.6:- In the Partly Affirmative.
7. Issue No.7:- As per final order, on the following:50
CT 1390_Com.O.S.6061_2018 Judgment.doc
1. Additional Issue No.1 :Negative.
REASONS
7. Additional Issue No.1 : The Defendant No.1 has taken a contention that, As per the Clause 22 of the Contract Document, in case either of the parties refuse to accept the decision of the adjudicator, the aggrieved party may approach the competent court within 28 days from the date of receipt of the adjudicators report to further adjudicate the dispute. The plaintiff has issued a legal notice, dated 24.04.2017 Under Section 80 of the CPC to the defendant No. 1 and the said notice has been replied suitably by the defendant No. 1 as per his reply notice, dated 31.07.2017. There is no case of action for the suit and the one pleaded in paragraph-50 of the plaint is false, frivolous and imaginary and therefore the suit filed by the plaintiff is liable to be dismissed as one without cause of action. The suit is barred by time.
8. The Defendant No.2 has taken a contention that, under clause 22 of contract, the aggrieved person against the decision of the of the Adjudicator can approach the competent court of law within 28 days is a clause in the agreement. One has to adhere to the Terms and Conditions of the agreement, as it is a contractual matter. Admittedly, the Adjudicator passed order on 11.03.2017. The Plaintiff received the same on 15.03.2017, from 11.03.2017, 28 days expires on 08.04.2017, the last day for Invoking the jurisdiction of this Hon'ble Court in the above suit. The above suit was filed a 14.08.2018. Therefore, there is an Unexplained, inordinate delay in 51 CT 1390_Com.O.S.6061_2018 Judgment.doc Filing the above suit. Hence it is liable to be dismissed on the ground of limitation. The parties to the contract agreed to the terms and Conditions. The same cannot be waived nor either party can choose conveniently explain the delay. The question of issuing legal notice under section 80 of Code of Civil Procedure does not arise. Since, the proceedings have already taken place before the Adjudicator hence the Plaintiff cannot maintain the above suit. The same is liable to be dismissed. Further the claims are in respect of the year 2010, the present suit is filed after lapse of 8 years.
9. As per Ex.P.2 the contract document it reveals that, this contract is entered between the Defendant No.1 to 5 and Plaintiff for providing rehabilitation, operation and management of water distribution systems in the Demonstration Zone from the initial Takeover Date till conclusion of the operation and Management period, to achieve performance targets and to perform its obligations with respect to the Demonstration zones in accordance with the terms of this contract.
10. Clause 22 of contract reads as under: Dispute Resolution.
22.1 Amicable Settlement : The parties shall use their best efforts to settle amicably all disputes arising out of or in connection with the contract or its interpretation. 22.2 Reference to Adjudicator: If any dispute arises between the KUIDFC and the OC in connection with, or arising out of, the contract or the provision of the services, whether during carrying out the services or after their completion, the matter shall be referred to the adjudicator within 14 days of the notification of disagreement of one party to the other.
11. The adjudicator shall give a decision in writing within 28 days 52 CT 1390_Com.O.S.6061_2018 Judgment.doc of receipt of a notification of a dispute.
12. The adjudicator shall be paid by the day at the rate of Rs. 4,000/- per day, together with reimbursable expenses, and the cost shall be divided equally between the KUIDFC and the OC, whatever decision is reached by the adjudicator. Either party may refer a decision of the Adjudicator to a court in Karnataka of competent jurisdiction, within 28 days of the Adjudicator's written decision. If neither party refers the dispute to court within the above 28 days, the Adjudicator's decision will be final and findings.
13. The Plaintiff has stated that as per clause 22 of the contract, in case either of the parties recuse to accept the decision of the adjudicator, then in such a scenario the aggrieved party may approach the Hon'ble Courts in Karnataka of competent jurisdiction within 28 days from the date of receipt of the Adjudicator report to further adjudicate the dispute That since, the Defendants in this case are government bodies/agencies, the plaintiff through its legal counsels issued a statutory legal notice dated 24.04.2017 in compliance with the provisions of Section 80 of CPC, thereby calling upon the Defendant No.1 to pay outstanding dues of the plaintiff as per the agreed terms under the Contract. The dispute receiving the legal notice and post the expiry of 2 months from the date of receipt of the legal notice, no payment has been received from the Defendants. That even after the issuance of legal notice, numerous meetings have happened between the parties, wherein the plaintiff has been trying to amicably settle the matter with the Defendant No.1. However, more than one year has expired now and it seems that the defendant No.1 is now merely trying to avoid its payment 53 CT 1390_Com.O.S.6061_2018 Judgment.doc obligations. The plaintiff is hereby compelled to approach the Hon'ble court in order to avail justice.
14. The Plaintiff has produced Ex.P.9 office copy of the letter issued by the Plaintiff to the Defendant No.1, Ex.P.10 copy of the letter dated 05.02.2018 issued by the Plaintiff to the Defendant No.1 along with Annexure-1, the letter dated 04.04.2017 at Ex.P.12 and the photocopy of the letter dated 07.04.2017 at Ex.P.20.
15. The Plaintiff has produced Ex.P.7 the letter sent by the Defendant No.1 to adjudicator dated 04.07.2016 it reveals that, Shri R. Vasudevan, retired Chief Engineer, BWSSB appointed as a adjudicator for adjudication of the matter.
16. Ex.P8 the letter dated 11.03.2017 by the Adjudicator to shows that adjudicator has stated that after going through the relevant record, and hearing the parties, they have completed the report and submitted the detailed report.
17. EX.P.9 and Ex.P.10 the letter written by the plaintiff to the managing director of the Defendant No.1 dated 18.01.2018 and 05.02.2018 for demanding the payment of eligible bonus.
18. Ex.P.12 the letter issued by the Defendant No.1 to the plaintiff dated 04.04.2017 stated that the report of the Adjudicator furnished, vide his letter dated 11.03.2017 is not acceptable to KUIDFC and clarified that no amount is due to you from KUIDFC.
19. The Advocate for the Plaintiff relied upon following decision 54 CT 1390_Com.O.S.6061_2018 Judgment.doc ILD 2013 KAR 2183 Central ware housing Corporation, rep by The executive Engineer and another vs. Ravi construction Limited and another , wherein Hon'ble High court of Karnataka held that A perusal of the amended Section 28 of the Contract Act extracted above would show that both kinds of agreements i.e. agreements which restrict the period of limitation within which claims could be referred, as also agreements which extinguish the right of a party to prefer a claim or discharges any party from any liability under a contract on expiry of a specified period, are void to that extent. In view of the amendment to Section 28 of the Contract Act by Act 1 of 1997 (w.e.f. 8.1.1997) as explained above, I am of opinion that Clause 25 of the Contract which seeks to extinguish the right to claim, on expiry of the specified period, offends Section 28(b) of the Contract Act and hence is void, as rightly held by the Appellate Court. In my opinion, the revision petition is devoid of merit and it is accordingly dismissed but with no order as to costs. In view of dismissal of the Revision Petition, IA No. 2/2011 filed for interim stay also stands dismissed. However, all contentions of both the parties are kept open to be adjudicated by the Arbitral Tribunal, except the question decided herein.
Municipal corporation of Delhi vs. Nataraj construction Company 2023 SCC Online Del 1709 wherein Hon'ble Delhi High court held that, Insofar as the appellant's contention regarding the claim having been time barred is concerned, it is noted that the same is of no merit in view of amended Section 28 of the Indian Contract Act. In this regard, reference may profitably be made to the decision in Pandit Construction Company v. Delhi Development Authority & Anr. reported as 2007 SCC OnLine Del 993, where also plea of limitation was taken by pressing a clause similar to Clause 25 of the Agreement between the present parties.
55
CT 1390_Com.O.S.6061_2018 Judgment.doc In view of the amended Section coming into force, the distinction sought to be carved out earlier by the legal pronouncements would not hold good.
In my considered view it is not open for defendant no. 2 to contend that if any suit or claim is not filed within one month of the expiry of the bank guarantee, the right of the plaintiff to institute any legal proceedings itself is extinguished. Such a plea would fly in the face of the amended Section 28 as defendant no. 2 cannot be discharged from the liability nor can the rights of the plaintiff be extinguished by inclusion of the clause providing so. I am thus of the considered view that to the extent there is restriction on any suit or claim being filed by the plaintiff beyond a period of one month from the expiry of the bank guarantee, the said clause would not prohibit the plaintiff from instituting the suit as it would be barred by the provisions of the amended Section 28 of the Contract Act."
In M/s. Smart Commodity Broker Pvt. Ltd. v. Beant Singh reported as 2017 SCC OnLine Del 10591, this Court reiterated the position of law surrounding amended Section 28 of the Indian Contract Act as follows:-
"7. Learned counsel for the appellant/petitioner again argued that the claim petition was barred by limitation, however, I would like to note that Section 28 of the Indian Contract Act, 1872 stood amended by Act 1 of 1997 with effect from 8.1.1997 whereby any contract by which a party reduces the period of limitation as provided under the law, then such contract cannot have the effect of extinguishing the rights of the party to approach proper forum/court within the period being statutory limitation period. In other words, party by contract cannot limit the limitation period which is otherwise provided by law.
In view of the amended Section 28 of Indian Contract Act therefore, the appellant cannot be permitted to press Clause 25 of the Contract Agreement and restrict the period of limitation for invoking arbitration clause to 120 56 CT 1390_Com.O.S.6061_2018 Judgment.doc days. The contention being meritless is rejected.
Trans Mediterranean Airways vs. Universal export and another. 2011 (10) SCC 316 wherein Hon'ble Supreme court held that.
It is also contended that Clause 12 of the Conditions of Contract printed on the reverse of airway bill requires that the person entitled to delivery must make a complaint to the carrier in writing in the case of non delivery of the goods within 120 days from the date of the issue of the airway bill. If not done within the time stipulated, claim, if any, against the carrier extinguishes. Per contra, Shri Jaideep Gupta, learned senior counsel, submits that under CP Act, the cause of action does not depend on any notice in writing being served on the carrier unlike in certain other Statutes. While considering this issue, the National Commission, in the impugned Judgment, has concluded:
20. In the above decision the Hon'ble high court and supreme court held that in view of the amended Section 28 of contract act, the party cannot be permeated to press the clause of the contract agreement and restricted the period of limitation for invoking the arbitration clause to 120 days. In the present case, as per the clause 22.2 if any dispute arises between the KUIDFC and OC in connection with or arising out of, the contract or a provision of a services, whether during carrying out the service or out of their completion, the matter shall be refereed to adjudicator within 14 days of the notification of disagreement of one party to the other. After decision of the adjudicator, either party may refer a decision of the adjudicator to a court in Karnataka of competent jurisdiction within 28 days of the adjudicators written decisions. If neither party 57 CT 1390_Com.O.S.6061_2018 Judgment.doc refers the dispute to court within the above 28 days, the adjudicator decision will be final and binding.
21. In the present case, the adjudicator report was received by the plaintiff on 15.03.2017 and on 01.04.2017 vide its letter the Defendant NO.1 informed the plaintiff that the adjudicator report was no acceptable to them. Further the plaintiff also raised an objection the findings of the adjudicator report vide letter dated 06.04.2017. Ofcourse the clause 22.2 provides that within a 28 days of the adjudicator written decisions, if neither party refer the dispute to the court the adjudicators decisions will be final and binding. But, in view of the above decisions, as per the amended section 28 of contract the agreement which restrict the period of limitation within which claims could be referred, as also agreements which extinguish right of the party to prefer a claim or discharge any party from any liability under a contract on expiry of a specific period or void to that extent. In view of above discussion and amended Section 28 of contract the restriction imposed in clause 22.2 to void to that extent and admittedly the present suit is filed on 18.08.2018. So the suit is not barred by limitation. Hence, I answer this issue in the Negative.
22. Issue No.5 : The Defendant has taken a contention that the court fee paid by the plaintiff is in-suffcient.
The Para 47 of the plaint discloses that, the defendant is liable to pay amount as follows:
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CT 1390_Com.O.S.6061_2018 Judgment.doc Sl.No. Particulars Amount INR Euro
1. Bonus entitlement in terms of 1,13,50,000 45,469 savings in total expenditure i.e. under First Category.
2. Bonus entitlement in terms of the 81,72,000 32,738 percentage increase in billed volume to the base value of bulk supplied water i.e. under Third Category.
3. Bonus attributable for the 17 1,83,76,190 73,615 months of extended contract period.
Total 3,78,98,190 1,51,822
23. The plaintiff has produced valuation slip along with plaint. On prayer of (a) under Section 26 of the Karnataka court fee and valuation slip the amount of revenue and other basis of valuation is RS. 1,49,99,342/-. The valuation arrived at Rs.2,82,121.71, on prayer of b under Section 26 of the Karnataka court fee and valuation slip the amount of revenue and other basis of valuation is Rs. 1,07,99,552/-. The valuation arrived at Rs.2,61,122.76 and on prayer of c under Section 26 of the Karnataka court fee and suit valuation slip the amount of revenue and other basis of valuation is Rs. 2,42,84,530/-. The valuation arrived at Rs.3,28,547/-. The total court fee paid 8,71,792.12.
24. The calculation made by the Plaintiff is proper and the court fee paid by the Plaintiff as per Section 26 of the Karnataka court fee and suit valuation amount of Rs. 8,71,792.12 is sufficient. Hence I answer this issue in the Affirmative.59
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25. Issue NO. 1, 2, 3 4 and 6 : Before going to the contrary facts it is necessary to mention the admitted facts, the admitted facts are the plaintiff duly participated in the competitive tender process and submitted its bid in response to the NIT. The bids submitted by various bidders including the bid submitted by the plaintiff were evaluated by the defendant No.1 consequent to which the project was awarded to the plaintiff. A contract No.KUWASIP-CC001-ICB- OCC dated 25/4/2005 was executed between the plaintiff and the defendant No.1 to 5 to carry out the project. The contract was entered for total period of 42 months which was divided into following phases:
a. Preparatory period A - From effective date i.e. 25/4/2005 to Initial Takeover Date i.e. 25/09/2005.
b. Preparatory period B - From Initial Takeover Date i.e. 26/09/2005 to Final Takeover Date i.e. 2/11/2006.
c. O & M period - From Final Takeover Date i.e 3/11/2006 to 24 months thereafter i.e. ending on 2/11/2008.
26. As per the contract, the plaintiff was required to achieve performance targets that mainly centered around the following (i) continuous pressured water to all customers; (ii) meter all consumption points; (iii) read and bill 100% customer every month;
(iv) threshold for water losses; (v) provide water connections within 60 CT 1390_Com.O.S.6061_2018 Judgment.doc 7 days of request; (vi) 24 x 7 customer service centre and (vii) resolve customer complaints in stipulated time. The plaintiff as per clause 10.1 of the Contract was entitled to "OC Remuneration"
which comprised of (a) Management which was payable in two parts, i.e. Fixed Remuneration (60% on quarterly basis from 1st quarter) and (b) Performance Remuneration (40% on half-yearly basis). The total OC Remuneration payable as per Clause 10.1 of the Contract amounted to INR 18,16,00,000 and in Euros -
amounting to Euro 727,500. Further, the said OC Remuneration was to be paid to the Plaintiff in the manner specified in "Schedule 18" of the Contract. Apart from receiving "OC Remuneration", the Plaintiff under clause 10.2 was also entitled to receive "Bonus", for achieving performance better than the mandatory performance. As per schedule 18 of the Contract, the "Bonus" component was to be paid by Defendant No. 1 at the end of Contract period and was capped at maximum of 25% of OC (Operator) Remuneration. Subsequently the defendant No. 1 in its meeting held on 01.04.2008 extended the initial contract period of 42 months by another 17 months (approx.) without any penalty on the Plaintiff and for reasons not attributable to Plaintiff vide letter dated 12.06.2008, on the existing terms and conditions of the Contract. In terms of the said letter, an extension was granted to the Plaintiff 61 CT 1390_Com.O.S.6061_2018 Judgment.doc under "Preparatory Period-B', whereby the tenure of 'Preparatory Period-B' was extended from 03.11.2006 till 02.04.2008. Thus, the total time period of the contract was extended from 42 months to 59 months.
27. The Plaintiff duly completed each of its obligations as set out in the Contract and completed the assignment within the extended contract period i.e. 42+17 months and further handed over the assets of the Project to the Defendants on 31.03.2010. Subsequent to the handover by the Plaintiff, the Defendants involved with the Project and party to the Contract have been running the water supply systems effectively under a different contract. As per Clause 2 titled as "Bonus for higher performance" given under "Schedule 18 - OC Remuneration and Bonus" of the Contract, the Plaintiff, post completion of the Project and handover date, is duly entitled for claiming "Bonus". The Plaintiff has duly achieved higher performance better than the mandatory performance targets in improving the service levels which are prerequisite to satisfy the Bonus relating to the three components specified under Schedule 18 of the Contract. Schedule 18 specifying the Bonus relating components to be paid to at the end of the Contract period has been extracted below:
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CT 1390_Com.O.S.6061_2018 Judgment.doc Bonus for higher performance:
The OC would be paid a Bonus on achieving higher performance better than the mandatory performance targets in improving the service provision. The maximum permissible bonus will be 25% of the OC Remuneration.
The Bonus relating to the three components would be paid at the end of the contract period as per the following schedule:
Sl.No Component Target Bonsu:
. Percent of
remuneration
1. Savings in total expenditure (as Upto 25% 3.75%
a % of estimated investments of
Rs.420 million as stated in ----------------------------- ------------------
section 4) - 10.00%
>25%
2. Real Losses reduction Between 20-15 5.00%
(litre/connection/day/meter
pressure) ----------------------------- ------------------
- 7.50%
<15
3. Percentage increase in billed Upto 25% increase 3.00%
volume to the base volume of ----------------------------- -----------------
bulk supplied water >25% 7.50%
25%
Base quantum of water is the cumulative absolute quantum of water being supplied at inlet of all DZs measured on completion of implementation period. Billed volume is cumulative quantum of water billed for property connections." 63
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28. Pursuant to completion of the Contract period i.e. 59 months on 31.03.2010, the Plaintiff vide letter dated 08.09.2010 requested the Defendant No. 1 to release Bonus on account of achieving maximum targets as per Schedule 18 of the Contract. The Plaintiff duly submitted its claims for the Bonus vide Letter No. KUIDFC/KAJ/OCC/Bonus/2010/277 dated 08.09.2010 (Invoice No. KUWASIP/OCC/2010-11/01 and 02 dated 08.09.2010) for the period of 42 months calculated at 25% of the remuneration, which is the maximum permissible limit for claiming Bonus as specified in Schedule 18 of the Contract.
29. The claim raised by the Plaintiff vide letter dated 08.09.2010 was also duly approved and authenticated by the Technical Auditor (independently appointed by the Defendant No. 1) vide its Letter No. CNT6705/Extn/ KUWASIP/TA/Operator Bonus Payment/ 2010/ 47 dated 21.09.2010. In the said Letter, the Technical Auditor appointed by the Defendant No. 1 have itself acknowledged and recommended that the Plaintiff is entitled to receive the maximum Bonus of 25% as set out in Schedule 18 of the Contract.
30. The Defendant No. 1 sometime around October 2011 (i.e. after a period of more than 1 year) released an amount of INR 64 CT 1390_Com.O.S.6061_2018 Judgment.doc 2,58,78,000 and Euro 100,822.72 ('Partial Payment') in favor of the Plaintiff. Aggrieved by the Partial Payment and arbitrary deductions made by Defendant No. 1, the Plaintiff vide its letter dated 17.10.2011 requested the Defendant No. 1 to provide reasons and also written a letter dated 03.11.2011 issued by the Defendant No.1, it was communicated to the Plaintiff that the total Bonus attributable to the Plaintiff is only 14.25% and not 25% as claimed by the Plaintiff for a period of 42 months. The Defendant No. 1, in its letter had stated that the Plaintiff is only entitled for 3.75% Bonus in the First Category, 7.5% percent in the Second category and 3% in the Third Category, thereby amounting to a total of 14.25% Bonus overall.
31. As per the clause of the contract, on 04.07.2016 Mr. R. Vasudevan Chief Engineer retired, was finally appointed for adjudicator for resolving the dispute amongst the parties. The adjudicator filed its report on 11.03.2017 same was received by the plaintiff on 15.03.2017. Both the plaintiff and defendant has not accepted the adjudicator report.
32. It is the case of the plaintiff that, pursuant to completion of contract period i.e., 59 months on 31.03.2010. The plaintiff 65 CT 1390_Com.O.S.6061_2018 Judgment.doc requested the defendant No.1 to release the bonus an account of maximum target as per Schedule 18 of the contract for a period of 42 months calculated at 25% of the remuneration as per Schedule 18 of the contract. Though the technical auditor appointed by the Defendant No.1 have itself acknowledged and recommended that the plaintiff is entitled to receive maximum bonus 25% as set out as per Schedule 18 of contract. But he defendant No.,1 released an amount Rs. 2,58,78,000/- in favour of the plaintiff and rejected the claim of entitlement of maximum 25% bonus and defendant NO.1 stated that in its letter that the plaintiff is only entitled on 14.25% bonus.
33. On the other hand the Defendant No.1 contention that, Defendant No. 1 had written letter, dated 21.11.2011 explaining component wise calculation of bonus and justified its action of deciding to pay 14.25% as bonus.
34. It is also made clear that, the amount spent on training on seminar insurance, contingencies and taxes were not included in investment programme as lumpsum and money spent on those items cannot be treated as the effect of O and M performance and accordingly savings under the items referred to in their letter were 66 CT 1390_Com.O.S.6061_2018 Judgment.doc not considered for calculating bonus. In this view of the matter, the first defendant came to the conclusion that savings on total expenditure works out to be 21.48% and as the savings is less than 25%, it was concluded that the plaintiff was entitled for bonus at the rate of 3.75% under component No. 1. In so far as the component No. 2 is concerned, the defendant No. 1 has agreed with the calculation of Maximum Bonus at 7.50% claimed by the plaintiff. In so far as the component No. 3 is concerned, it was decided by the defendant No. 1, that the percentage increase in the billed volume to the base volume of the bulk supplied water works out to be 8.71% and as the percentage increase is less than 25%, the plaintiff was entitled for bonus of 3% as against the claim of 7.50% made by the plaintiff. Accordingly the defendant No. 1 came to a definite conclusion as indicated in its letter, dated 21.11.2011 that as per the contract conditions, the plaintiff would be entitled to a total bonus of 14.25% of operators remuneration for the original contract period of 42 months and accordingly as stated above, an amount of Rs. 2,58,78,000/- has been paid to the plaintiff by the defendant No. 1. The claim putforth by the plaintiff is not justified in law.67
CT 1390_Com.O.S.6061_2018 Judgment.doc
35. The plaintiff to substantiate its case, examined authorized signatory M.J.R. Chowdary as PW.1. PW.1 in his evidence and reiterated the averments of the plaint and got marked Ex.P.1 to Ex.P.23. The facts elicited during cross-examination is to be considered herein after at appropriate stage.
36. On the other hand, the assistant Engineer of the Defendant NO.1 Corporation examined as DW.1. DW.1 in his evidence and reiterated the averments of the written statement and got marked Ex.D.1 to Ex.D.19. The facts elicited during cross-examination is to be considered herein after at appropriate stage.
37. In this case, the plaintiff has raised objection regarding the authenticity of DW.1 to lead evidence on behalf of the defendant Corporation. Defendant has produced Authorization letter at Ex.D.1 it discloses that, A.B. Ibraham, I.A.S., Managing Director, Karnataka Urban Infrastructure development and finance corporation (KUIDFC) Bengalruu authorized to Dr. N Shrimadhvi, KMAS, Deputy General Manager to institute commence prosecute on carry on or defend or withdraw all the suits or other action and proceedings in any Civil, Criminal and revenue court, Tribunal or any other authority of original and/or appellant jurisdiction, to file 68 CT 1390_Com.O.S.6061_2018 Judgment.doc plaint, written statement, objections and affidavit etc., for him and on his behalf and to appoint and engage advocate to plead the case.
38. In this regard, the Plaintiff counsel relied upon decision reported in State Bank of Travancore vs. Kingston Computers India Pvt Ltd 2011 SCC 524 wherein Hon'ble Supreme court held that, "In our view, the judgment under challenge is liable to be set aside because the respondent had not produced any evidence to prove that Shri Ashok K.Shukla was appointed as a Director of the company and a resolution was passed by the Board of Directors of the company to file suit against the appellant and authorised Shri Ashok K.Shukla to do so. The letter of authority issued by Shri Raj K.Shukla, who described himself as the Chief Executive Officer of the company, was nothing but a scrap of paper because no resolution was passed by the Board of Directors delegating its powers to Shri Raj K.Shukla to authorise another person to file suit on behalf of the company."
C. Krishnaiah Chetty Sons and Private limited vs. Deepali Company Private Limited wherein Hon'ble Supreme court held that, On reading of provision of Order XXIX Rule 1, it is very clear that Order XXIX Rule 1 of CPC only defines the person who is authorised to sign or verify the pleadings on behalf of the company and it does not authorise any person mentioned therein to institute suits or appeals on behalf of the company. The said provision of law comes into operation only after proceedings have been validly commenced and itself does not authorise a person to institute suits or any other legal proceedings. Defect in filing of a suit or appeal would go to the very root of the matter.
69
CT 1390_Com.O.S.6061_2018 Judgment.doc In the present case, the dispute is interse between the two branches of a family holding equal shareholdings in the Company. Though the defect in filing the suit or an appeal in the absence of a Board Resolution by a Company is a curable defect, which can be cured by a express or implied ratification by a Board Resolution, such an eventuality is completely ruled out in the present case having regard to the fact that the present case has been initiated by the Company by its Chief Financial Officer against 50% shareholders of the Company. Therefore, since the possibilities of a ratification being not there, the defect in instituting the suit or appeal for want of Board Resolution of the Company cannot be said to be a curable defect in the present case.
Uma Nath Pandey & Ors vs State Of U.P.& Anr, 2009 AIR SCW 3200 wherein Hon'ble Supreme court held that:
How then have the principles of natural justice been interpreted in the Courts and within what limits are they to be confined? Over the years by a process of judicial interpretation two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi-judicial and administrative process. They constitute the basic elements of a fair hearing, having their roots in the innate sense of man for fair-play and justice which is not the preserve of any particular race or country but is shared in common by all men. The first rule is `nemo judex in causa sua' or `nemo debet esse judex in propria causa sua' as stated in (1605) 12 Co.Rep.114 that is, `no man shall be a judge in his own cause'. Coke used the form `aliquis non debet esse judex in propria causa quia non potest esse judex at pars' (Co.Litt. 1418), that is, `no man ought to be a judge in his own case, because he cannot act as Judge and at the same time be a party'. The form `nemo potest esse simul actor et judex', that is, `no one can be at once suitor and judge' is also at times used. The second rule is `audi alteram partem', that is, `hear 70 CT 1390_Com.O.S.6061_2018 Judgment.doc the other side'. At times and particularly in continental countries, the form `audietur at altera pars' is used, meaning very much the same thing. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely `qui aliquid statuerit parte inaudita alteram actquam licet dixerit, haud acquum facerit' that is, `he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right' (See Bosewell's case (1605) 6 Co.Rep. 48-b, 52-a) or in other words, as it is now expressed, `justice should not only be done but should manifestly be seen to be done'. Whenever an order is struck down as invalid being in violation of principles of natural justice, there is no final decision of the case and fresh proceedings are left upon. All that is done is to vacate the order assailed by virtue of its inherent defect, but the proceedings are not terminated.
14. Order 29 Rule 1 of CPC reads as under:
In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case.
39. In this regard, I relied upon a decision of Hon'ble High court of Karnataka ILR 1992 KAR 3443 (DB) Food Corporation of Indiam Bangalore vs. Central Co-operative Wholesale stores Limited, Sirsi held that:
In suit filed by Food Corporation of India, plaint was signed by the District Manager on behalf of the corporation. When it is declared by the Corporation that the District Manager is the Principal Officer of the Corporation, it follows that he is entitled to sign and verify the pleadings as provided by order 29, Rule 1. The plaint was signed and verified by the Principal Officer of the Corporation, namely, the District 71 CT 1390_Com.O.S.6061_2018 Judgment.doc Manager, was validly presented by him as he was the Principal Officer of the Corporation.
2010 NOC 44 KAR DB, Indian Oil Corporation Limited vs. M/ s Mukund Construction Company wherein Hon'ble High Court of Karnataka held that;
Where an officer is not authorized to file the suit, files a suit on behalf of a company and subsequently the power of attorney holder ratifies the unauthorized act of filing of suit, suit would be maintainable.
40. Admittedly, the Defendant is a government agency, it is clear from the written statement that Deputy General Manager, (LL & R) has filed verifying affidavit and signed the written statement. As per Order 29 Rule 1 of CPC, the suit can be filed by the principal officer of the corporation. Since, the Managing Director of the Corporation has given authorization to Deputy General Manager, to Dr. N. Shrimadhavi, KMAS, on 27.02.2018 is a principal officer of the defendant corporation, and Deputy General Manager of the Defendant corporation, so the Managing Director as well as Deputy General Manager have entitle to sign and verify the pleadings as provided Order 29 Rule 1. The written statement was singed and verified by the principal officer i.e., Deputy General Manager (LL & R) was validly presented by them.
41. Now the question whether the Dw.1 K.C> Ramakrishna Gowda, Assistant Engineer in KUIDFC limited, have an authority to depose on behalf of the Defendant NO.1. As above discussed during the course of argument after raising the objection regarding the authority of representative of the D.W.1 by the Plaintiff, the Defendant has produced Ex.D.2 Inter office note dated 29.11.2022 72 CT 1390_Com.O.S.6061_2018 Judgment.doc it discloses that, DGM (LL&R) has made office note that, as per the approval by learned MD, Ramakrishna Gowda, Assistant Engineer is delegated as a witness to depose the evidence in Com.O.S. NO. 6061/2018 before the Commercial court, Bengaluru. E
42. Ex.D.2 Inter office note dated 29.11.2022, it shows that the DW.1 is authorised by the DGM (LL&R) to give the evidence on behalf of the Defendant NO.1 before this court.
43. Admittedly, the DW.1 is Assistant engineer of the Defendant Corporation, he has produced Ex.D.2 it shows that he has authorized by DGM (LL&R), to lead evidence in this case. Further, from Ex.D.1 it clearly shows that, at the time of filing the written statement. Dr. N. Shrimadhavi, KMAS, having authority to sign the written statement and to file verifying written statement. Further, Order 29 Rule 1 of CPC authorized to principal officer of the corporation to file the suit and to lead evidence. In view of the Order 29 Rule 1 of CPC the DW.1 being a Assistant Engineer of the Defendant corporation is an authority to depose on behalf of the Defendant corporation.
44. Since, the defendant is a Government agency and the principal officers of the corporation has filed written statement and lead the evidence. Hence, the written statement is filed by the Defendant No.1 is maintainable and DW.1 has authority to lead evidence on behalf of the Defendant No.1.
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45. Now coming to the point whether the plaintiff is entitled for bonus as prayed in this suit.
46. The plaintiff stated that, the plaintiff corporation is entitled to the entire bonus of 10% of the remuneration for savings in total expenditure under the first category. AS per clause 3.2.3 of the programme' outlining the entire investment amount of the project. A DIP of Rs. 41,95,11,837/- which was reviewed by the defendant NO.1 in consultation with the Technical Auditor appointed under the contract and was duly approved and accepted by the Defendant No.1 vide letter No. KUIDFC/KUWASIP/OP/GEN/41/2005- 06/1917 dated 23.09.2005. Thereafter, the defendant No.1 also issued a Certificate of Commencement on approval of the DIP. Further the plaintiff submitted that, the total expenditure incurred by the plaintiff for the entire program was Rs. 28,00,63,511/- and thus the total savings achieved by the plaintiff as against the estimated investment amount was Rs. 13,99,36,489/-. (13,99,36,489/42,00,00,000)*100 = 33.31%
47. The savings on expenditure as against the estimated investment amount is 33.31% which is greater than 25% and 74 CT 1390_Com.O.S.6061_2018 Judgment.doc hence, the plaintiff is entitled to a bonus of 10% of the entire remuneration amount which amounts to Rs. 1,81,60,000/-.
48. Clause "10.1 of agreement :
The OC's entire remuneration ("OC Remuneration") for the Services and performance under this Contract shall include two components viz. the fixed remuneration ("Fixed Remuneration") and the performance remuneration ("Performance Remuneration"). The OC Remuneration under this Contract shall be Rs. 18,16,00,000 (Rupees One Hundred and Eighty-One Million, Six Hundred Thousand) plus Euros 727,500 (Euros Seven Hundred and Twenty-Seven Thousand Five Hundred) only payable in the manner set out in Schedule 18."
Clause 10.2 of agreement reads as under
In addition to the OC Remuneration, the OC may be entitled to receive Bonus for higher performance of It is true to suggest that, obligations and performance targets, in the manner and as specified in Schedule 18.
Clause 2 of Bonus for higher performance reads as under
The OC would to be paid a Bonus on achieving higher performance better than mandatory performance targets in improving the service provision. The maximum permissible bonus will be 25% of the OC remuneration.
The schedule 18 of Agreement reads as under:
The OC remuneration would comprise two components, viz., Fixed remuneration and performance remuneration, as follows: 75
CT 1390_Com.O.S.6061_2018 Judgment.doc
(a) Fixed remuneration equal to 60% of the OC Remuneration amounting to Rs. 108,960,000 and Euros 436,500 only, and
(b) Performance remuneration equal to 40% of the OC remuneration amounting to Rs. 72,640,000/-
and Euros 291,000 only.
49. As per the schedule 18 of the contract the bonus for higher performance divided into 3 categories as follows:
Sl.No. Component Target Bonsu:
Percent of
remuneration
1. Savings in total expenditure (as a Upto 25% 3.75%
% of estimated investments of
Rs.420 million as stated in ------------------------------ ------------------
section 4) >25% 10.00%
2. Real Losses reduction Between 20-15 5.00%
(litre/connection/day/meter
pressure) ------------------------------ ------------------
<15 7.50%
3. Percentage increase in billed Upto 25% increase 3.00%
volume to the base volume of ----------------------------- -----------------
bulk supplied water >25% 7.50%
25%
Base quantum of water is the cumulative absolute quantum of water being supplied at inlet of all DZs measured on completion of implementation period. Billed volume is cumulative quantum of water billed for property connections."
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CT 1390_Com.O.S.6061_2018 Judgment.doc
50. The Plaintiff calculated the bonus component as per the schedule 18. The following calculation was made by the Plaintiff to determine the Bonus component:
Sl. Component Hubli DZ Dharwad Bengaluru Bengaluru Gulbarga Total No. DZ South DZ North DZ DZ
1. Month of Dec.07 Apr-08 Jul-07 Nov-07 Apr-08 implementation period completed
2. Base quantum of 159,628 94,780 76,544 136,302 57,767 525,021 water supplied at inlet to demo zones as on completion of implementation period (m3/ month.
3. Billed volume for 143,665 87,151 71,569 93,694 57,681 453,760 month of completion of implementation of implementation period (m3/month)
4. % of billed volume to 86.43% the base quantum of i.e water supplied (a) (453760/ 525021 *
100)
5. Billed volume for 171,372 104,934 125,128 139,159 71,435 612,028 month of March 2010 completion of O & M period (m3/month)
6. % of billed volume to 116.57% the base quantum of i.e water supplied (b) (612028/ 525021*
100)
7. Percentage increase 30.15% in billed volume to i.e the base quantum of (116.57% 77 CT 1390_Com.O.S.6061_2018 Judgment.doc water supplied (a b) 86.43%)
51. The % increase in the build valued to the base quantum of water supplied is 30.15% which is more than 25% thus the plaintiff is entitled to bonus 7.5% of remuneration as provided in the schedule 18 of the contract.
52. The Plaintiff has submitted the claim under 1 st category and 3rd category. The plaintiff calculated the amount as per the terms of contract as under:
Sl.No. Particulars Amount
INR Euro
1. Bonus entitlement in terms of 1,13,50,000 45,469
savings in total expenditure i.e.
under First Category.
2. Bonus entitlement in terms of the 81,72,000 32,738
percentage increase in billed
volume to the base value of bulk
supplied water i.e. under Third
Category.
3. Bonus attributable for the 17 1,83,76,190 73,615
months of extended contract
period.
Total 3,78,98,190 1,51,822
53. The defendant main contention that they have paid a bonus at the rate 3.75% of OC remuneration taking estimated investment as 42 crore and decline to accept the claim made by the plaintiff at 78 CT 1390_Com.O.S.6061_2018 Judgment.doc the rate of 10% OC remuneration. The plaintiff has included in the investment plan expenses towards public fountains, public awareness program, paper advertising and provisions for medical expenses which were not at all executed by the plaintiff during the implementation of investment plan. In view of the matter the said amount cannot be considered as savings for the purpose of determining the performance bonus as demonstrated in the table below:
Item As per Investment Expenditure incurred (in Programme (In Lakhs) lakhs) Training and Seminars 80-00 13.98 Insurance 40-00 0.51 Contingencies 261-77 0.00 Taxes 443.11 282.00
54. Further the defendant stated that, the item referred a column No.2 of the above table which are like tax, insurance, etc., have known excess to performance of the plaintiff which could be the basis of calculating bonus. The plaintiff having included these items for investment in the investment program provided by him has boosted the amount in total investment program. IF these items of the investment are excluded, the total savings on the expenditure works out to be fair less than what has been computed by the plaintiff. In these background facts the amount bonus calculated by 79 CT 1390_Com.O.S.6061_2018 Judgment.doc the defendant at 3.75% of OC remuneration is correct and said amount has been paid by the defendant to the plaintiff and i.e., the amount for which the plaintiff is legally entitled.
55. During cross-examination DW.1 admitted that, defendant No.1 has accepted draft investment program and final investment program with out any changes and further he has stated average base quantum of water was not specified and also it is not specified to consider only ending month of the project completion period for calculation of bonus on 3rd component. They have adopted best method of calculation. Also admitted that there is nothing in the contract which provides for regulatory purpose must be excluded from calculating the total expenditure for the purpose of calculation of bonus for component 1. There is nothing in contract which provides that the expenditure on items not executed by the plaintiff while calculating the savings on bonus on component-1.
56. In view of the admission of DW.1 it is clear that the method of calculation adopted by the defendant is not provided any were in the contract and the defendant no.1 has not given any justification for this method of calculation. IT is Undisputedly foot note No.6 of the contract clearly provides that the base quantum of water supply 80 CT 1390_Com.O.S.6061_2018 Judgment.doc is the cumulative quantum of water supplied at the inlet of all demo zone measured on completion of the implementation period.
57. Further as per the contract, the claim of the plaintiff referred to technical auditor.
58. As per the clause 8 of the contract at Ex.P.2 :
The KUIDFC will appoint an independent third party to act as an independent technical auditor to monitor compliance by with its obligations under the contract. The principal responsibilities technical auditor are listed in schedule 17.
Schedule 17 provides for terms of reference - technical auditor and clause 2 speaks about the role of the technical auditor. Clause 2 (C) reads as under
Check that the works invoiced by the OC's contractors have been satisfactorily completed: Clause 3.6.4 provides that, technical auditor, shall in the ordinary course main record of activities under taken by it in discharge of its function and responsibilities. This would include records in respect of :
(vi) payment of bonus/deduction of penalties etc.,
(viii) (b) - Any other report as may be reasonable required KUIDFC or as may be necessary to give effect to the provisions of the agreement.
59. Further it reveals technical auditor will deploy skills internally or procure them from outside experts. The team leader shall be professionally qualified Civil Engineer at lease 15 years of 81 CT 1390_Com.O.S.6061_2018 Judgment.doc experience and should be well-versed with supervision of water supply contract. The team leader shall have experience on projects financed by multilateral and international agencies with capability to handle environmental sound construction method. The team leader shall have suitable experience in handling design and performance monitoring of network system.
60. In this case, it is undisputed fact that, the technical auditor has submitted a report as per Ex.P.14. The technical auditor as adopted same method of calculation as adopted by the plaintiff and as concluded that, percentage increased in build value to the base quantum of water supplied is morethan 25%.
61. The defendant has rejected the report of the technical auditor as the technical auditor has not taken consideration certain items which were included in the final investment program referred to in second column of the tabular column. If those items are excluded the savings of total expenditure would be far less than as compelled with statement made by the plaintiff. The payment of bonus at the rate of 3.75% is correct, As above discussed, DW.1 has categorically admitted that there is nothing in the contract which provides for regulatory purpose must be excluded from calculating the total 82 CT 1390_Com.O.S.6061_2018 Judgment.doc expenditure for the purpose of calculation of bonus for component
1. There is nothing in contract which provides that the expenditure on items not executed by the plaintiff while calculating the savings on bonus on component-1.
62. Under such being the case, there is no reason to discard the technical auditor report at Ex.P.14 by the defendant. Hence, the plaintiff is entitled to claim the bonus on 1 st component at the rate of 10% OC remuneration.
63. In so far as bonus regarding component 2 is concerned there is no dispute between the parties.
64. Bonus regarding the component 3 percentage. The plaintiff has claimed the bonus with regard to component 3 namely percentage increased in the build volume to the base value of bulk supplied water. The plaintiff has claimed 7.50% of OC remuneration claiming that the percentage increased in the build volume to the base value of bulk supplied water is more than 25% increased. According to the plaintiff the percentage increased in build volume as measured end of O&M period namely March 2010 is taken as the basis for calculating bonus. Which is the last month 83 CT 1390_Com.O.S.6061_2018 Judgment.doc of O&M period, the percentage increased in build volume was shown as 25.42% which is the percentage increased for month of March 2010 and on that basis the plaintiff has claimed 7.5% of the remuneration as bonus on component-3.
65. The defendant contention that except for the month of March 2010 which is the last month of O&M period, no other month as shows an increased about 25% which would entitle to claim bonus at maximum rate of 7.5% with regard to component-3.Even in preceding month of March 2010 the percentage increased on 14.78% and 22.13% this is evident from the reply dated 22.11.2016 submitted by the defendants before the adjudicator at Ex.D.12.
66. As per the foot note NO.6 to the schedule 18 of the contract provides that, base quantum of water is the cumulative absolute quantum of water being supplied at the inlet of all DZ's measured on completion of implementation period. Billed volume is the cumulative quantum of water billed for property connection".
67. As above discussed the plaintiff has calculated the total base quantum of bulk supplied water in different demo zones on completion of implementation period and the cumulative billed 84 CT 1390_Com.O.S.6061_2018 Judgment.doc volume for all the property concern. As per the table mentioned in the para No. 36 of the plaint. Therefore, the percentage increased the billed volume to the based quantum of water supplied is 30.15% which is more than 25% thus, the plaintiff is entitled to the bonus of 7.5% of the remuneration as provided in the schedule 18 of contract.
68. In this case, the D.W.1 in cross-examination stated that the Defendant NO.1 has adopted their own method of inculcation for 3 rd component. Their Department head office at Bengaluru adopted the method. But, in this case no witnesses from the head office who has calculated the 3rd component is examined by the Defendant NO.1 in support of alleged method of calculation.
69. Furthermore, as above discussed the technical auditor in his report ex.p.14 adopted the method of calculation which is adopted by the plaintiff and as concluded the percentage increased in the billed volume to the base quantum of water supplied is more than 25%. Therefore, the plaintiff's method of calculation is as per the contract. Hence, the plaintiff is entitled to 7.5% remuneration as a bonus. Since the percentage increased in billed volume to the base quantum of water supplied more than 25%. Hence, the defendant is 85 CT 1390_Com.O.S.6061_2018 Judgment.doc liable to pay 1,13,50,000 and Euro 45,469 towards bonus entitlements in terms of savings in total expenditure under 1 st category. Hence, the defendant is liable to pay 81,72,000 and Euro 32,738 towards bonus entitlements in terms of savings in total expenditure under 3rd category.
70. The plaintiff claimed the bonus for the additional period of 17 months. The plaintiff stated that, the plaintiff is entitled to the bonus for additional period of 17 months and the interest on delayed months as delay was not attributable to the plaintiff, as per the minute of 12th meeting as empowered committee appointed under the contract, failure to accomplish the performance target within the stipulated time was mainly an account of delay in supplying bulk water by defendant NO.2. Thus the plaintiff cannot be made to suffer for no fault of its own must be entitled to the bonus for additional 17 months of contract.
71. On the other hand the defendant contention that, the contract in question is a performance oriented contract. There is delay in performance of contract. The claim for bonus by the plaintiff for extended period of implementation period is against the spirit of the contract. The paying bonus for completion of project entrusted to 86 CT 1390_Com.O.S.6061_2018 Judgment.doc the plaintiff within a specific condition that it should be completed within 42 months and because of the extension sought by the plaintiff 17 months was extended. As could be seen from schedule 18 the bonus is payable, at the rate specified in the tabular column specified under Schedule 18 for the original period of 42 months. There is no provision for payment of bonus for the extended period under nay of the terms of the contract document. In this view of the matter the plaintiff is not entitled for the bonus for extended period of 17 months.
72. In this case, as per the Ex.P.2 contract was for 42 months comprising of 18 months for implementation period and 24 months thereafter O&M phase. There was extension of 17 months on the request made by the plaintiff in so far as implementation period is concerned. And thus the implementation period was extended 35 months. However O&M period remain constant at 24 months after completion of implementation period. The plaintiff contention that, the contract period of 42 months extended another 17 months without any penalty on the plaintiff and for reason not attributable to the plaintiff vide letter dated 12.06.2008 at Ex.P.3. On perusal of Ex.P.3 it shows that, the during the empowered committee meeting held on 01.04.2008 and extended the operator contract by 17 87 CT 1390_Com.O.S.6061_2018 Judgment.doc months beyond 2.11.2008 on the existing terms and conditions of the contract. On perusal of this letter we could not found a single word that the extension of 17 months on the request of the plaintiff and extension is contributable to the plaintiff. Under these circumstances, the plaintiff is entitled to claim payment of bonus for extended period. Hence, the defendant is liable to pay bonus attributable for additional 17 months in the contract period amounting to Rs., 1,83,76,190/- and Euro 73,615/-.
73. The Plaintiff claimed the interest for delay in payment of bonus. The Plaintiff stated that as per the clause 10.3 contract if the defendant is unreasonably delays payment of any amount due to the plaintiff for a period exceeding 15 days, Defendant No.1 is liable to pay on the said amount for each day delay. The defendant contended that, no delay in payment of bonus claimed by the plaintiff of 3 component enumerated in the contract document, more particularly schedule 18. The contract work was over on 31.03.2010 as admitted by the plaintiff himself and completed the project was handed over to the defendant on the said date. After 6 months, after completion of the project, plaintiff on 08.09.2010 as per Ex.P.13 as requested the defendants for the payment of bonus at the rate of 25% of OC remuneration. This was recommenced by 88 CT 1390_Com.O.S.6061_2018 Judgment.doc the technical auditor by 21.10.2010 as per Ex.P.14. There were exchange of letters between the plaintiff and defendant NO.1 with regard to claim of the plaintiff for bonus at the maximum rate of 25%. After exchange of several letter the defendant NO.1 has agreed to pay bonus at the rate of 14.25% and same was communicated to the Plaintiff and thereafter correspondence as taken place between the plaintiff and defendants. But, the plaintiff is not agreed for the payment of bonus at the rate 14.25%. On 08.09.2011 in the meeting of the empowered committee, the defendant has paid an amount of Rs. 2,58,78,000/- Euro 100822.7. The plaintiff referred to this fact of receipt of money in his letter dated 17.10.2011, at Ex.P.15 and legal notice at Ex.p.21. In this background there is no delay in the payment of bonus by the defendant to the plaintiff.
74. It is a matter on the record that, the dispute regarding the payment of bonus and referred to adjudicator and the said adjudicator give an letter 11.03.2017 as per Ex.D.18 and also admitted that adjudicator recommended 20.50% of bonus in favour of the plaintiff. It is evident on the record that the empowered committee has considered the request of the plaintiff and decided to pay the bonus at the rate of 14.25%. According to the decision of the empowered committee the defendant has paid an amount of Rs. 89
CT 1390_Com.O.S.6061_2018 Judgment.doc 2,58,78,000/- and Euro 100822.72 to the plaintiff and same is admitted by the plaintiff in Ex.P.15 and Ex.P.21. As per the clause 10.3 contract if the defendant is unreasonably delays payment of any amount due to the plaintiff the defendant is liable to pay the interest. It is matter on the record that as per the empowered committee decision, the plaintiff had paid bonus at the rate of 14.25% Rs. 2,58,78,000/- to the plaintiff on 15.10.2011. There is no dispute regarding the receipt of the above said amount by the plaintiff. Hence, there is no delay in payment of bonus by the defendant to the plaintiff. Hence, defendants are not liable to pay any interest as claimed by the plaintiff.
75. Issue No.7 : -Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed in part with cost.
The defendant is liable to pay a sum of Rs. 1,13,50,000/- or Euro 45,469/- towards bonus entitlements in terms of savings in total expenditure under 1st component.
The defendant is liable to pay a sum of Rs. 81,072/- or Euro 32,738/- towards bonus entitlements in terms of savings in total expenditure under 3rd component.
90
CT 1390_Com.O.S.6061_2018 Judgment.doc The defendant is liable to pay a sum of Rs. 1,83,76,190/- or Euro 73,615/- towards bonus attributable for additional 17 months.
The plaintiff is not entitle for interest on bonus payments.
Draw Decree accordingly.
The Office is directed to send copy of this Judgment to Plaintiff and Defendants to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer, typed by him directly on computer, verified and then pronounced by me in open Court on this the 31st Day of January 2025).
(SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.
ANNEXURE
LIST OF WITNESSES EXAMINED ON BEHALF OF THE
PLAINTIFF
P.W.1 M.J.R. Chowdary
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF 91 CT 1390_Com.O.S.6061_2018 Judgment.doc Ex.P.1 Authorization Letter Ex.P.2 Copy of the letter and contract (defendant No.1 to 5 admitted during the statement of admission and denial) Ex.P.3 Copy of the Letter dtd:12.06.2008 Ex.P.4 Letter dtd:03.11.2011 Ex.P.5 Office copy of the Letter dtd:02.12.2011 Ex.P.6 Letter issued by the defendant No.1 to the plaintiff dtd:21.11.2011 along with Annexure No.I and II.
Ex.P.7 Copy of letter sent by the defendant No.1 to adjudicator dtd:04.07.2016.
Ex.P.8 Copy of the reply letter dtd:11.03.2017 sent by the adjudicator to the defendant No.1 along with report of the adjudicator.
Ex.P.9 Office copy of the letter issued by plaintiff to defendant No.1 Ex.P.10 Copy of the letter dtd:05.02.2018 issued by the plaintiff to the defendant No.1 along with Annexure-I Ex.P.11 Letter dtd:23.09.2005 issued by the defendant No.1 to the plaintiff along with annexure.
Ex.P.12 Letter dtd.04.04.2017 Ex.P.13 Photocopy of the letter dtd.08.09.2010 (marked on subject to objection) Ex.P.14 Photocopy of letter dtd.21.09.2010 (marked on subject to objection) Ex.P.15 Photocopy of letter dtd.17.10.2011 (marked on subject to objection) Ex.P.16 Photocopy of letter dtd.14.11.2011 (marked on subject to objection) Ex.P.17 Photocopy of letter dtd.05.12.2011 (page no.15 to 20) (marked on subject to objection) Ex.P.18 Photocopy of letter dtd.05.12.2011 (page no.21 to 25) (marked on subject to objection) 92 CT 1390_Com.O.S.6061_2018 Judgment.doc Ex.P.19 Photocopy of letter dtd.25.01.2012 (marked on subject to objection) Ex.P.20 Photocopy of letter dtd.07.04.2017 (marked on subject to objection) Ex.P.21 Office copy of legal notice dtd.24.04.2014 Ex.P.22 Minutes of empower committee meeting dated01.04.2008.
LIST OF WITNESSES EXAMINED ON BEHALF OF THE
DEFENDANT
D.W.1 K.C Ramakrishne Gowda
D.W.2 Gururaj Mallayya Banginawar
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT Ex.D.1 Authorization letter Ex.D.2 Authorization letter dtd.29.11.2022 Ex.D.3 Original letter dtd.16.08.2007 (pg no.2 to 17) Ex.D.4 Original letter dtd.14.11.2007 (pg no.18 to 21) Ex.D.5 Original letter dtd.04.01.2008 (pg no.22 to 23) Ex.D.6 Original letter dtd.11.10.2007 (pg no.24 ) Ex.D.7 Original letter dtd.12.06.2008 (pg no.25 ) Ex.D.8 Letter dtd.08.09.2010 (pg no.26 to 27) Ex.D.9 Invoice no.KUWASIP/OCC/2010-11/1, dtd.08.09.2010 (pg no.28) Ex.D.10 Invoice no.KUWASIP/OCC/2010-11/2, dtd.08.09.2010 (pg no.29) Ex.D.11 Report (sent along with invoices) (pg no.30 to 83) Ex.D.12 Office copy of letter dtd.22.11.2016 with 93 CT 1390_Com.O.S.6061_2018 Judgment.doc annexures (pg no.84 to 90) Ex.D.13 Office copy of letter dtd.04.04.2017 (pg no.91) Ex.D.14 Office copy of reply notice dtd.31.07.2017 (pg no.93 to 99) Ex.D.15 Original meeting proceedings dtd.08.09.2011 (pg no.100 to 105) Ex.D.16 Office copy of letter dtd.27.10.2018 (pg no.106 to
107) Ex.D.17 Office copy of letter dtd.15.02.2018 (pg no.108 to
109) Ex.D.18 Report of the adjudicator (pg no.110 to 135) Ex.D.19 Certificate U/s 65b of Indian Evidence Act. Ex.D.20 Letter of authorization dated 28.11.2023.
(SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.