Delhi District Court
Anubhav Wadhwa vs Municipal Corporation Of Delhi And Anr on 31 August, 2024
IN THE COURT OF SH MUKESH KUMAR GUPTA
DISTRICT JUDGE(COMMERCIAL)-07(CENTRAL)
TIS HAZARI COURTS: DELHI
CS (Comm.) No. 1404/2023
CNR No. DLCT010152742023
DLCT010152742023
ANUBHAV WADHWA,
Sole Proprietor of M/s Anubhav Construction Company,
Through his Attorney, Shri Ravinder Kumar Wadhwa
F-1, VikasPuri,
New Delhi-110018
......Plaintiff.
Vs
1. MUNICIPAL CORPORATION OF DELHI .
Through: its Commissioner,
Civic Centre, J.L. Nehru Marg,
Minto Road,
New Delhi-110002
2. The Executive Engineer (EMS)WZ,
Municipal Corporation of Delhi,
Dr. Sahab Singh Verma Nigam Bhawan,
Near Shivaji College, Shivaji Place,
Raja Garden, Delhi-110027.
...... Defendants.
SUIT FOR RECOVERY OF RS.13,04,893/-
Date of institution of suit : 25.10.2023
First Date before this court : 09.04.2024
Date of hearing of final argument : 28.08.2024
Date of Judgment : 31.08.2024
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 1 of 26
Appearance(s) : Ms. Swenkia Tripathi, Adv. Ld. Counsel for plaintiff.
Shri Sanjeet Malik, Advocate, Ld. Counsel for the
defendant.
JUDGMENT
(A) PRELUDE:
1. By way of present judgment, I shall conscientiously adjudicate upon plaintiff's suit for Recovery of Rs. 13,04,893/- alongwith interest @ 12% per annum pendentlite and future from the date of filing of suit till its realisation. The plaintiff has also prayed for costs of the suit against the defendant.
(B) PLAINTIFF'S CASE:-
2. Eschewing prolix reference to the pleadings crystallizing the same the plaintiff has averred in the plaint that:-
2.1) The plaintiff is the sole proprietor of M/s Anubhav Construction which is duly enrolled as a Municipal Contractor with the defendant corporation. The plaintiff firm is engaged in the civil nature of work for the defendant corporation.
2.2) The defendant No.1 is a body corporate of Delhi, established and governed under the Municipal Corporation of Delhi Act, 1957. The suit is being filed against the defendant through its Commissioner who is in-charge of all the acts and day to day activities of the defendant. The defendant No.1 is engaged in taking care of all the civil amenities, development etc of South Delhi. Defendant No.2, the Executive Engineer of defendant No.1 is responsible for construction activities in CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 2 of 26 the area of erstwhile South MCD and the work order in question was issued by him.
2.3) It is further the case of the plaintiff that plaintiff being Government Contractor approached the defendant for the work through tender invited by the Executive Engineer (M) I/CLZ, and after due process became successful. After satisfaction and completion of required conditions at the stage of pre-work order, the works covered by the tender were awarded by the defendant No.2 on behalf of defendant No.1 to the plaintiff. Accordingly, the works order No. EE(EMS) West Zone/SYS/2021-22/4 dated 03.03.2022 ( in short "WO-4") was issued to the plaintiff. The plaintiff has also deposited the security/earnest money and entered into an agreement with the defendant as a pre-condition of the award. The work was completed by the plaintiff to the satisfaction of the defendant No.2 within the stipulated period and the period for defect liability has also passed without any negative remarks with the satisfaction of the defendant.
2.4) The defendant No.2 completed the final measurement of the aforesaid works and bills pertaining to the aforesaid works were passed and recorded in the measurement books. The defendant No.2 passed (first running bill) for a sum of Rs.11,76,201/- as a net amount on 29.06.2022 pertaining to the aforesaid work. The plaintiff has also deposed the security/earnest money of Rs.1,28,692/- and thus, the total amount including the amount of passed bills and security/earnest money comes to Rs.13,04,893/-.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 3 of 26 2.5) Despite passing of the bills, the defendants have neither released the payment nor informed the plaintiff and amounts were withheld for which the plaintiff has made several request to the defendants for release of the amount of passed bills as also the security amount but to no avail. According to the clause 9 of the General Terms and conditions of the agreement, the defendants are liable to release the same within a period of six/nine months. The plaintiff has, thus also claimed, an interest @ 12% per annum on the suit amount of Rs.13,04,893/-against the defendant with effect from 01.04.2023.
2.6) The defendants, on the other hand, have tried to evade the payment on one pretext or the other compelling the plaintiff to issue a legal notice dated 07.11.2022 u/s 477/478 of the MCD Act, calling upon the defendants to pay the suit amount with interest @ 12% per annum which was also not replied to by the defendants.
2.7) The plaintiff has claimed the cause of action arose on the date when the defendants awarded the works order to the plaintiff, when raised the final bills in respect of WO No.4 dated 03.03.2022 and finally, on issuance of legal notice which was not responded to.
2.8) Hence the present suit for recovery of Rs.13,04,893/-
alongwith interests and costs.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 4 of 26 (C) DEFENDANT'S CASE:-
3. On receipt of summons for settlement of issues, the defendants contested the suit by filing a detailed Written Statement thereby taking various preliminary objections as averred and mentioned herein under:-
3.1) The suit filed by the plaintiff is premature, without any cause of action and therefore deserves to be rejected at the threshold. The plaintiff has not approached the court with clean hands and has concealed the material facts, plaintiff has also breached the agreement. It has further been contended that the plaintiff has not submitted any bill either interim or final which he was contractually required to and as such in absence of any bill, no amount can be said to be due or payable to the plaintiff. The plea of the defendants is that the purported bills which the plaintiff seeks to rely upon are only internal notings of the defendant and they do not constitute bills for the purposes of payment. It is further contended that the plaintiff has failed to disclose a cause of action to maintain the present suit and the plaintiff has failed to comply with and adhere to the contractual obligation as set out in the Work order and the General Conditions of Contract (GCC). The defendants have also reproduced clause 7, 9, 17 and 45 of the GCC to support its defence.
3.2) On merits, all the allegations made in the plaint have been denied as incorrect. It has been contended that the plaintiff himself admits being bound by the terms of the NIT, the Work Order and the GCC, however, the plaintiff has failed to abide by the same and do what was necessary thereunder. The defendants have also denied that the CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 5 of 26 plaintiff made necessary arrangements for execution and completion of the work within the stipulated time and that the work was completed by the plaintiff to the satisfaction of the defendants. It has also been contended that once the plaintiff is aware of his obligations under the GCC and the law, issuance of legal notice would not absolve him of his legal and contractual duty to furnish the bills. It has also been contended that the amounts given as security deposit cannot be refunded unless the plaintiff complies with provisions of the GCC. It has also been denied that defendants are liable to pay interest as claimed by the plaintiff as no amounts have become due on date. The entire claim of the plaintiff including the claim of the interest is stated to be pre-mature and false.
4. A detailed replication to the Written Statement was also preferred by the plaintiff reiterating the contents of the plaint and vehemently denying the contents of the Written Statement. It has been contended that even after passing of bills in question upon satisfactory completion of the work, defendants are trying to raise frivolous dispute which clearly shows that defendants are trying to withhold legitimate dues of the plaintiff for indefinite period.
(D) CRYSTALISING THE DISPUTE :-
5. On the pleadings of the parties and documents placed on record the following issues were framed for adjudication vide order dated 12.03.2024.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 6 of 26 ISSUES.
(i) Whether the plaintiff is entitled to recover
the suit amount from the defendant ?OPP
(ii) Whether the plaintiff is entitled to any
interest, if so, at what rate and for what
period ?OPP
(iii) Relief.
(E) EVIDENCE OF PLAINTIFF.
6. Plaintiff, in support of his case, got examined himself as PW1 and reiterated the contents of the plaint on oath in his affidavit Ex.PW1/A. He got exhibited the General Power of Attorney in his favour dated 06.05.2016 as Ex.PW1/1, Copy of Work Order No.4 dated 03.03.2022 as Ex.PW1/2 (colly), photocopy of passed bill dated 29.06.2022 as Ex.PW1/3 (colly), Copy of General Terms and Conditions of Agreement as Ex.PW1/4, and Legal Notice dated 07.11.2022 alongwith its postal receipts as Ex.PW1/5 (colly). He has deposed that despite the passing of the bills of the plaintiff, the defendant has failed to release the payments to the plaintiff and a legal notice in this regard also issued. It has further been deposed that the suit is correct and the defendant No.1 is liable to pay the outstanding amount alongwith interest and costs.
7. During a detailed cross-examination, Ld. Counsel for defendants has tried to puncture the testimony of PW1 on the point of compliance of terms & conditions of the Agreement, non-submitting the bills in question and other aspects. PW1 during cross-examination has admitted that he has read the terms and conditions of the Agreement before he CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 7 of 26 signing the same. He has further deposed that he has not retained any record of measurement in respect of the work done for the work order in question. He has further deposed that the completion date of Work order No.4 is 25.04.2022. He has admitted that he has completed the work in question within the stipulated time. He has admitted that he has not submitted any bill on his letter head regarding the Work Order in question and he has not written any letter to defendants regarding payment of the bill in question except the issuance of legal notice dated 07.11.2022. He has also admitted in the cross-examination that he has not submitted any Measurement Book for measurement of the record regarding the work order in question and he has accepted the measurement done by MCD. The witness has further deposed that he has not filed any completion Certificate in the present case regarding Work Order in question. He has also deposed that he has executed the Work Order within the stipulated time. He has also admitted that he has not filed any proof of payment made by him to the labourers engaged by him for execution of the Work Order. He has also denied the suggestion that he has not entitled for any interest as claimed or that he has deposed falsely.
8. No other witness was examined by the plaintiff and the evidence of the plaintiff was closed on 09.04.2024.
(F) DEFENDANT'S EVIDENCE :-
9. The defendant in its defence examined one Shri Manoj Kumar Kanojia, Assistant Engineer (EMS), West Zone, MCD, Raja Garden as CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 8 of 26 DW1 who has filed his evidence by way of affidavit Ex.DW1/A. He reiterated the contents of the Written Statement on oath. DW1 also deposed in his evidence that the plaintiff has not submitted any bill (either interim or final) that he was contractually required to and that in the absence of any bill submitted by the plaintiff no amount can be said to be due or payable to the plaintiff. He has further deposed that the purported bills that the plaintiff seeks to rely upon are only internal noting of the defendants and they do not constituted bills for the purpose of payment. He has also deposed that the plaintiff has failed to comply with clause 17 and clause 45 of the GCC and unless the conditions of clause 17 and 45 are fulfilled, there can be no refund of security deposit to the plaintiff. He has deposed that the suit of the plaintiff is liable to be dismissed as pre-mature, misconceived and bereft of cause of action with exemplary costs.
10. The witness was subjected to a detailed cross-examination by Ld. Counsel for the plaintiff, during which DW1 has admitted that he has not exhibited any document on record. He has admitted in his evidence that the bill regarding the work order No.4 has already been passed by the defendant No.1 corporation and the same has already been accepted by the contractor/plaintiff at point "A" in Ex.PW1/3 (colly). He has also admitted that the bill was prepared and passed by the department as per the Measurement Book. He has already admitted that the work of the said work was completed within the stipulated time. He has further admitted that there is no complaint received from the concerned labour or labour department in respect of the said Work Order No.4.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 9 of 26
11. No other witness was examined by the defendants and the evidence of the defendants was closed vide statement dated 05.08.2024.
(G) ARGUMENTS ADDRESSED:- ARGUMENTS OF PLAINTIFF.
12. Ld. counsel for the plaintiff Ms. Swenkia Tripathi has vehemently argued that the plaintiff has successfully executed the awarded Work Order No.4 to the satisfaction of the defendants within time and as per the guidelines of the GCC. It has been argued that despite the aforesaid the defendant has failed to clear the outstanding amount which are legitimate dues of the plaintiff for reasons best known to the defendants. It has been stated that even after passing of the bills in respect of the work order, the defendants have not released the payment of the plaintiff leading to withholding a substantial amount and continued loss to the plaintiff. He has argued that though original bills were submitted to the the defendants after completion of the work but the same has been duly entered in the Measurement Book and it was after completion of necessary documentation and formalities only the defendants have proceeded further to pass the bills as can be reflected from Ex.PW1/3 (colly) which not only bears the signature of the concerned Engineer but also the Accounts Officer and the Executive Engineer on behalf of the commissioner of the MCD. Ld. Counsel has argued that the defendants on one pretext or other, have been deferring the payment and not releasing the same. He has prayed that not only the suit be decreed with interest and costs but exemplary costs and damages should also be granted to the plaintiff against the defendants.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 10 of 26 ARGUMENTS OF DEFENDANT:
13. Ld. counsel for the defendant Shri Sanjeet Malik on the other hand has vehemently opposed the arguments of the Ld. Counsel for the plaintiff and has stated that the plaintiff has not submitted the bills qua the Work Order No. 4 and therefore not complied with the terms and conditions of the GCC which he himself is relying upon and as such the suit of the plaintiff is pre-mature and misconceived. Ld. Counsel for defendants while making specific reference to clause 7 and 9 of GCC has vehemently argued that the submission of the bills is a pre-condition on which a cause of action can arise. On the aspect of refund of security deposit, Ld. Counsel has again referred to clause 17 and 45 of GCC to state that it was on account of plaintiff failure to complete the formalities, the same was not released as no occasion has arisen for the defendants to release the same. Ld. Counsel Shri Malik has also referred to the Judgment of Hon'ble High Court in New Delhi Municipal Corporation & Ors. Vs. Sanjeev Kumar RFA No. 430/17 (DOD 22.03.2018). Finally, he has argued that the plaintiff has failed to comply with the provisions of MCD Act in as much as no notice u/s 478 of the Act has ever been issued to the defendant corporation which is mandatory. He has further stated that the suit is liable to be dismissed with exemplary costs.
(H) ANALYSIS & DETERMINATION:-
14. I have heard the arguments addressed by the Ld. Counsels for the parties, perused the entire record including the oral and documentary evidence. I have given a thoughtful consideration to the same. My issue- wise determination is as under:-
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 11 of 26 Issue no.1. "Whether the plaintiff is entitled to recover the suit amount from the defendant ?OPP"
15. The onus of proving this issue was held upon the plaintiff for which the plaintiff has led evidence through his attorney PW1 who has filed his affidavit by way of evidence as Ex.PW1/A. The defendants on its part has taken only one objection in its Written Statement that the suit is liable to be dismissed for the reason that the plaintiff has not complied with the terms and conditions of the GCC which governs the tender and work order. This issue is pivotal to the entire controversy between the parties as there is no dispute regarding the award of contract Ex.PW1/2, completion of work within stipulated time, labour complaint or any other issue regarding the satisfactory work being completed except the alleged non-compliance of GCC. Ld. Counsel for the defendants has vehemently taken only one stand in defence that the plaintiff has not submitted the bills (interim or final), which he was contractually required to submit. It has also been argued that as per specific clause 7 and 9 of GCC and clause 4 of the work order Ex.PW1/2, the contractor shall not be entitled for any payment, if he does not submit the certificate of completion and further plaintiff was required to submit final bill within one month of the date of the final certificate of completion furnished by the Engineer-in- charge or within three months of physical completion of the work.
16. Per Contra, Ld. counsel for the plaintiff has argued that the defendants had passed the requisite bill in respect of the work done which have been exhibited as Ex.PW-1/3 (colly) a copy of which was CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 12 of 26 also provided to the plaintiff which he had accepted after counter signing the same and hence, there was due compliance of the clause 7 and 9 of the GCC and as such, the plaintiff is entitled for the amount of the bill as claimed and which the defendants is withholding without any justifiable reason and even passing of the same after due measurement. He has relied upon the decisions of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Barahi Construction RFA (COMM) 6/2021 (Neutral citation: 2021/DHC/958-D) and the judgment of Hon'ble Division Bench of High Court of Delhi in North Delhi Municipal Corporation Vs. Vipin Gupta RFA 160/2017 to support his point. He has further relied upon the judgment of Mr. Rajnish Yadav proprietor of M/s. Bharat Construction Company Vs. North Delhi Municipal Corporation, RFA (OS) (COMM) 1/2021 (Neutral citation:
2023/DHC/000174) to argue that once the defendants had accepted the execution of the work by the plaintiff as also after submission of the measurement duly entered in the Measurement Book even processed the bills pertaining to the work order without any dispute whatsoever and therefore, the defendants were under the liability to pay the contractual work amount to the plaintiff.
17. Before proceeding further, I deem it appropriate to reproduce the Clause 4,7 and 9 of the GCC which has been referred to by both the parties:-
Clause 4 of Work order:
"It should be noted - (a) that as and when orders are given for execution of any extra/substitute item prior orders from the competent Authority to be obtained before execution of CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 13 of 26 the same to avoid any further complications; (b) that contractor has to submit his RA/Final bill with measurement otherwise nothing will be consider due on account of work execution".
Clause 7 GCC:
"No payment shall be made for work estimated to cost Rs. Twenty thousand or less till after the whole of the work shall have been completed and certificate of completion given. For works estimated to cost over Rs. Twenty thousand, the interim or running account bills shall be submitted by the contractor for work executed on the basis of such recorded measurement on the format of the department in the triplicate on or before the date of every month of the fixed for the same by the Engineer-in-Charge. The contractor shall not be entitled to be paid any such interim payment if the gross work done together with the note payment/adjustment of advances of material collected., if any, since the last such payment is less then the amount specified in Schedule 'F' in which case the interim bill shall be prepared on the appointed date of month after the requisite progress is achieved. Engineer-in Charge shall arrange to have the bill verified by taking or causing to be taken, where necessary, the requisite measurement of the work. In the even of the failure of the contractor to submit the bills progress is achieved. Engineer-in- charge shall prepare or cause to be prepared such bills in which event no claims whatsoever due to delays on payment including that of interest shall be payable to the contract. Payment on account of admissible shall be made by the Engineer-in-charge certifying the sum to which the contractor is considered entitled by way of interim payment at such rates as decided by the Engineer-in-charge of his Asstt. Engineer together with the account of the material as issued by the department, or dismantled materials, if any. The payment of passed bills will be subject to availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first and CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 14 of 26 past liabilities will be cleared and after that the release of payment for passed bills be in order of the demand received at HQ under particular head of accounts. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of the MCD."
Section 9 of GCC "The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in-charge whichever is earlier. Nor further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payment of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer-in-charge, will, as far as possible be made after the period specified here-in-under the period being reckoned from the date of receipt of bill by the Engineer-in-charge or his authorized Asstt. Engineer, complete with account of material issued by the department and dismantled. The payment of passed bills will depend on availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first the past liability will be cleared and after that the release of payment for passed bills will be in order of the demand received at the HQ and the particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of MCD.
(i) If the tendered value of work is upto Rs.5 lacs : 6 months.
(ii) If the tendered value of work exceeds Rs.5 lacs :9 months."
18. On harmonious constructions of these provisions, it is clear that :
"a. for payments of bills regarding the works, the CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 15 of 26 Engineer-in-Chief is required to certify the payments. b. the payments of the passed bills shall be made subject to availability of the funds in specific head from time to time with the MCD.
c. the payments of the bills shall be strictly made on que basis, and d. the interest shall not be payable by MCD for delayed payment on account of non-availability of funds".
19. Hon'ble High Court of Delhi had the occasion of examining the aforesaid clauses where it has been observed that a corporation which gets the work done to the satisfaction cannot be allowed to include a term in a contract which is per se unconscionable and unreasonable in so far as the availability of the funds are concerned as there is no fixed period or mechanism to determine as and when these funds shall be made available in a particular head of account that too without any knowledge of the aforesaid two factors to the plaintiff. Reliance placed on Sanjeev Kumar (supra). The Hon'ble High Court after examining the entire issue has even passed guidelines in the batch of appeals on 22.03.2018 where the bills after submission was required to be scrutinized by the Engineer in- chief and the work should be recorded in measurement book and bills should be passed. The Hon'ble High Court has been categoric that payment of 6 months and 9 months should be strictly adhered to and any delay in payment thereof would entail interest to be paid by the defendant corporation.
20. The Hon'ble High Court has gone to the extent of directing that for refund of security deposit and earnest money deposit the contractor shall CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 16 of 26 unscrupulously comply with the condition of clause 17 and 45 for which even the payment of final bills need not be awaited. The Hon'ble High Court has further passed a plethora of directions for streamlining the aforesaid issue which results in avoidable litigation between the corporation and the contractors executing the work.
21. In the present case, it is not in dispute that the plaintiff firm was awarded WO No.4 dated 03.03.2022, Ex. PW1/2 by the defendant No.2 and the said work were duly executed by the plaintiff and as a precondition earnest money was also deposited by the plaintiff. It is also not in dispute that the work was completed within time and the plaintiff has completed the necessary formalities including the measurement immediately on completion of the work leading to preparation of the bill Ex.PW1/3 passed the Executive Engineer concerned mentioning not only the details of the work done, rates on which the work was done and the actual amount due to be paid by the defendant corporation. The only question which has raised by the defendant is technical non-filing of final bill by the plaintiff.
22. According to the plaintiff, bill Ex.PW1/3 was passed on 29.06.2022 for Rs.11,76,201/- qua WO No.4, and the earnest amount for the same work of Rs. 1,28,692/- was also deposited as precondition and compliance of the tender document which has still not been returned by the defendants. The testimony of PW1 in this regard is not only clear and categoric but has also not been breached during cross-examination.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 17 of 26
23. The defendant on the other hand, has taken only one technical objection that no bills either interim or final were submitted for clearance to the defendant corporation and that Ex.PW1/3 was an internal noting of the defendant corporation only. However, if the cross-examination of DW1 Shri Manoj Kumar Kanojia AE is carefully examined, he has not only admitted Ex.PW1/3 but has admitted that the bill regarding the work order No.4 has already been passed by the defendant corporation and the same has also been accepted by the contractor/plaintiff at point "A". It has also been admitted by DW1 in his cross-examination that the running bills Ex.PW1/3 also bears the signature of contractor i.e. the plaintiff herein. If the bill is carefully scrutinized and as already discussed they contain not only the details of work, rates on which the work was completed but also the total amounts against each work order. The bill has been signed by the concerned JE, the Assistant Account Officer and even the Executive Engineer on behalf of the Commissioner MCD which clearly indicates that this bill has been duly approved by the competent officers of the defendant corporation who are duly authorised not only to verify and check the same but also approve the same. This bill is admittedly based on the measurement book which contains the details and particulars of work done duly cross-checked by the officers of defendant corporation after physical verification at the site. This bill has admittedly been also given to the plaintiff after his signatures on the same. It is not the case of the defendant that this bill has been obtained by the contractor through illegitimate means or through illegal access. It is unfathomable for the court to understand as to how the defendant corporation will reach this stage of preparation, cross-verification and CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 18 of 26 approval of the bills without the necessary formalities being completed by the plaintiff/contractor. Thus, taken on the yardstick of preponderance of probabilities, Ex.PW1/3 cannot be merely called an internal noting of the department but is a document to which the plaintiff is clearly also a party.
24. It is further not in dispute that this bill was prepared, cross-checked and has been prepared after verification on the basis of the measurement book. This fact has also been admitted by DW1 Shri Manoj Kumar Kanojia during cross-examination. It is also an admitted case of the defendant that there is no labour complaint pending or received against the plaintiff in respect of the work orders in question. Thus, taken comprehensively the defendant has though admitted the liability on satisfaction of the works covered by the work order Ex.PW1/2 but is deliberately denying the claim of the plaintiff on the technical plea of non-submission of bill. Certainly law and equity cannot permit the same to happen, more so, when there is clear admission of completion of work without any complaint or lack of compliance and even the liability by the corporation. The defendant has admittedly failed to show any document on record showing failure of compliance or guidelines at the end of the plaintiff.
25. Though the defendant has taken the defence that plaintiff is not entitled for the amount as he had not complied with the contractual obligations and had failed to submit the final bill as required under clause 7 and clause 9 of GCC and clause 4 of the work order. It was also CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 19 of 26 submitted that the plaintiff also failed to comply with clause 17 and 45 of GCC for refund of the security deposit and did not apply for the labour clearance certificate. Ld. Counsel for the defendant relied upon the judgment of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Sanjeev Kumar (RFA 430/2016) in support of his arguments. It was also argued that unless the provision of clause 17 and 45 of GCC are complied with, the claim for refund of the security deposit is pre-mature and untenable.
26. As already held in the foregoing paras, admittedly the plaintiff had completed the works awarded to him pursuant to work order Ex.PW1/2 and even the bill has been prepared, verified and passed by the defendant corporation on 29.06.2022. The defendant has admitted its liability by preparing and passing of the bills Ex.PW1/3 which were counter signed by the plaintiff in token of its correctness.
27. As regards the amount of Rs.13,04,893/- withheld by the defendant in the bills Ex.PW-1/3 , DW-1 Shri Manoj Kumar Kanojia in his cross examination has admitted that this amount was withheld qua the work order No.4. It is now more than 2 years that the work has been completed and defect liability period has also expired and there is no complaint qua the work done by the plaintiff. The bill in question Ex.Pw1/3 covering the amount of work done have admittedly been prepared by the defendant. The plaintiff on his part has issued a legal notice under Section 477 & 478 of DMC Act, dated 07.11.2022 Ex.PW1/5, the receipt of which has not been disputed or denied by the CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 20 of 26 defendants in their affidavit of Admission Denial of documents but have merely mentioned that GCC was not complied with. The plaintiff has made request for passing of the bills and release of payment in respect of the works completed pursuant to the work order Ex.PW1/2 awarded to him.
28. In so far as the refund of the security deposit of Rs.1,28,692/- against the work order is concerned, PW-1 Shri Ravinder Kumar attorney of the plaintiff has categorically deposed that the same was not refunded despite satisfactory completion of the work covered under work order Ex.PW1/2. On the other hand defendant has claimed non-compliance of clause 17 & 45 of GCC.
29. Perusal of clause 17 of GCC makes it clear that plaintiff cannot claim the security deposit before the expiry of 12 months after the issue of the final certificate of completion of the work or till the time final bill has been prepared and passed, whichever is later. Clause 45 of the GCC also provides that security deposit of the work will not be refunded till the contractor produces a clearance certificate from the labour office. However, it further says that if no complaint is pending on record till after three months after completion of the work and/or no communication is received from the labour officer to this effect till 6 months after the date of completion, it will be deemed to have received the clearance and the security deposit will be released, if otherwise due.
CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 21 of 26
30. In the present case, the works were completed by the plaintiff and the bills were prepared and passed by the defendant on 29.06.2022. A period of almost 2 years has expired from the date of completion of work. Admittedly, there is no complaint regarding the quality of work done by the plaintiff nor there is any complaint against the plaintiff regarding any labour dispute in respect of the aforesaid work orders (the maximum period for which was 6 months). A considerable time has expired since the contract was completed and admittedly there is no claim made by the defendant on account of any acts of commission or omission on the part of the plaintiff. DW-1 Shri Manoj Kumar Kanojia has also admitted in his cross examination that there are no labour complaints in respect of the work order Ex.PW-1/2 . Hence, there are no grounds for the defendant to withhold the security amount of the plaintiff. Accordingly, taken on the yardstick of preponderance of probabilities and in view of oral as well as documentary evidence which has come on record, the plaintiff has been successful in discharging the onus for his entitlement.
31. In view of the aforesaid discussions and findings, this issue is decided in favour of the plaintiff and against the defendant and it is held that the defendant was under legal obligation to pay outstanding amount of Rs..11,76,201/-, as also refund the security deposit of Rs.1,28,692/- which the defendant has failed to pay despite service of legal notice darted 07.11.2022 Ex.PW1/5 which is due and outstanding against the defendants. Therefore, the plaintiff is entitled to recover the total amount of Rs.11,76,201/- + Rs.1,28,692/- ( Earnest Money) from the CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 22 of 26 defendant. This issue is decided accordingly.
Issue no.2: "Whether the plaintiff is entitled to recover any interest from the defendant, if so, at what rate and for what period ?OPP"
32. The onus to prove this issue was on the plaintiff. The plaintiff has claimed pendente lite and future interest @ 12% per annum on the due amount of Rs.13,04,893/- from the date of filing of the suit till its realization.
33. Ld. Counsel for the plaintiff has argued that defendant has illegally withheld the amount of bills. It is further argued that the plaintiff has suffered financial losses as defendant failed to release the payments within a period of 6/9 months as required under clause 9 of GCC and hence, the plaintiff is entitled for the interest on the delayed payment.
34. Ld. Counsel for the defendant has argued that plaintiff is claiming interest on the decreetal amount without submitting the requisite documents and compliance of terms and conditions of GCC.
35. Ld. Counsel for the plaintiff has, however failed to establish the basis the interest is being claimed @ 12% per annum by the plaintiff. In NDMC & Others Vs. Shish Pal MANU/DE/1200/2018, it was observed that:-
"45. In the present case, the combined effect of the Clauses and the Circular and amendments, set out above, is that if the Corporation does not procure funds, it is not liable to even pay the Contractor any interest and the Contractor CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 23 of 26 has no remedy. This by itself would mean that such a Clause could be read as leading to a contract without consideration and hence unlawful under Section 23 of the Contract Act.
The Corporation being an instrumentality of State, such a contract would also be opposed to public policy under Section 23 of the Contract Act. Section 46 of the Contract Act is also clear that if no time for performance of a contract is specified, it has to be performed within a reasonable time. Reading these provisions together, it is clear that an open ended Clause which in effect says that the payment shall be made at an undetermined time in the future, subject to availability of funds, in a particular head of accounts is wholly unreasonable and such a term would also be unfair.....
71. A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the Contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
72. In view of the question of interest having been gone into detail and non-payment having been held to be illegal by various Single Judges of this Court, in cases involving the CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 24 of 26 Corporations, it is held that non-payment of interest beyond the period of 6 months and 9 months, as stipulated in Clause 9 of the General Conditions of Contract, would be contrary to law. Hence, the Contractors are entitled for payment of interest after a period of 6 months - 9 months respectively."
36. The award of interest is discretionary as the contract nowhere mentions about the rate of interest, each case has to be adjudged on its own merit. Keeping in view the facts and circumstances of this case, this court is not inclined to grant pre suit interest to the plaintiff which in any case the plaintiff has not claimed in the suit.
37. However, this court is of the considered opinion that the interest of justice would be subserved if the plaintiff is awarded simple interest @ 7.5% per annum on the amount of Rs.13,04,893/- from the date of filing of the suit till its realization. Reliance placed on Pt. Munshi Ram @ Associates (P) Lt. Vs. DDA, 2010 SCC Online Delhi 2444, Rajendra Construction Co. Vs. Maharashtra Housing & Area Development Authority and others, 2005 (6) SCC 678, McDermott International Inc. Vs. Burn Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road Transport Corporation Vs. Indag Rubber Ltd., (2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. Vs. G. Harischandra, 2007 (2) SCC 720 & State of Rajasthan Vs. Ferro Concrete Construction Pvt. Ltd. (2009) 3 Arb. LR 140 (SC). This issue is, accordingly decided in favour of the plaintiff and against the defendants.
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(I) CONCLUSION:-
ISSUE No.3: Relief.
38. In view of the aforesaid discussions and finding of the court on the aforesaid issues, the court is of the considered opinion that the plaintiff has been able to successfully prove its entitlement to the recovery against the defendant. The suit of the plaintiff is, accordingly decreed against the defendant for a sum of Rs. 13,04,893/-. The plaintiff shall also be entitled to a simple interest @ 7.5% per annum on such amount pendente-lite and future from the date of institution of the suit till its realization.
39. In the specific facts and circumstances of the case, the plaintiff shall also be entitled to the costs of the suit throughout.
40. Decree sheet be drawn accordingly.
41. File be consigned to record room after due completion.
PRONOUNCED IN OPEN COURT .
On this 31st August, 2024 (MUKESH KUMAR GUPTA) DISTRICT JUDGE (COMM. COURT)-07 CENTRAL/DELHI(pk) CS (Comm.) No. 1404/2023 Anubhav Wadhwa Vs. Municipal Corporation o f Delhi & Anr. Page no. 26 of 26