Delhi District Court
Manmoha Singh Wadhwa Constructions ... vs Municipal Corporation Of Delhithrough ... on 24 December, 2024
IN THE COURT OF Sh. NIKHIL CHOPRA, DISTRICT JUDGE
(COMMERCIAL COURT)-06, CENTRAL DISTRICT,
TIS HAZARI COURT, DELHI
CS (COMM) 2436/2022
CNR No. DLCT01-014772-2022
M/s Manmohan Singh Wadhwa Construction Pvt. Ltd.,
Regd. Office at:-A-1/8,
Krishna Nagar, Delhi-110051.
Working Office at H-1,
Vijay Chowk, Krishna Nagar,
Delhi-110051.
Through its Director
Mr. Juginder Singh Wadhwa.
......Plaintiff
Versus
Municipal Corporation of Delhi
Dr. SPM Civic Centre, Minto Road,
New Delhi-110002.
Through its Commissioner.
....Defendants
Date of Institution (e-filing) : 20.10.2022
Final arguments : 18.12.2024
Date of decision : 24.12.2024
JUDGMENT
1. Judgment disposes off of a commercial suit for declaration, Permanent Injunction and recovery of Rs.52,77,202/- together with interest @ 14% per annum.
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2. Shorn of avoidable details, the case of the plaintiff is that he is the proprietor of M/s Rajender Kumar and a duly enrolled Contractor with defendant. It is averred that the defendant invited tenders [NIT]1 for three Work Orders which was uploaded on their Website on 25.01.2022. The plaintiff submitted its quotation in respect of two Work Orders and was declared successful. The defendant awarded Work Order bearing no.EE/SLF/O/SDMC/2021- 22/9 dated 07.3.2022 on a contractual amount of Rs.3,01,28,000/-. The period of contract was of three months, which was to commence on 07.03.2022 and completed on 06.06.2022.
3. It is averred that the work could not be commenced on time as the registration certificates of trucks could not be procured. As a result thereof, the defendant issued a Show Cause Notice under Clause 3 of GCC on 29.03.2022, to which, the plaintiff replied on 31.03.2022 stating therein the reasons of delay as also that the work commenced on 27.03.2022.
4. It is further averred that the plaintiff submitted the quantity of executed Work alongwith original receipts and despite the mandate of defendant to verify and pass the bill within 10 days from the date of submission of the receipt 1 Notice Inviting Tender CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 2 of 35 of inert loaded and unloaded with measurement/quantity, the defendant make the payment. Further, in case of delay, the plaintiff is also entitled for interest on delayed payment @ 7.5% per annum.
5. It is averred that the work was completed within stipulated period. The defendant issued letters dated 22.08.2022 and 31.08.2022 thereby asking the plaintiff to submit original documents pertaining to vehicles on account of some discrepancies. The plaintiff replied to the letter dated 31.08.2022 vide letter dated 05.09.2022 stating therein that the vehicles which were engaged in the execution of the work has no concern with it and it is not possible for the plaintiff to produce the original documents.
6. The defendant sent a letter dated 07.09.2022 calling upon the plaintiff to submit the documents required within two days, which was replied by plaintiff on 12.09.2022 citing helplessness to submit the original documents/RC of the vehicles. However, the defendant vide e-mail dated 07.10.2022 suspended the business of the plaintiff for a period of one year without any notice or giving any opportunity for personal hearing, which is untenable.
7. It is further averred that the defendant made part payment of Rs.1,55,36,813/- on 30.06.2022 and thereafter, CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 3 of 35 did not made any payment and as such, the plaintiff is entitled to interest @ 7.5% per annum. It is averred that the plaintiff sent a legal notice dated 17.10.2022 under Section 478 of DMC to the defendant and a modified legal notice dated 18.10.2022 to defendant whereafter, the defendant issued a Show Cause Notice to the plaintiff to appear before the Superintendent Engineer on 28.10.2022. The plaintiff reply to the said notice and appeared before the concerned official. However, vide letter dated 28.10.2022, the defendant blacklisted the plaintiff for a period of one year as also forfeiting the earnest money.
8. The plaintiff has claimed the following amounts:-
Sl No. Particulars Amount
1. Balance amount in respect of Rs.39,06,849/-
Work Done
2. Earnest Money Rs.8,11,902/-
3. Interest @ 7.5% p.a. on delay Rs.5,58,451/-
payment Total Rs.52,77,202/-
9. While claiming cause of action to have accrued on several dates, including on the date of issuance of the legal notice dated 17.10.2022 and 18.10.2022 and further claiming that entire cause of action has accrued within the territorial jurisdiction of this Court, the plaintiff has claimed a money decree to the tune of Rs.52,77,202/-.
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10. The defendants filed their written statement raking up preliminary objections to the effect that the suit is bereft of any cause of action as the plaintiff has not submitted the original registration certificate of the vehicles; the plaintiff is guilty of violation of terms and conditions of GCC and subject conditions of the contract; the plaintiff is guilty of submitting forged registration certificates as far as the vehicles are concerned and have failed to provide original certificates despite notices dated 28.10.2022, 29.10.2022, 31.08.2022 and 07.09.2022; the plaintiff has already been blacklisted on 28.10.2022 after the plaintiff failed to show any reasonable cause pursuant to notice dated 21.10.2022 and is subjected to forfeiture of earnest money and provisional compensation as assessed by the defendant. Besides, it is averred that the documents were forged by the plaintiff in order to manipulate the functioning and make undue gains at the costs the defendant/MCD.
11. The defendant, in their parawise reply, admitted awarding of the work to the plaintiff as well as the various correspondence attributed to the defendant, however, has denied the other contentions of the plaintiff. It has been impressed that the plaintiff was under a legal obligation to ensure correctness of the documents and information submitted by the plaintiff; and that the defendant had repeatedly called upon the plaintiff to submit the original registration certificates as forgery/discrepancies were CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 5 of 35 found in the registration certificates submitted by the plaintiff, insofar as the laden weight of the vehicles used is concerned. It is also averred that the plaintiff is not entitled to any payment or any interest as the discrepancies pointed out were not addressed by the plaintiff and as such, no payment had become due. It is further averred that the plaintiff did not submit any satisfactory reply to the show cause notice dated 28.10.2022 and did not submit the original registration certificates of the vehicles used and as such, the defendant had issued letter dated 28.10.2022, blacklisting the plaintiff as well as forfeiting earnest money as per the terms and conditions of the Agreement/NIT Conditions. The defendant has also denied that the work was completed by 06.02.2022 and in fact, it was completed with a delay of more than one month i.e. on 08.07.2022. The claim of any amount or any principal due thereon are stated to be misconceived.
12. The plaintiff filed its replication reiterating his stand as mentioned in the plaint, while denying averments in the written statement.
13. As transpires from the record, following issues were framed on 09.07.2024:-
i. Whether the Order dated 07.10.2022 as well as the internal noting dated 19.09.2022 are illegal, null and void or based on wrong assumptions, if CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 6 of 35 so its effect? OPP ii. Whether the plaintiff is entitled to a sum of Rs.52,77,202/- together with interest @ 14% per annum w.e.f 01.11.2022 till actual realization of the dues, if so its affect? OPP iii. Whether no cause of action has accrued? OPD iv. Whether the plaintiff is stopped from the filing of the present suit on account of breach of contract? OPD.
v. Whether the plaintiff has submitted forged and fabricated documents of registration of the vehicles, if so its effect? OPD vi. Relief.
14. The plaintiff examined its Authorized Representative as PW-1 who deposed through affidavit on the lines of the plaint and proved the following documents:-
1. Registration Certificate as Ex.PW-1/1;
2. Company Master Data as as Ex.PW-1/2;
3. Resolution dated 12.10.2022 as Ex.PW-1/3;
4.The NIT and General Conditions (Special) as Ex.PW-1/4;
5. The Work Order dated 07.03.2022 as Ex.PW-1/5;
6.The Show Cause Notice dated 29.03.2022 as Ex.PW-1/6;
7. Reply of the plaintiff dated 31.03.2022 as Ex.PW-1/7;
8.Copies of letters of defendant dated 22.08.2022 and 31.08.2022 as Ex.PW-1/8, Ex.PW1/9 respectively;
9. Reply of plaintiff dated 02.09.2022 as Ex.PW1/10;
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10.The letter of defendant dated 07.09.2022 as Ex.PW-1/11;
11. Reply of plaintiff dated 12.09.2022 as Ex.PW-1/12;
12. The Office order dated 07.10.2022 as Ex.PW-1/13;
13. Covering letter as to Bill of quantity dated 17.05.2022 as Ex.PW-1/14;
14.Covering letters as to Bills of quantity dated 02.06.2022 (two bills) as Ex.PW-1/15 and Ex.PW-1/16;
15.Covering letters as to Bills of quantity dated 08.06.2022 (two bills) as Ex.PW-1/17 and Ex.PW-1/18;
16.Covering letter as to Bill of quantity dated 09.06.2022 as Ex.PW-1/19;
17. Covering letter as to Bill of quantity dated 11.07.2022 as Ex.PW-1/20;
18. Covering letter as to Bill of quantity dated 25.07.2022 as Ex.PW-1/21;
19. The legal notice dated 17.10.2022 as Ex.PW1/22 with proof of e-mail as Ex.PW1/23;
20. The modified legal notice under Section 478 of D.M.C. Act, 1957 as Ex.PW1/24, proof of e-mail as Ex.PW1/25 and postal receipts as Ex.PW1/26;
21. Show cause Notice dated 21.10.2022 as Ex.PW1/27;
22. Reply of plaintiff dated 28.10.2022 as Ex.PW1/28 and
23.Letter of defendant dated 28.10.2022 as Ex.PW1/29.
15. During cross examination, PW-1 stated that he did CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 8 of 35 not know as to how many trucks were retained for the Work Order in question. He further stated that the trucks were retained from different transporters and photocopies of their RCs were given by the respective truck drivers. He also stated that he had signed the Measurements Book where required or directed by the officers of the defendant. He stated that Ex.PW-1/D1 i.e. letter dated 27.01.2023 was sent by the department regarding necessary recoveries. He stated that he had attended the personal hearing, however, he did not remember what was asked from him.
16. He further stated that the he has not submitted the original RC of the trucks. He volunteered that he did not submit the RC as the same was asked to be submitted after expiry of two months from the date of completion of the work and at the time of inception of the work, only photocopies of the RCs were asked to be submitted. He admitted that as per para 7 of the Work Order and the remarks thereunder, the liability as to correctness/genuineness is of the contractor. He stated that as per Condition 12 of Ex.PW-1/4, it is the responsibility of the contractor to ensure the genuineness of the documents. He denied that the plaintiff has deliberately used unauthorized vehicles/transports to ferry the load, in violation of clear conditions of the contract.
17. The defendants examined Sh. Nitin Bharti, Assistant CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 9 of 35 Engineer (Civil) as DW-1, who deposed through affidavit on the lines of their pleadings and proved the following documents:-
1. Table of Registered Laden Weight (R.L.W) of the vehicles submitted by the plaintiff as Ex.DW-1/1 (colly).
2. Letters dated 31.08.2022, 07.09.2022, 07.10.2022 and 28.10.2022 as Ex.DW-1/2 (colly) [subject to production of original]
3. Photocopy of weightment slip for garbage/malba/silt/mixed garbage/ash dated 06.06.2022 and 03.07.2022 as Mark X. [later exhibited as Ex.DW-1/P1]
18. During cross examination, DW-1 stated that the date of completion as per the Work Order was 06.06.2022 and the work was actually completed by the plaintiff on 08.07.2022. Ex.DW-1/P1 substantiates that the last truck was weighed at SLF Okhla on 03.07.2022. He further stated that the defendant did not issue any completion certificate of this work. He volunteered that the completion certificate is issued only when it is requested by the Contractor. He further stated that provisional extension of work was granted w.e.f 06.06.2022 to 08.07.2022, however, its copy had not been placed on record.
19. He denied that clause 7 of Ex.PW-1/5 is related to the documents produced/submitted by the plaintiff at the time of submission of the quotation of the work or prior to CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 10 of 35 the date of issuance of letter dated 07.03.2022. He also stated that there had been another litigation between the parties in relation with some other contract in which, a decree has also been passed. He volunteered that he is not aware as to whether the same has been challenged by the defendant or not. He further submitted that the department was not to verify the truthfulness of the registration as the purpose was to grant permission only.
20. During further cross examination, he stated that bill amount of Rs.2,67,49,914/- was passed, which has already been paid to the plaintiff. However, the remaining of the execution work is of Rs.31,80,000/-. He also stated that the defendant has prepared and passed the final bill to the tune of Rs. (-) 46,72,229/-, which was exhibited as Ex.DW-1/P3 (OSR). He admitted that page no.15 of the Measurement Book Ex.DW-1/P4 (OSR), the total amount of executed work is mentioned as Rs.2,98,42,973.83/-, however, the same was cancelled by the Assistant Engineer concerned. He also stated that the earnest money deposited by the plaintiff in this case is Rs.8,11,902/-. He admitted that the defendant did not suffer any monetary loss due to overloading of the vehicles, however, again said that he cannot say as to whether there was any monetary loss or not. He volunteered that the same is a violation of traffic laws. He admitted that no such monetary loss is mentioned in the affidavit or written statement of the defendant.
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21. The defendants examined Sh. Shubhash Singh, TSI RTA, Faridabad as DW-2. He proved 7 certificates in respect of vehicles as Ex.DW-2/1 (colly) bearing the details of name of the owner, type of vehicle and the capacity/permissive load capacity. He also proved his authority letter as Ex.DW-2/2.
22. During cross examination, he stated that he did not generate the certificate from the computer personally and the same have been generated by operator Sh. Rameshwar. He admitted that the same does not bear the signature of Sh. Rameshwar or any certificate under Section 63 of the BSA, 2023.
23. The defendants examined Sh. Irshad Ali, TSI RTA, Gurugram as DW-3. He proved 3 certificates in respect of vehicles as Ex.DW-3/1 (colly) bearing the details of name of the owner, type of vehicle and the capacity/permissive load capacity.
24. DW-2, proved the following certificates:-
1. Vehicle No.HR38X6960 Laden Weight 35,000 Kg.
2. Vehicle No.HR38X5153 Laden Weight 31,000 Kg.
3.Vehicle No.HR38X6153 Laden Weight 31,000 Kg.
4. Vehicle No.HR38Z0799 Laden Weight 35,000 Kg.
5..Vehicle No.HR38U9511 Laden Weight 25,000 Kg.
6. Vehicle No.HR38Q7028 Laden Weight 28,000 Kg.
7. Vehicle No.HR38R4164 Laden Weight 28,000 Kg.
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25. DW-3 proved the following certificates:-
1. Vehicle No.HR55AD4392 Laden Weight 28,000 Kg
2. Vehicle No.HR55P6659 Laden Weight 28,000 Kg.
3. Vehicle No.HR55Y7481 Laden Weight 31,000 Kg.
26. I have heard learned counsel for the parties and have gone through the material placed on record.
27. Main contentions of the Ld. Counsel for the plaintiff are:-
(i) The plaintiff completed the work well within time even though there was initial delay and it was only after the completion of the work and at the time of clearing of the balance amount the defendant corporation had raised this issue.
(ii) The defendant has wrongfully claimed default on the part of the plaintiff inasmuch as, the main contract stood concluded with the satisfactory completion of the Work under the Work Order.
Any technical objection could not have been raised after the completion of the work so as to deny the benefit that has become due to the plaintiff after completion of the work.
The defendant corporation has failed to consider the fact that all the inert which the plaintiff was to transport stood transported well within time and if at all, there was any valid reason available with the defendant to claim breach of the Agreement or terminate the same, the same ought to have been done at the initial stage itself and not after the corporation got the complete work done from the plaintiff.
(iii) The neglect and refusal of the defendant to make the payment of the balance amount, is CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 13 of 35 malafide inasmuch as, the defendant corporation denied the payment without there being any just cause.
(iv) The cancellation/termination of the Agreement after the completion of the work is meaningless and malafide besides being unlawful inasmuch as, the defendant had all the opportunity during the currency of the Agreement while Work Order was being performed by the plaintiff to have the documents verified if at all there was a real necessity. The fact that the documents were sought to be verified only after the completion of the Work clearly shows that the same is being done only with a motive to deny the payments.
(v) The defendant is wrongfully accusing the plaintiff company of forgery and fraud inasmuch as it is not the plaintiff's documents but pertaining to third parties and the plaintiff cannot be punished for any irregularity or violation on the part of the third party. It has been brought to the notice of the defendant corporation for a number of times after the work was over, the plaintiff is not in a position to call the transporters for submitting of the record or to seek an explanation from them.
(vi) The plaintiff is not pressing for relief nos. a and b mentioned in the prayer as the same has already been granted in a connected matter and thus, the plaintiff is not pressing for the said relief in this lis, while referring all their rights.
(vii) The defendant has wrongfully proceeded to assess the amount of Rs.46,72,229/- as recoverable on the basis of a self styled criterion for assessment of the amount without bothering that the matter is pending in the Court. The defendant did not even file any counter claim or even mention any amount in the written statement or even the affidavit.
(viii) Assuming that the defendant has any right to recover the amount under some provision, the assessment has to be on the basis of well settled principles of law and as the matter is under adjudication before this Court, the defendant ought CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 14 of 35 to have proved that they have suffered damages to the tune of Rs.46,72,229/-.
(ix) The defendant, as is clear from the written statement and the affidavit, did not even whisper about any such assessment or existence of any claim as against the plaintiff. As such, the same cannot be considered at all.
(x) Ex.DW-1/P3, which is the final bill and being claimed to be a reason for not realizing the amount is non-est in the eyes of law and no such damages can be considered by the Court as neither they are believed, nor even proved before the Court. The defendant was under an obligation to prove that it has suffered any such loss on account of the alleged forgery, even if such forgeries are attributed to the defendant for the sake of arguments,
28. Main contentions of the Ld. Counsel for the defendants are:-
(i) The very suit of the plaintiff is misconceived inasmuch as no cause of action has accrued to the plaintiff for filing the present suit.
(ii) The plaintiff is himself guilty of breach of contract/conditions of GCC and Special conditions of the contract by submitting forged registration certificates and thereby committed a fraud upon the defendant.
(iii) The plaintiff was to ensure the genuineness and correctness of the documents and information submitted by him as per Clause 12 of the Work Order/conditions of the GCC. Since the registration certificates so submitted by the plaintiff were found to be forged, coupled with the failure of the plaintiff to bring the original registration certificates despite several opportunities, the plaintiff cannot be heard to say that any amount is due to him. In view of the above fraud so committed, the Agreement has been terminated and the plaintiff has also been blacklisted.
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(iv) The defendant is not liable to make any payment as the defendant is entitled to recover compensation or Rs.46,72,229/- on account of fraudulent conduct of the plaintiff and the plaintiff is not entitled to any money in terms of order dated 28.10.2022 of the competent authority of the defendant on account of breach of contract/agreement.
(v) In view of the order dated 28.102022 providing for blacklisting as well as recovery of compensation, it is the defendant who is still to recover certain amounts and the plaintiff cannot be heard to say that any amount had become due to him.
(vi) The very submission of forged registration certificates is a clear act of fraud upon the defendant for the purposes of deriving a personal gain, thereby dis-entitling the plaintiff to claim any relief whatsoever from the Court. On account of the fradulent acts of the plaintiff, the suit is liable to be dismissed.
29. Ld. Counsel for defendant has relied upon S.P. Chengalvaraya Naidu (Dead) by L.Rs Vs. Jagannath (Dead) by L.Rs & Ors. [AIR 1994 SC 853] and Commissioner of Customs (Preventive) Vs. M/s Aafloat Textiles (I) Pvt. Ltd. & Ors. [2009 (11) SCC 18]
30. In S.P. Chengalvaraya Naidu (Dead) by L.Rs Vs. Jagannath (Dead) by L.Rs & Ors. [AIR 1994 SC 853], the Hon'ble Supreme Court of India, observed as under:-
"7. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 16 of 35 playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants.
The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean-hands. We are constrained to say that more often Athan not, process of the court is being abused. Property-grabbers, tax- evaders, bank- loan-dodgers and other unscrupulous persons from all walks of life find the court -process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation."
31. In Commissioner of Customs (Preventive) Vs. M/s Aafloat Textiles (I) Pvt. Ltd. & Ors. [2009 (11) SCC 18] , the Hon'ble Supreme Court of India observed as under:-
"9 . "fraud" means an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include and any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non- economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almos always call loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. [See Dr. Vimla v. Delhi Administration 1963 Supp. 2 SCR 585 and Indian CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 17 of 35 Bank v. Satyam Febres (India) Pvt. Ltd. AIR1996SC2592].
10. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. See S.P. Changalvaraya Naidu v. Jagannath AIR1994SC853 .
11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. ...... It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. See Ram Chandra Singh v. Savitri Devi and Ors. (2003) 8 SCC 319."
32. Time now to deal with the issues.
"Issue No.1- Whether the Order dated 07.10.2022 as well as the internal noting dated 19.09.2022 are illegal, null and void or based on wrong assumptions, if so its effect? OPP "
33. Considering the statement at bar, made by the Ld. Counsel for the plaintiff on 18.12.2024, to the effect that he is not to press the relief in Clause A and Clause B of the plaint, i.e. pertaining to declaration in regard with order dated 07.10.2022 and 19.09.2022 as the said issues are CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 18 of 35 already decided in a connected case. Issue no. 1 does not survive for consideration.
34. Issues no. 2 to 5 are taken up together being integrally linked with each other.
"Issue No.2- Whether the plaintiff is entitled to a sum of Rs.52,77,202/- together with interest @ 14% per an- num w.e.f 01.11.2022 till actual realization of the dues, if so its affect? OPP "Issue No.3 -Whether no cause of action has accrued? OPD "Issue No.4- Whether the plaintiff is stopped from the filing of the present suit on account of breach of con- tract? OPD.
"Issue No.5- Whether the plaintiff has submitted forged and fabricated documents of registration of the vehicles, if so its effect? OPD Before proceeding further, the evidence lead by the parties needs to be dilated upon. Plaintiff and defendants have proved certain documents. As per the same, the work order dated 07.03.2022 was issued in favour of the plaintiff. Clause 7 of the same clearly stated that the plaintiff shall be responsible for the correctness/ genuineness of all the documents submitted by the plaintiff. Since the plaintiff did not initiate the work immediately upon the issuance of the Work Order dated 07.03.2022- Ex.PW1/5, the defendant issued a Show CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 19 of 35 Cause Notice dated 29.03.2022- Ex.PW1/6. The plaintiff replied to show cause notice in terms of his letter dated 31.03.2022-Ex.PW1/7, wherein the defendant was informed that the work stands started w.e.f. 27.03.2022.
35. Ex.PW1/14 to Ex.PW1/21 are the various bills raised by the plaintiff qua the disposal/ transportation of the inert to the designated placed. These documents indicate that the last of the bills was raised on 25.07.2022 for the period w.e.f. 01.05.2022 to 30.05.2022. The same also indicate that the work was not completed before 06.06.2022 as claimed by the plaintiff.
36. In terms of order dated 22.07.2022 and 31.08.2022 proved on record- Ex.PW1/8 and Ex.PW1/9, the plaintiff was called upon by the defendant to submit the original documents like Registration Certificates, Vehicle Permits, Insurance Proof, Pollution Certificates etc. The plaintiff submitted its reply thereto in terms of communication dated 02.09.2022- Ex.PW1/10 stating that the vehicles were arranged from different transporters and the plaintiff had obtained the copies of registration documents of such vehicles from the concerned transporters and submitted for verification. The plaintiff also impressed that certain payments have already been made and the work stood satisfactorily completed and as such the plaintiff is not in a position to arrange registration documents and that its CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 20 of 35 request is not heeded to by the transporters.
37. In terms of letter dated 07.09.2022- Ex.PW1/11, the defendant informed the plaintiff that nothing has been submitted by the plaintiff which was followed by an office order dated 07.10.2022 in the mail dated 07.10.2022- Ex.PW1/13 relating to suspension of the business
38. The plaintiff served a legal notice and modified legal notice, both dated 27.10.2022-Ex.PW1/22 and Ex.PW1/23 respectively, under Section 478 of BMC Act, 1957, calling upon the defendant to withdraw the office order to make the payment of Rs.52,77,202/-. The defendant, as transpires from the Show Cause Notice dated 21.10.2022- Ex.PW1/27, called an explanation as to why the order for suspension of business, black listing and closure of contract should not be passed. The opportunity of hearing also stands provided for as per the said letter. The letter also indicate a proposed action for recovery of damages/ compensation on account of material transported beyond the vehicles specified capacity. The plaintiff replied to the show cause notice, in terms of letter dated 28.10.2022. However, on the said date itself, the defendant passed an order-Ex.PW1/29 to the following effect:-
"After due consideration of the reply/ submission of M/s. Manmohan Singh Wadhwa Const. Pvt. Ltd. And all the facts of the case on record placed before competent authority, the competent authority came CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 21 of 35 to the conclusion that the firm i.e. M/s. Manmohan Singh Wadhwa Const. Pvt. Ltd. has defaulted in registration of vehicles at the weighbridge on the basis of documents submitted by you, as such, the genuineness and authenticity of these documents solely lie upon you inasmuch you were causing a wrongful gain to yourself and a wrongful loss to the corporation by using forged documents and hence therefore, be blacklisted for a period of one year for participation in any tender/ work for MCD from the date of issue of this order, forfeiture of earnest money, provisional compensation to be levied on the agency for the weight claimed over and above RLW of 25 MT @ awarded to our firm and to be recovered from the contractor's bill and the Closure of contract."
39. It is not in dispute that the Work stood completed much before the first ever letter citing discrepancy i.e. Ex.PW-1/8 dated 22.08.2022 was issued. The defendant side has admitted that while during the currency of the implementation of the Work Order, no such discrepancy was communicated to the plaintiff. It was subsequent to the completion of the work that in terms of Ex.PW-1/8 and Ex.PW-1/9 that the defendant had called upon the plaintiff to submit the original documents pertaining to the vehicles engaged by the plaintiff.
40. Insofar as the scope of issue is concerned, following questions arise for consideration:-
(i) Whether the certificates as provided by the plaintiff were genuine?
(ii) Whether the belated action of pointing out discrepancy has any legal effect?
CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 22 of 35
(iii) Whether the rescinding of the contract subsequent to the completion of the work was in proper earnest?
(iv) Whether the plaintiff can claim the amount to be due in view of the assessment of damages done by the defendant?
41. It is not in dispute that subsequent to the letters Ex.PW-1/8 and Ex.PW-1/9 relating to supply of the original registration certificates etc, the plaintiff had only been stating that the said documents pertains to third parties/ transporters, who are not under the control of the plaintiff and not heeding to the plaintiff's request. Fact remains, however, that at least 10 number of vehicles engaged by the plaintiff are proved to have lesser load capacity than proposed in the documents submitted. There is no cross examination by the plaintiff side as to the authenticity of the documents brought by the witnesses- DW-2 and DW-3 on record. These documents, coupled with the stand of the defendant clearly generate an inference that the documents submitted by the plaintiff qua these vehicles must be interpolated, even if the interpolation is not to be attributed to the plaintiff. Upon comparison of the certificates brought on record by DW-2 and DW-3, it is clear that these vehicles were registered for work with the defendant, at the behest of the plaintiff.
42. The defendant, thus, seem to have proven its point CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 23 of 35 that at least 10 of the vehicles engaged by the defendant were permitted a lesser load bearing capacity, than were claimed to be, by means of submission of documents by the plaintiff. It may be relevant here to mention that the defendant has also placed a table of registered vehicles as Ex.DW-1/1, which is not disputed by the plaintiff. The defendant, thus, has proved that at least in respect of 10 vehicles the certificates were not genuine. The question no. 1 above stands accordingly answered.
43. Question nos. 2 to 4 are taken up together being closely linked.
44. The defendant has not disputed that the issuance of Ex.PW-1/7 and Ex.PW-1/8 qua the discrepancy was issued only subsequent to the completion of the Work. Although the plaintiff has claimed that the work was completed by 06.06.2022, the statements of PW-1 and DW-1 indicate that it was completed only subsequently, around 08.07.2022. An extension is also stated to have been effected in this respect. It is also an admitted position that substantial amount stood released to the plaintiff by the said date and it was only after the completion of the work that the issue relating to discrepancy had cropped up.
45. The plaintiff's contention in this respect is that the defendant could have raised issues at the time when the CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 24 of 35 certificates were submitted, but the defendant continued to get the work done from the plaintiff and once they were in advantageous position, they started raising these technical issues. Besides, it is the plaintiff's assertion that the defendant could have, and ought to have raised the objection initially at the time of submission of the documents or even while the work was being performed by the plaintiff through his hired transporters; and that after having made the plaintiff to complete the work and suffer in terms of the transportation cost, the defendant cannot resile from its contractual obligations to pay for the work done by the plaintiff.
46. The defendant side, however, maintains that these certificates are forged, and the plaintiff did not file the original certificates thereby confirming the fabrication of the certificates, for the purpose of obtaining advantage/benefit under the Contract Act and considering the conditions of the Work Order, and as such there is a breach of contract on the part of the plaintiff. Accordingly, the defendant was well within its right to rescind the contract as well as assess damages, forfeit the earnest money, and no monetary damages are required to be proved by the defendant, as fraud would violate the very contract.
47. I have given thoughtful consideration to the above.
CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 25 of 35 A reference to the relevant provisions of the Contract Act appears to be desirable:-
" Section 62. Effect of novation, rescission, and alteration of contract.--If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract, need not be performed."
"Section 64. Consequences of rescission of a voidable contract.--When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promiser. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."
"Section 65. Obligation of person who has received advantage under void agreement, or contract that becomes void.--When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it."
"Section 70.Obligation of person enjoying benefit of non-gratuitous act.--Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."
"Section 73.Compensation for loss or damage caused by breach of contract.--When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 26 of 35 Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract.--When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.
Explanation.--In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account."
"Section 75.Party rightfully rescinding contract, entitled to compensation.--A person who rightfully rescinds a contract is entitled o compensation for any damage which he has sustained through the non- fulfillment of the contract."
48. Coming back to the fact in case, the submission of documents, found to be not genuine and fabricated, cannot be said to be of no consequence. If not a material violation in terms of the performance of the actual work of the contract or completion of the work under the Work Order, the same would still amount to a breach of a condition. The plaintiff cannot justify the submission of interpolated documents. What remains to be seen is the impact of such submission and especially the turn of events involved in the present case.
CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 27 of 35
49. As far as the rescinding of the contract is concerned, the defendant cannot be said to be entirely unjust in so doing. As has been proved on record, the plaintiff was afforded opportunity to place the original documents. However, what appears to be more compelling is the fact that the work stood performed and completed by the date when the defendant raised the issue of fabrication of the documents. The defendant side has sought to contend that it was done subsequently only during the audit by some other branch, but the same does not appear to be convincing. If the Court is to consider that whether the defendant had opportunity to verify the documents immediately after the submission of such documents and while during the performance of the work, the answer would seem to be in affirmative.
50. The contention of the plaintiff that it had altered its position completely and finished the work before such issue was raised, cannot be said of no consequence. Even if the defendant is assumed to have a legal right to rescind the contract, or otherwise penalize the plaintiff, under the terms of the contract, the manner and extend of such exercise has to be in line with the law.
51. The defendant did not consider the fact that the plaintiff had completed the work while passing the impugned order. The defendant, as transpires from the CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 28 of 35 record, had not only proceeded to inflict penalties like blacklisting, suspension of the work and subsequently, assessing damages to the tune of Rs.46,72,229/-, on the theoretical assumption that the excess load carried by such vehicles need not be paid for. This is where the Court finds a wrong to have been done by defendant.
52. A perusal of the provisions of the Contract Act mentioned hereinabove would indicate that a party who has derived a benefit under a contract which is rescinded or avoided, is also to restitutive the same to the party at the disadvantage. Even in respect of Quasi Contracts or other eventualities resembling a contract, a party enjoying the benefit of non-gratuitous act has to pay for the same. In the realm of a well defined contract, the principles may be identified as damages and in respect of quasi contracts or other situations resembling contract, as Quantummeriut.
53. A perusal of Section 62 shows that in the event of rescission, the contract need not be performed. Section 64 obligates a party rescinding avoidable contract to restore the benefit derived by him under a contract. The Court, cannot be oblivious of the fact that if the contract in question were to be rescinded timely, the defendant could not have expected to complete the work under the contract or suffer the expense. The rescission of the contract does not appear to be in right earnest as the defendant CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 29 of 35 corporation could have raised the issue earlier or timely, ensuring that the plaintiff does not alter its position any further.
54. Assuming that the defendant has rightfully rescinded the contract, it ought to have cared for mitigation of the damages and the delay on its part cannot be said to be inconsequential. The very fact that the rescinding of the contract was proposed and effected subsequent to the completion of the work under the contract, does count in favour of the plaintiff, insofar as the unpaid balance is concerned.
55. The defendant appears to have assessed damages to the tune of Rs.46,72,229/- on the basis of theoratical basis that the excess load need not be paid for. At this juncture, a reference to the case law appears to be desirable.
56. In Maula Bux Vs. Union of India [1970 SCR (1) 928], the Hon'ble Supreme Court of India observed as under:-
"It is true that in every case of breach of contract the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree, and the Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract. But the expression "whether or not actual damage or loss is proved to have been caused CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 30 of 35 thereby" is intended to cover different classes of contracts which come before the Courts. In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation, the sum named by the parties if it be regarded as a genuine preestimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him.
In the present case, it was possible for the Government of India to lead evidence to prove the rates at which potatoes, poultry, eggs and fish were purchased by them when the plaintiff failed to deliver "regularly and fully" the quantities stipulated under the terms of the contracts and after the contracts were terminated. They could have proved the rates at which they had to be purchased and also the other incidental charges incurred by them in procuring the goods contracted for. But no such attempt was made."
57. In Murlidhar Chiranjilal Vs. Harishchandra Dwarkadas & Ors [AIR 1962 SC 366], the Hon'ble Supreme Court of India, observed as under:-
"9 . The two principles on which damages in such cases are calculated are well-settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principles is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps......."
CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 31 of 35
58. Not only there is admission to the effect that there is no monetary loss, but also the fact remains that the defendant has not proved any damages in the proceedings. Although, the Court cannot be oblivious that the submission of fabricated documents cannot be said to be of no consequence, there has to be some proportionate or logical nexus between the injury and the damages.
59. The defendant has not only blacklisted the plaintiff, suspended the work, rescinded the contract, but also assessed the damages on theoretical basis i.e. not to pay for the over load. Even if the assessment of damages on this theoretical assumption is accepted as permissible under law, the Court cannot be oblivious of the fact that it is only in respect of the 10 of the vehicles that the overloading beyond capacity has been proved in the present proceedings. The assessment, however, appear to have been randomly done on the basis of sum totals, without specifying the actual over-loads. Besides, the Court would also hesitate to accept the said criterion for assessment of damage on account of element of remoteness. The work was already complete and the defendant had no means to restore the benefit while rescinding the contract. The imposition of penalty could not have been exercised to the extend that the work done is not paid for.
60. Applying these principles, the Court is of the view CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 32 of 35 that the breach of condition, without occasioning any monetary loss, could not have warranted imposition of the damages to the tune of Rs.42,72,229/-. At best, having regard to the terms and conditions of the contract, the defendant could have forfeited the earnest money.
61. Since the question of suspension/blacklisting etc. is not being agitated before this Court, on this ground that the same are already adjudicated upon in a connected matter, the question as to the legality of the blacklisting/suspension of work is not to be considered by this Court.
62. For the reasons recounted above, the Court is of the view:-
1. The defendant could have and ought have raised issue of fabrication of documents at the earliest point of time; and
2. The rescission of the contract after the completion of the work does not inspire confidence and the right of the plaintiff under Section 64 stood severely affected; and
3. Even if the defendant is assumed to be entitled to damages, the defendant ought to have cared for mitigation of damages; and the belated action on the part of the defendant, i.e. after the completion of the work has put the plaintiff at a much disadvantageous CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 33 of 35 position; and
4. The assessment of damages to the tune of Rs.42,72,229/- is purely on theoretical basis and having regard to the law laid down in Maula Bux Vs. Union of India [1970 SCR (1) 928] and Murlidhar Chiranjilal Vs. Harishchandra Dwarkadas & Ors [AIR 1962 SC 366], the defendant ought have proved the actual damages suffered. In the absence of such determination, the defendant could not have usurped the right to withhold the payment of the plaintiff.
5. The submission of the fabricated documents would definitely vest with the defendant with certain rights to act there on, but the same have to be exercised within the limits and as per the principles of the Contract Act.
The defendant is justified in forfeiting the earnest money; and
6. The plaintiff appears to be entitled to the amount of unpaid balance towards the work done, as special damages, if not as contractual obligation of the defendant, in as much as the defendant had failed to mitigate the damages by not acting timely.
63. Issue no.4-Relief.
64. Having regard to the totality of the circumstances involved and as stated here in above, the Court is of the view that the plaintiff is entitled to a sum of Rs.39,06,849/- CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 34 of 35 towards the unpaid balance against the work done by the plaintiff. The suit is, accordingly, partly decreed to the tune of Rs.39,06,849/- in favour of the plaintiff and against the defendant.
65. In the facts and circumstances of the case, the plaintiff is held entitled to the interest @ 9% per annum from the date of filing of the suit till actual realization.
66. Defendant is directed to make the payment of the decretal amount within three months from today.
67. Decreed with costs.
68. Decree sheet be prepared accordingly.
69. File be consigned to the record room after due compliance. Digitally signed by NIKHIL NIKHIL CHOPRA Dictated and Announced today CHOPRA Date:
2024.12.24 th 20:03:17 i.e. on 24 of December, 2024 +0530 in the open Court (NIKHIL CHOPRA) District Judge (Commercial Court-06) Central, Tis Hazari Court, Delhi 24.12.2024 CS (COMM) 2436/2022 M/s Manmohan Singh Wadhwa VS. MCD Page no. 35 of 35