Delhi High Court
Cambridge Construction (Delhi) Ltd. vs Mcd on 18 January, 2011
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 13.01.2011
Judgment Pronounced on: 18.1.2011
+ CS(OS) No. 706/2007
CAMBRIDGE CONSTRUCTION (DELHI) LTD. ...Plaintiff
- versus -
MCD ....Defendant
Advocates who appeared in this case:
For the Plaintiff: Mr. Anil Kumar Kher, Sr. Adv.
with Ms. I.Sidhu, Adv.
For the Defendant: Ms. Sumita Kapil, Adv.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may Yes
be allowed to see the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
V.K. JAIN, J
IA No. 967/2008 (Leave to Defend)
1. This is a suit filed under Order XXXVII of the Code
of Civil Procedure of Rs 56,28,364/-. The plaintiff is the
owner of property No. 11, L.S.C., Masjid Moth, New Delhi,
which is assessed to property tax in the Records of MCD.
The defendant vide its letter dated 09th September, 2004,
CS(OS)No. 706/2007 Page 1 of 13
confirmed that after meeting the property tax liability for the
above said property for the period up to 31st March, 2004, a
sum of Rs 40,62,782/- was lying with it as on 31st March,
2004. In the meanwhile, liability of the plaintiff towards
property tax for the years 2004-05, 2005-06, 2006-07,
amounting to Rs 40,8,000/- has been adjusted from the
aforesaid amount, thereby leaving a balance of Rs
36,54,782/- with the defendant. The plaintiff has claimed
that amount along with interest thereon at the rate of 18%
per annum, amounting to Rs 19,73,582/-.
2. In its application for leave to contest, the defendant
has alleged that the plaintiff is not entitled to any money
from it and, in fact, it owns a sum of Rs 95,28,566/- to the
defendant, which it has not paid since 31st March, 2004. It
is further alleged that the Ratable Value (RV) of property in
question was revised to Rs 1,30,00000/- w.e.f. 1st April,
1996, from the previous RV of Rs 11,30,530/-. Later, vide
letter dated 26th March, 2000, the RV was reduced to Rs
91,03,500/- w.e.f. 14th February, 1998. An appeal was
preferred by the plaintiff against the Assessment Order
dated 26th March, 2000, being Appeal No. 354/2000. In the
meanwhile, disputes started between the plaintiff and its
CS(OS)No. 706/2007 Page 2 of 13
tenant which was later compromised and the plaintiff filed
Writ Petition No. 2474 of 2001, claiming vacancy remission.
Pursuant to the directions given by this Court, an order was
passed by the then Additional Assessor and Collector on
31st January, 2002 which was challenged by the plaintiff by
filing Appeal No. 109/2002. Both the appeals were disposed
of by the learned Additional District Judge vide common
order dated 01st July, 2002. Pursuant to the order of the
learned Additional District Judge, Smt. Surbhi Varshney,
the then Joint Assessor and Collector vide order dated 03 rd
September, 2004, fixed the RV at Rs 48,38,400/- w.e.f. 01st
March, 1997 and Rs 11,30,530/- w.e.f. 1st April, 2001.
According to the defendant, this was a blatant error on the
part of Smt. Varshney. It is also alleged that Smt. Varshney
was hand in glove with the plaintiff, was not competent to
pass this order and caused major revenue loss to the
department.
3. The defendant has not disputed the letter dated
03rd September, 2004, written by Smt. Surbhi Varshney, the
then Joint Assessing & Collector, South Range to the
plaintiff. The letter, to the extent it is relevant, reads as
under:
CS(OS)No. 706/2007 Page 3 of 13
"Please refer to your letter dated
29.07.2004 on the subject cited above.
Consequent upon finalization of
assessment vide assessment order dated
03.09.2004, and after adjusting the
property tax liability for the period up to
31.03.2004 n respect of subject property, a
sum of Rs 40,62,782/- (Rupees forty lacs
sixty two thousand seven hundred and
eighty two only) have become excess as on
31.03.2004 against subject property. This
amount is adjustable against the future
property tax liability."
4. This is defendant's own case that vide order dated
03rd September, 2004, Mrs Varshney had fixed the RV of the
property of the plaintiff at Rs 48,38,400/- w.e.f. 1st March,
1997 and Rs 11,30,530/- w.e.f. 1st April, 2001. This is also
not the case of the defendant that calculated in terms of the
order dated 09th September, 2004, the liability of the
plaintiff towards payment of property tax for the period up
to 31st March, 2004 comes to more than what is indicated in
the letter dated 9th September, 2004.
The only plea taken by the defendant to dispute its
liability is that Mrs Varshney was in connivance with the
plaintiff, had no administrative authority to pass the order
which she passed on 3rd September, 2004 and that the
order passed by her was erroneous.
CS(OS)No. 706/2007 Page 4 of 13
It is not in dispute that MCD did not file any
appeal, or other legal proceedings, challenging the order
passed by Mrs Varshney on 3rd March, 2004. It is also not
in dispute that the order dated 3rd March, 2004 was not
recalled or modified either by Mrs Varshney or by her
successor or an officer superior to her at any point of time.
During the course of arguments, I specifically asked the
learned counsel for the defendant as to whether the order
dated 3rd March, 2004 was recalled/modified at any stage or
was made subject matter of challenge by way of an appeal
or some other legal proceeding. She conceded that the order
had neither been recalled nor challenged by way of any legal
proceedings.
5. Since the order dated 3rd March, 2004 was neither
challenged by the defendant nor recalled or modified at any
point of time, it attained finality and is, therefore, binding
on the defendant, irrespective of whether it was erroneous
or not. If the defendant was aggrieved on account of an
erroneous order having been passed by Mrs Varshney or her
acting in connivance with the plaintiff and/or having no
administrative authority to fix RV of the property owned by
the plaintiff-company, the only course of action available to
CS(OS)No. 706/2007 Page 5 of 13
it was either to recall/modify the order provided it was
otherwise entitled in law to adopt such a course or to
challenge that order by way of appropriate legal proceeding.
Having not adopted either of these two courses of action, the
defendant cannot dispute the order passed by Smt.
Varshney in these proceedings and cannot claim that it was
not liable to pay a sum of Rs 40,62,782/- to the plaintiff on
31st March, 2004. It is not open to this Court to go into
validity, correctness or otherwise of the order passed by Mrs
Varshney on 3rd September, 2004 and once it is shown that
the order had attained finality, the defendant has no option,
but to pay the amount of Rs 40,62,782 to the plaintiff after
adjusting the amount of property tax in the years 2004-05,
2005-06, 2006-07.
6. During the course of arguments, I asked the
learned counsel for the plaintiff to satisfy me that the suit
on the basis of the letter dated 09th September, 2004 is
maintainable under Order XXXVII of the Code of Civil
Procedure. The learned counsel for the plaintiff relied upon
the decisions on Daya Chand Uttam Prakash Jain & Anr.
vs. Santosh Devi Sharma, 67 (1997) DLT 13, Food
Corporation of India vs. Bal Krishan Garg, 21(1982) DLT
CS(OS)No. 706/2007 Page 6 of 13
167, S.C. Gupta vs. Allied Beverages Co. Pvt. Ltd. in IA
No. 7987/2004 in Suit No. 542/2004 decided on 30th April,
2007.
7. In the case of Daya Chand (supra), in a suit under
Order 37 of the Code of Civil Procedure, the plaintiff relied
upon Statements of Account which contained
acknowledgement of a balance, payable to the plaintiff. It
was held by this Court that a suit on the basis of a written
acknowledgement of a pre-existing debt being a written
contract could form a basis for recovery of an existing debt
based on the said written contract in the shape of a written
acknowledgement. This Court was also of the view that the
acknowledgement was a promise to pay and contains all the
essentials for formation of a written contract.
In Food Corporation of India (supra), a Division
Bench of this Court concurred with the view taken by
Madras High Court in Commissioner of Wealth Tax vs.
Pierce Leslie and Co. Ltd. AIR 1963 Madras 356 that
Commissioner of Wealth Tax that the essential requisites
of a debt are (1) an ascertained or readily calculable
amount; (2) an absolute unqualified and pre-sent liability in
regard to that amount with the obligation to pay forthwith
CS(OS)No. 706/2007 Page 7 of 13
or in future within a time certain; (3) the obligation must
have accrued and be subsisting and should not be that
which is merely accruing.
In the case of S.C. Gupta (supra), this Court
upheld a suit based on acknowledgement by the defendant
in their Books of Account, Balance Sheets and Profit & Loss
Accounts, filed under Order 37 of CPC. In the case before
this Court, the letter dated 09th September, 2004, written by
Mrs Varshney, to the plaintiff not only contains
acknowledgement of liability of Rs 40,62,782 as on 31 st
March, 2004, it also contains a promise to adjust the same
against future property tax liability to the plaintiff. The
amount, mentioned in the letter, is a specific amount having
been arrived after quantifying the liability of the plaintiff
towards property tax for the period ending 31st March, 2004
on the Ratable Value fixed vide order dated 03rd September,
2004 and the obligation of the defendant to pay this amount
to the plaintiff had already been arisen when this letter was
sent. Since the letter also contained an obligation on the
part of the defendant to adjust this amount towards future
property tax liability of the plaintiff, it satisfies all the
requirements of the written contract as laid down in Order
CS(OS)No. 706/2007 Page 8 of 13
XXXVII Rule 1(2)(b)(i) of the Code of Civil Procedure. The
defendant, therefore, has virtually no defence in law to the
claim of the plaintiff.
8. In M/s Mechalec Engineers and Manufactures v.
M/s Basic Equipment Corporation (1977) 1 SCR 1060, the
Supreme Court set out the following principles:-
"(a) If the defendant satisfies the Court
that he has a good defense to the claim
on its merits the plaintiff is not entitled
to leave to sign judgment and the
defendant is entitled to unconditional
leave to defend.
(b) if the defendant raises a friable issue
indicating that he has a fair or bona fide
or reasonable defense although not a
positively good defense the plaintiff is
not entitled to sign judgment and the
defendant is entitled to unconditional
leave to defend.
(c) If the defendant discloses such facts
as may be deemed sufficient to entitle
him to defend, that is to say, although
the affidavit does not positively and
immediately make it clear that he had a
defense, yet, shows such a state of facts
as leads to the inference that at the trial
of the action he may be able to establish
a defense to the plaintiff's claim the
plaintiff is not entitled to judgment and
the defendant is entitled to leave to
defend but in such a case the Court
CS(OS)No. 706/2007 Page 9 of 13
may in its discretion impose conditions
as to the time or mode of trial but not
as to payment into Court or furnishing
security.
(d) If the defendant has no defense or
the defense set up is illusory or sham or
practically moonshine then ordinarily
the plaintiff is entitled to leave to sign
judgment and the defendant is not
entitled to leave to defend.
(e) If the defendant has no defense or
the defense is illusory or sham or
practically moonshine then although
ordinarily the plaintiff is entitled to
leave to sign judgment, the Court may
protect the plaintiff by only allowing the
defense to proceed if the amount
claimed is paid into Court or otherwise
secured and give leave to the defendant
on such condition, and thereby show
mercy to the defendant by enabling him
to try to prove a defense."
9. Since the defendant has virtually no legal defence
to the case of the plaintiff, it is not entitled to leave to
contest the suit. The application is, hereby, dismissed.
CS(OS) No. 706/2007
In view of dismissal of IA No. 967/2008 filed by the
defendant to leave to contest, the plaintiff has become
entitled to judgment forthwith, in terms of Order XXXVII
Rule 3(6) of the Code of Civil Procedure. The principal
CS(OS)No. 706/2007 Page 10 of 13
amount payable by the defendant to the plaintiff is Rs
36,54,782/-. As regards interest, neither any agreement
nor any custom on usage of trade for payment of interest
has been pleaded by the plaintiff. The only ground given by
the plaintiff for claiming interest is that the defendant has
legally withheld the amount payable to it. Interest, however,
cannot be awarded as damages.
Section 3 of Interests Act, to the extent it is
relevant, provides that in any proceedings for the recovery of
any debt or damages or in any proceedings in which a claim
for interest in respect of' any debt or damages already paid
is made, the court may, if it thinks fit, allow interest to the
person entitled to the debt or damages or to the person
making such claim, as the case may be, at a rate not
exceeding the current rate of interest from the date
mentioned in this regard in a written notice given by the
person entitled or the person making the claim to the
person liable that interest will be claimed, to the date of
institution of the proceedings.
Vide notice dated 17th January, 2007 sent to the
defendant through counsel, the plaintiff demand the
amount of Rs 36,54,782/- along with interest at the rate of
CS(OS)No. 706/2007 Page 11 of 13
18% per annum from the date the amount became due and
payable to the plaintiff. In the facts and circumstances of
the case, I am of the view that interest should be awarded to
the plaintiff at the rate of 6% per annum. The amount of
interest calculated at the rate of 6% per annum comes to Rs
6,57,860/-. The plaintiff, therefore, is entitled to recover a
total sum of Rs 43,12,642/- from the defendant.
ORDER
A decree for Rs 43,12,642/- with proportionate cost is hereby passed in favour of the plaintiff and against the defendant. If the defendant does not pay the aforesaid amount of Rs 43,12,642/- to the plaintiff within six weeks from the date of this order, the plaintiff shall also be entitled to interest on that amount at the rate of 6% per annum from the date of filing of the suit till the payment of the decretal amount. It is made clear that this order will not come in the way of the defendant in initiating any administrative or disciplinary action against Mrs. Surbhi Varshney or prejudice in any manner, the pending action, if any, against her.
CS(OS)No. 706/2007 Page 12 of 13
Decree sheet be prepared accordingly.
(V.K. JAIN) JUDGE JANUARY 18, 2011/BG CS(OS)No. 706/2007 Page 13 of 13