Delhi High Court
Ayg Reality Private Limited vs Nbcc (India) Limited & Anr. on 2 September, 2021
Author: C. Hari Shankar
Bench: C. Hari Shankar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 13th August, 2020
Pronounced on: 2nd September, 2021
+ I.A.12354/2019 in CS(COMM)1005/2018
AYG REALITY PRIVATE LIMITED ..... Plaintiff
Through: Mr. Jayant K. Mehta, Senior
Adv, Mr. Aman Verma and Mr.
Anjuman Tripathy, Advs.
versus
NBCC(INDIA) LIMITED AND ANR. ....Defendants
Through: Mr. Rajinder Wali, Advocate
with Mr. Ashish Rana, Adv. for
D-1
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
% ORDER
(Video-Conferencing)
IA 12354/2019 in CS(COMM)1005/2018
1. This order disposes of IA 12354/2019, preferred under Order
XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 ("the
CPC"), whereby the plaintiff has sought interim relief.
Facts
2. Defendant No. 1 (hereinafter referred to as "NBCC") invited
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tenders, for construction of infrastructure at the Subsidiary Training
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Centre for the Border Security Force (BSF) at Chakur, District Latur,
Maharashtra. The plaintiff applied, and was awarded the tender, for a
total contract value of ₹ 30,06,15,853/-. The project involved for
separate "Packages" of work, designated as Package I-A, I-B, II-A
and II-B. A tabular representation thereof may be provided thus:
Package Date of Letter Value (₹) Nature of work
No. of Acceptance
(LOA)
I-A 16th January, 7,44,27,503/- Construction of the Training
2012 A Building, Training B
Building, SOS Mess Building
and GOS Mess Building
I-B 10th January, 7,60,08,843/- Construction of MI Hospital
2012 Building, Shopping Complex,
Family Welfare Centre and
Barracks 2.
II-A 10th January, 9,25,19,742/- Construction of Parade
2012 Ground, Stadium and
Swimming Pool
(Swimming Pool was later
withdrawn)
II-B 10th January, 5,76,59,806/- Construction of Barracks 3, 4,
2012 5 and 6 (Barracks 5 was later
withdrawn)
The work was required to be completed within Nine months.
3. The plaintiff predicates its case on Clauses 9, 10, 37.1 and 74 of
the General Conditions of Contract (GCC), which governed the
contractual relationship between the plaintiff and NBCC. NBCC
relies, for its part, on Clauses 37.1, 37.3 and 67.0 of the GCC. These
Clauses read thus:
"9.0 PERFORMANCE GUARANTEE
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Within 10 days (ten) from the date of issue of letter of award
or within such extended time as may be granted by NBCC in
writing, the contractor shall submit to NBCC a performance
bank guarantee in the form appended, from any Nationalized
bank, equivalent to 5% (five percent only) of the contract
value for the due and proper execution of the contract. This
bank guarantee shall remain valid up to 90 (ninety) days after
the end of defects liability period.
In case the contractor fails to submit the performance
guarantee of the requisite amount within the stipulated period
or extended period, letter of intent will stand withdrawn and
EMD of contractor shall be forfeited."
10.0 SECURITY DEPOSIT/RETENTION MONEY
The security deposit or the retention money shall be deducted
from each running bill of the contractor at 5% (five percent
only) of the gross value of the Running Account will. The
Earnest Money Deposited by the tenderer in the form of D.D.
only will be treated as part of the security deposit. The
lumpsum (consolidated) EMD amount deposited by the
Contractor at the time of registration with NBCC shall not be
adjusted for security deposit.
The security deposit or retention money shall be
refunded to the contractor after expiry of defects liability
period (referred to in Clause No. 74) or on payment of the
amount of the final bill whichever is later.
If the amount of Security Deposit deduction in cash is
more than Rs. 10 lakhs (Rupees Ten Lakhs only), the excess
amount can be refunded to contractor against submission of
Bank Guarantee of equivalent amount from a Nationalized
Bank in the prescribed proforma of NBCC."
"37.0 PAYMENTS
37.1 The bill shall be submitted by contract are each month
on or before the date fixed by the Engineer-in-Charge for all
works executed in previous months. The contractor shall
prepare computerized bills using the program as approved by
Engineer-in-Charge as per the prescribed format/pro forma.
The Contractor shall submit five numbers of hard copies and
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one soft copy of floppy/CD for all bills. Subject to clause
37.3 herein below, the payment due to the contractor shall be
made within fifteen days of getting the measurements verified
from the Engineer-in-Charge on his
subordinate/representative and certification of bill by the
Engineer-in-Charge.
*****
37.3 It is clearly agreed and understood by the Contractor
that notwithstanding anything to the contrary that may be
stated in the agreement between NBCC and the contractor,
the contractor shall become entitled to payment only after
NBCC has received the corresponding payment(s) from the
client/Owner for the work done by the contractor. Any delay
in the release of payment by the client/Owner to NBCC
leading to a delay in the release the corresponding payment
by NBCC to the contractor shall not entitle the contractor to
any compensation/interest from NBCC."
"67.0 SET-OFF OF CONTRACTORS LIABILITIES
NBCC shall have the right to deduct or set off the expenses
incurred or likely to be incurred by it in rectifying the defects
and/or any claim under this agreement against the Contractor
from any or against any amount payable to the contractor
under this agreement including security deposit and proceeds
of performance guarantee."
"74.0 DEFECTS LIABILITY PERIOD
The contractor shall be responsible for the rectification of
defects in the works for a period of 12 months from the date
of taking over of the works by the Owner/Client. Any defects
discovered and brought to the notice of the contractor
forthwith shall be attended to and rectified by him at his own
cost and expense. In case the contractor fails to carry out
these rectifications, the same may without prejudice to any
other right or remedy available, be got rectified by NBCC at
the cost and expense of the contractor."
(Emphasis supplied throughout)
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4. The following features are plain, from a reading of the afore-
extracted Clauses:
(i) The responsibility of the plaintiff, for rectification of
defects, extended only till the expiry of Twelve months from
the date of taking over of the works by the "Owner/Client".
"Works" and "Owner/Client" are defined, in sub- clauses (b)
and (l) of Clause 1.4 of the GCC, as under:
"(b) WORKS OR WORK The expression works or
work shall unless there is something either in the
subject or context repugnant to such construction, be
construed and taken to mean the works by or by virtue
of the contract contracted to be executed whether
temporary or permanent, and whether original, altered,
substituted or additional."
"(l) OWNER/CLIENT means the Government,
Organisation, Ministry, Department, Society,
Cooperative etc. who has awarded the work/Project to
NBCC and/or appointed NBCC as
Implementing/Executing Agency/Project Manager
and/or for whom NBCC is acting as an agent and on
whose behalf NBCC is entering into the contract and
getting the work executed."
The period of Twelve months, for reckoning the Defects
Liability Period ("DLP", in short) has, therefore, to be
computed from the date of taking over of the works by the
Border Security Force (BSF), who awarded the work to NBCC.
Clearly, the existence of defects in the work, or their
rectification/curing, by the plaintiff, is not relevant, for
assessing the DLP. The DLP extends only till the expiry of
Twelve months from the date of taking over of the work by the
BSF. Clause 74.0 requires NBCC to communicate, to the
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plaintiff, defects in the work, if any, within the said period of
Twelve months. The liability of the plaintiff to rectify the
defects extends only to that effect which are so brought to his
notice within the said period of Twelve months. The plaintiff
has no liability in respect of any defects in the work, to which
its notice is invited after the expiry of Twelve months from the
taking over of the work by the BSF. At the same time,
intimation, to the plaintiff, of the existence of defects, and their
rectification, by the plaintiff, thereof, had no effect on the
operation of Clause 74.0, insofar as the Twelve months'
terminus ad quem of the DLP is concerned. Any which way, on
the expiry of Twelve months from the date of taking over of the
work by the BSF, the DLP comes to an end.
(ii) The expression "works", as employed in Clause 74.0, is
also of no little significance. The submission of Mr. Mehta is
that Clause 74.0 is to apply on a building-wise basis, and not on
a Package-wise basis, whereas Mr. Wali would contend, per
contra, that Clause 74.0 is to be reckoned for each Package, and
not for each building. Mr. Mehta has, in this context, placed
reliance on a communication, dated 23rd April, 2018, from
NBCC to the plaintiff, which sets out the "actual DLP status",
as per the NBCC, building-wise. It is also asserted, in the said
communication, inter alia, that "the DLP of SOS Mess
completed but as on date you have not installed the solar water
heating at SOS building." The letter contains separate tabular
representations, for each Package, on a building-wise basis,
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explaining why, according to NBCC, the DLP, for the said
building, was as yet not concluded. This communication, in my
view, prima facie supports the submission of Mr. Mehta that the
DLP was required to be computed on a building-wise, rather
than a Package-wise, basis. Clauses in contracts, which admit
of ambiguity, or suffer from any want of clarity, may be
interpreted in the light of the manner in which the clauses are
understood by the parties to the contract, as manifested by their
actions, as held in Godhra Electricity Co. v. State of Gujarat1
and Mukul Sharma v. Orion India Pvt Ltd2.
(iii) The buildings under the Four Packages were
handed/taken over to the BSF, as follows:
Package Buildings Actual Date of
Handing over
Package I-A Training A 01.11.2014
Training B 03.12.2013
SOS 16.11.2016
GOS 19.05.2018
MI Hospital 05.08.2014
Package I-B Shopping Complex 16.11.2016
Family WelfareCentre 26.05.2015
Barrack 2 30.03.2019
Package II-B Barrack 3 30.04.2013
Barrack 4 09.09.2017
Barrack 6 19.06.2017
1
(1975) 1 SCC 199
2
(2016) 12 SCC 623
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(iv) The expiry of the DLP does not, however, unfortunately,
crystallise any right, in favour of the plaintiff, to the reliefs
sought in this application. The plaintiff's essential claim is to
refund of the Security Deposit and return of the One remaining
PBG and the SBGs. These are governed by Clauses 9 and 10 of
the GCC.
(v) Clause 9.0 requires the petitioner to submit to NBCC,
within Ten days of issuance of letter of award of the contract
(subject to extension by NBCC), PBG, equivalent to 5% of the
total contract value, and further requires the PBG to remain
valid till the expiry of Ninety days after the DLP ends. As the
PBG, in respect of Package II-A continued to remain alive till it
was invoked by NBCC on 30th June, 2018, Clause 9 does not
call for application.
(vi) Clause 10.0 specifically envisages refund, of the security
deposit, by NBCC to the plaintiff. This, however, is to take
place after expiry of the DLP, or on payment of the Final Bill
raised by the plaintiff, whichever is later.
(vii) Clause 10.0 has to be read in juxtaposition with Clauses
37.1 and 37.3 of the GCC. Clause 37.1 is made subject to
Clause 37.3 and, to counterbalance, Clause 37.3 incorporates a
non obstante covenant; accordingly it has pre-eminence over all
other Clauses in the agreement between the plaintiff and
NBCC.
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(viii) Clause 37.1 requires payment, due to the plaintiff, to be
made by NBCC within Fifteen days of getting the
measurements verified from the Engineer-in-Charge or his
representative, and certification of the bill by the Engineer-in-
Charge. Clause 37.3 records the agreement and understanding,
of the plaintiff, that the plaintiff would be entitled to payment
only after NBCC received the corresponding payment from
BSF for the concerned work.
(ix) In order to claim entitlement to payment against any bill,
therefore, the plaintiff has, contractually, to establish that (a)
the measurements have been verified by the Engineer-in-Charge
or his subordinate/representative, (b) the bill has been certified
by the Engineer-in-Charge and (c) NBCC has received payment
of the amount, covered by the bill, from BSF.
(x) The result is that the contractor cannot, merely by virtue
of the DLP having expired, or come to an end, seek the return
of the SBGs furnished by it.
(xi) The PBGs were to remain alive till the expiry of Ninety
days from the end of the DLP. Once the DLP had expired, on a
building-wise basis, then, in respect of those buildings which
had been taken over by the BSF, Clause 9.0 requires the life of
the PBG, to that extent, to continue only for a period of Ninety
more days.
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5. For the purposes of the present application, and the present
order, it is not necessary to enter, in detail, into the allegations and
counter allegations in the suit. A brief reference is, however,
necessary. The contract was awarded, by NBCC to the plaintiff, in
Four Packages - Package I-A, Package I-B, Package II-A and Package
II-B. Each Package was covered by a separate Letter of Acceptance
(LOA). The LOA, covering Packages I-B, II-A and II-B, were issued
on 10th January, 2012, whereas the LOA covering Package I-A was
dated 16th January, 2012. Each Package required the plaintiff to
construct the buildings/structures covered thereby. This may be
presented, in a tabular fashion, thus:
Package Date of LOA Value of Buildings covered by
Package (₹) Package
I-A 16th January, 7,44,27,503/- (1) Training A
2012 Building
(2) Training B Building
(3) SOS Mess Building
(4) GOS Mess Building
I-B 10th January, 7,60,08,843/- (1) MI Hospital
2012 Building
(2) Shopping Complex
(3) Family Welfare
Centre
(4) Barrack No. 2
II-A 10th January, 9,25,19,742/- (1) Parade Ground
2012 (2) Stadium
(3) Swimming Pool
(later withdrawn)
II-B 10th January, 5,76,59,806/- (1) Barrack No. 3
2012 (2) Barrack No. 4
(3) Barrack No. 5 (later
withdrawn)
(4) Barrack No. 6
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6. As required by the General Conditions of Contract (GCC),
applicable to the contract between the plaintiff and NBCC, the
following Performance Bank Guarantees (PBGs) and Bank
Guarantees towards Security Deposit (SBGs) were furnished by the
plaintiff to NBCC, towards Packages I-A, I-B and II-B (the present
application does not concern Package II-A):
Package B/G No. PBG/SBG B/G Amount (₹)
I-A 00061PEBG120004 PBG 37,21,400/-
00061PEBG150019 SBG 5,85,927/-
00061PEBG140027 SBG 11,42,000/-
00061PEBG170012 SBG 6,97,000/-
I-B 00061PEBG120002 PBG 38,00,500/-
00061PEBG150018 SBG 8,67,910/-
00061PEBG140028 SBG 8,42,000/-
00061PEBG170013 SBG 3,91,000/-
II-B 00061PEBG120003 PBG 28,83,000/-
00061PEBG150020 SBG 10,15,808/-
00061PEBG140030 SBG 19,90,000/-
00061PEBG170015 SBG 4,54,000/-
7. Though, by the time of filing of the present suit, and even at this
stage of amendment thereof, some of the Bank Guarantees had been
invoked and encashed by NBCC (in respect to Package II-A). The
amounts covered by the PBGs issued in respect of Packages I-A (₹
37,21,400/-) and II-B (₹ 28,83,000/-) were, subsequently, released to
the plaintiff on 7th July, 2020. The prayers in the plaint seek return, by
NBCC, of the amounts covered by the Bank Guarantees invoked by it,
as well as of the Security Deposit furnished by the plaintiff and a
restraint against NBCC from invoking any further Bank Guarantees,
and the direction, to NBCC, to return all the Bank Guarantees to the
plaintiff. The prayer clause in the present IA, preferred under Order
XXXIX Rules 1 and 2 of the CPC, reads as under:
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"In the aforesaid circumstances, the Plaintiff most
respectfully prays that:
(i) This Hon'ble Court may be pleased to order and
direct the Defendant No. 1 to finalize the final bills
raised by the Plaintiff with respect to 'Package I-A',
'Package I-B' and 'Package II-B' vide letters dated
24.07.2019, 26.04.2019 and 10.08.2018 respectively in
a specific time frame.
(ii) This Hon'ble Court may be pleased to order and
direct the Defendant No.1 to return, release and hand
over to the Plaintiff all the 12 (twelve) Bank
Guarantees with immediate effect, details of which are
as herein below (tabular statement of the Bank
Guarantees);
(iii) Alternatively, order and direct the Defendant
No.1 to return, release and hand over to the Plaintiff
the 08 (eight) Bank Guarantees with immediate effect
with respect to the Bank Guarantees of 'Package I-A'
and 'Package II-B' and to refund/return proportionate
Bank Guarantees qua 'Package I-B' since the defects
liability period of 3 out of the 4 buildings in the said
package are over and one building is ready for
possession.
(iv) This Hon'ble Court may be pleased to order and
direct the Defendant No.1 to return, release, refund
and/or pay over the security deposit of an amount of ₹
65,00,000/- (Rupees Sixty Five Lakhs only) lying with
it in cash, back to the Plaintiff without any claim or
demand thereunder on any count, whatsoever;
(v) This Hon'ble Court may be pleased to order and
direct the Defendant no.1 to return, release, refund
and/or pay over to the Plaintiff all the pending deposits
and amounts etc. under the Project Contract lying with
it and by whatever name called and in whichever form
whether lying with the Defendant No.1 or any other
person;
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(vi) This Hon'ble Court may be pleased to permit
the Plaintiff to remove its construction material, tools
and equipment lying on the project site;
(vii) Ad-interim reliefs in terms of prayer clause (i)
to (v);
(viii) Any other such reliefs as this Hon'ble Court
may deem fit and proper in the facts and circumstances
of the case."
8. According to the plaint, owing to unavoidable circumstances -
for a large part of which the plaintiff blames NBCC - the plaintiff
was unable to meet the milestones fixed by NBCC, from time to time.
As a result, various communications were addressed, by the plaintiff
to NBCC, inter alia on 26th September, 2012, 6th June, 2013, 9th
April, 2015, 10th June, 2015, 5th September, 2017, 24th January, 2018,
1st February, 2018, 15th February, 2018, 19th April, 2018, 12th May,
2018 and 26th June, 2018. Ultimately, NBCC granted the plaintiff
Nine months extension for completing the project which, according
to the plaintiff, was unreasonable.
9. The plaint also alleges that there was continuous default, on the
part of NBCC, in making prompt payment of the bills raised by the
plaintiff and that, in certain cases, payment was delayed by as long as
a year. When payment was made, it is alleged that arbitrary
deductions were effected from the bills, by NBCC suo motu. This, it
is alleged, violated Clause 37.1 of the GCC, which required
payments, against bills raised by the plaintiff, to be cleared within
Fifteen days from certification by the Engineer-in-Charge of NBCC.
The plaintiff alleges that, in violation of this covenant, NBCC, citing
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frivolous administrative and technical reasons, failed to clear the
plaintiff's bills in time, and repeatedly sought accommodation,
pleading scarcity of funds. This, it is submitted, resulted in
unnecessary financial burden on the plaintiff, which also adversely
affected progress of the work on the Project. It is also asserted, in the
plaint, that meetings were held, between the plaintiff and NBCC on
5th July, 2013 and 16th July, 2013, which were duly minuted, and in
which NBCC undertook to conduct joint measurement of the work
done by the plaintiff and release the payment within Seven days, as
well as to provide maximum assistance to the plaintiff, to complete
the Project within time. Even so, it is alleged that, from January to
December, 2015, the plaintiff's payments were not released in time
owing to financial difficulties being faced by NBCC. Reliance has
been placed, in this regard, on letters dated 9th April, 2015, 1st June,
2015, 9th June, 2015, 10th June, 2015, 11th June, 2015, 2nd July, 2015,
28th August, 2015, 8th October, 2015 and 16th December, 2015, from
the plaintiff to NBCC. It was only in early 2016 that, consequent to
assurances extended by NBCC, the plaintiff agreed to restart the
work. This, it is submitted, was reduced, by the plaintiff, in writing,
vide letter dated 16th December, 2015 addressed to NBCC.
10. All these facts, though undoubtedly interesting and
informative, do not really advance adjudication of the present
application. Prayer (i) in the application refers to letters dated 24 th
July, 2019, 26th April, 2019 and 10th August, 2018, whereunder final
bills, in respect of Packages I-A, I-B and II-B, were raised by the
plaintiff. It would be relevant, therefore, to refer to the said
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communications, and what happened to them, as the plaintiff seeks
interlocutory directions to NBCC to finalise the said final bills. For
this purpose, a chronological excursion through the communications
between the parties, howsoever tedious, is essential.
11. Communications between NBCC and plaintiff:
11.1 The original time stipulated, for completion of work under the
contract, expired on 9th October, 2012.
11.2 On 5th March, 2013 and 7th May, 2013, NBCC wrote to the
plaintiff, requiring it to rectify the defects in Barrack 3 (Package II-
B). Thirteen civil works and Nine electrical works, requiring to be
done, were enumerated.
11.3 On 25th April, 2013, NBCC wrote to the plaintiff, drawing its
attention to Seventeen works remaining to be done in Training
Building-B (Package I-A) and pointing out that the Building was
scheduled to be inaugurated by the Home Minister on 11 th May,
2013. As such, the plaintiff was directed to complete the work on
war footing basis.
11.4 The plaintiff's assertion that Barrack 3 (Package II-B) was
completed and handed over in September 2012 and that Training
Building B was completed on 31st March, 2013, was denied, by
NBCC, in its letter dated 31st May, 2013, to the plaintiff. The letter
again highlighted the defects in Barrack 3. It was further stated, in
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the said communication, that, in exercising its right under Clause
72.1 of the GCC, NBCC had withheld amounts, liable to be
recovered from the plaintiff in respect of the works related to
Package II-B, as the contract was scheduled to expire on 30th April,
2013, and no completion program had been received from the
plaintiff. The letter also referred to defects in Barracks 4, 5 and 6
(Package II-B). It was further alleged that the Family Welfare Centre
(Package I-B), the SOS Mess (Package I-A), GOS Mess (Package I-
A), MI Hospital (Package I-B) and Shopping Complex (Package I-B)
were not complete. Defects, pointed out in respect of Barrack 3, it
was reiterated, were yet to be addressed and that the BSF Board had
declined to take over the said Building, for that reason. In the
circumstances, the plaintiff was directed to show cause as to why sub
clauses (ii) to (iv) of Clause 72.2 of the GCC be not invoked by
NBCC.
11.5 On 6th June, 2013, the plaintiff responded to the aforesaid
Show Cause Notice dated 31st May, 2013. Apropos Barrack 3, it was
asserted that the building was complete and in occupation by the BSF
since September 2012. It was further pointed out that the Building
had been inaugurated by the IG, BSF, on 16th January, 2013. The
DLP, in respect of Barrack 3, therefore, it was submitted, had
commenced in September, 2012. In a somewhat contradictory vein,
however, the same communication went on to state that the plaintiff
would hand over, to NBCC, Barrack 3 (Package II-B), Training
Building-B (Package I-A), Training Building-A (Package I-A), the
MI Building (Package I-B) and the Family Welfare Centre (Package
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I-B) within 4 months, and would complete the RCC work in Barrack-
6 (Package II-B), the SOS Mess (Package I-A), GOS Mess (Package
I-A), Barrack-2 (Package I-B) and Barrack-4 (Package II-B) within 4
months, and in the Shopping Centre (Package II-A) and Barrack-5
(Package II-B) within 8 to 10 months.
11.6 On 6th June, 2013, NBCC wrote to the plaintiff, reiterating its
request for completion of Training Building-B (Package I-A). The
letter alleged that the plaintiff had not yet completed the first floor of
the said Building, but that the Building was inaugurated as per
programme on 2nd June, 2013. NBCC further stated that it had taken
the initiative to formally hand over the building to the BSF, but that,
in order to initiate the proceedings, incomplete work was required to
be first completed. Fifteen items of work, requiring attention, were
enumerated in the letter.
11.7 The plaintiff was once again requested by NBCC, vide letter
dated 2nd July, 2013, to immediately rectify the defects which
remained in Barrack-3 (Package I-B) and Training Building-B
(Package I-A). Vide a subsequent communication, dated 25th July,
2013, NBCC informed the plaintiff that defects, in Training Building-
B (Package I-A) were persisting, and that the BSF had adversely
commented on this aspect during the process of handing over/taking
over inspection.
11.8 The plaintiff responded, vide letter dated 19th September, 2013,
stating that the defects, pointed out in Barrack-3 (Package II-B) and
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Training Building-B (Package I-A) had been rectified. The NBCC
was, therefore, requested to expedite the process of handing
over/taking over of Barrack-3 (Package II-B) and Training Building-
B (Package I-A).
11.9 On 11th November, 2013, NBCC wrote to the plaintiff, alleging
that major rectification work continued to remain unfinished in
Barrack-3 (Package II-B) and Training Building-B (Package I-A), as
well as in the MI Hospital (Package I-B). In the circumstances,
NBCC stated that it was left with no alternative but to impose
Liquidated Damages, owing to the delay, attributable to the plaintiff,
in completion of the aforesaid buildings. It was stated, in the said
letter, that (i) the completion date had been crossed in respect of
Training Building-A (Package I-A), the GOS Mess (Package I-A),
the SOS Mess (Package I-A), the MI Building (Package I-B), Family
Welfare Centre (Package I-B), and Barracks 4 and 6 (Package II-B),
but the buildings were still incomplete, and that (ii) the Completion
Date was yet to reach in respect of the Shopping Complex (Package
I-B), Barrack-2 (Package I-B) and Barrack-5 (Package II-B). The
plaintiff was, therefore, requested to submit its final completion
programme.
11.10 NBCC further alleged, vide its communication dated 3rd
December, 2013, addressed to the plaintiff, that defects continued to
remain in Training Building-B (Package I-A) and the MI Building
(Package I-B). Further, vide communication dated 20th August, 2014,
NBCC alleged that defects were noticed by the BSF, at the time of
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handing over/taking over of the MI Hospital Building as intimated by
the BSF vide letter dated 13th August, 2014. The plaintiff was,
therefore, requested to rectify the said defects without delay.
11.11 On 9th October, 2014, NBCC again wrote to the plaintiff,
stating that, during handing over/taking over of Training Building-B
(Package I-A), Barrack-3 (Package II-B) and the MI Hospital
Building (Package I-B), various defects were found, which were
required to be rectified at the earliest. This was followed by further
communications dated (i) 13th January, 2015, alleging persistence of
defects in Training Building-B (Package I-A), the MI Hospital
Building (Package I-B), Barrack-3 (Package II-B), (ii) 16th January,
2015, alleging existence of defects in the Shopping Complex
(Package I-B) and (iii) 21st February, 2015, alleging existence of
defects in Training Building-B (Package I-A) and the Family Welfare
Centre (Package I-B).
11.12 The plaintiff wrote, on 9th April, 2015, to NBCC, requesting
for extension of time, without liquidated damages, for completion of
Package I-B.
11.13 On 8th May, 2015, the plaintiff wrote to NBCC, asserting that,
out of Fourteen buildings, it had completed Six and handed over the
buildings to NBCC. The plaintiff also requested for escalation, for
the period by which completion of work under the contract had got
extended beyond the originally stipulated period of Nine months.
This was followed by a communication dated 1st June, 2015, in which
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the plaintiff asserted that Barrack-3 (Package II-B), Training
Building-A (Package I-A), Training Building-B (Package I-A), the
MI Hospital (Package I-B), the Family Welfare Centre (Package I-B)
and the Shopping Complex (Package I-B) had been completed and
handed over and that the SOS Building (Package I-A), GOS Building
(Package I-A) and Barracks 2 (Package I-B), 4, 5 and 6 (Package II-
B) were nearing completion. Escalation, beyond the originally
stipulated period of 9 months, was again sought, and also extension
of time without liquidated damages.
11.14 On 2nd June, 2015, NBCC wrote to the plaintiff, alleging that
the plaintiff had failed to adhere to the stipulated milestones in the
contract and that much of the work continued to be defective or
incomplete. It was also asserted, in the said communication, that
almost all payments to the plaintiff stood paid.
11.15 On 10th June, 2015, the plaintiff again wrote to NBCC,
reiterating that Six out of the Fourteen buildings contracted, i.e.
Barrack-3 (Package III-B), Training Building-A (Package I-A),
Training Building-B (Package I-A), the MI Hospital (Package I-B),
Family Welfare Centre (Package I-B) and Shopping Complex
(Package I-B) had been completed and handed over, and that the
remaining Eight buildings were in the process of completion. The
plaintiff also blamed NBCC for delay in progress of the work,
attributing it to an availability of cash flow and free funds. In order
to complete the remaining work, the plaintiff sought extension of
time without liquidated damages, escalation and payment of its
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pending bills. The request for payment of its pending bills was
reiterated by the plaintiff, vide its letter dated 2nd July, 2015, to
NBCC.
11.16 On 3rd October, 2015, NBCC again wrote to the plaintiff,
assuring the plaintiff that there was no fund problem and that "as the
work progress, you will be paid immediately". The following
assurance was contained in the said communication:
"Please recall our discussion held on 26-8-2015 with
undersigned in SBG office, Mumbai, and it was informed that
there is no fund problem, and as the work progress, you will
be paid immediately.
In spite of various incomplete items/non executed items
included in bill passed, payment of Package I/Part B has been
released to you, on your firm assurance that you will resume
the work immediately and further payment on expeditious
completion of incomplete items etc progressively.
You are advised to start the work immediately to enable us to
release payment as work progress."
11.17 Again, on 5th December, 2015, NBCC wrote to the plaintiff,
alleging that defects continued to persist in the MI Hospital Building,
Family Welfare Centre and Shopping Complex, in Package I-B. This
was followed by communications dated 10th June, 2016, 1st July, 2016,
2nd July, 2016th and 16th July, 2016, from NBCC to the plaintiff,
alleging persistence of defects in the MI Hospital Building (Package I-
B), GOS Mess (Package I-A), SOS Mess (Package I-A), Family
Welfare Centre (Package I-B), Training Building-A and Training
Building-B (Package I-A).
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11.18 On 28th July, 2016, BSF wrote to NBCC, stating that the
Barracks (Packages I-B and II-B), GOS Mess (Package I-A) and SOS
Mess (Package I-A) were yet to be completed. This message was
forwarded by NBCC to the plaintiff on 1st August, 2016.
11.19 Persistence of the defects in the SOS Mess (Package I-A) and
Shopping Complex (Package I-B) was again alleged, by NBCC, in its
subsequent communication dated 20th January, 2017, to the plaintiff,
based on complaints received from the BSF in that regard.
11.20 On 12th February, 2017, the plaintiff forwarded, to NBCC, the
deviation statements in respect of Packages I-A, I-B and II-A.
11.21 On 23rd March, 2017, BSF wrote to NBCC, informing that,
during the inspection prior to handing over/taking over, Barrack-6
(Package II-B) was inspected by the BSF, and several shortcomings,
in civil and electrical works, were noticed, which were also shown to
the representative of the plaintiff, present at the site. The letter
attached a list of the shortcomings, Twenty Six in number, with a
request that all shortcomings be rectified at the earliest. This was
reiterated by the BSF, in its subsequent communication dated 21 st
April, 2017, which was forwarded by NBCC to the plaintiff on 25th
April, 2017.
11.22 On 19th June, 2017, BSF wrote to the NBCC, again intimating
the NBCC that, on inspection, seepage was found in Training
Building-A (Package I-A), the SOS Mess (Package I-A), as well as in
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Training Building-B (Package I-A) and Barracks 2 (Package I-B), 3
(Package II-B) and 6 (Package II-B). This, it was pointed out, was
required to be rectified. The complaint was forwarded by NBCC to
the plaintiff on 21st June, 2017.
11.23 On 7th August, 2017, BSF again wrote to NBCC, drawing its
attention to defects which persisted in Barrack-6 (Package II-B), and
calling for their rectification. This was communicated by NBCC to
the plaintiff on 12th August, 2017.
11.24 On 13th September, 2017, BSF again wrote to NBCC, alleging
that shortcomings were still found pending in Barracks 4 and 6
(Package II-B), before handing over/taking over. It was requested that
this pending work be completed at the earliest. The request was
communicated by NBCC to the plaintiff under cover of letter dated
22nd September, 2017.
11.25 On 28th September, 2017, NBCC wrote to the plaintiff, alleging
that the plaintiff's claims for excess work having been undertaken by
it were not reflected from the position on the ground. Defects in the
SOS Mess (Package I-A) were also referred to. It was further alleged
that work was still incomplete in Barrack-5 (Package II-B).
11.26 On 6th October, 2017, the plaintiff wrote to NBCC, stating, inter
alia, that the 26th RA Bill raised by the plaintiff on 24th August, 2017
for Package I-A was still awaiting payment, those certified by NBCC
for ₹ 9,54,287/-. Prompt payment was requested.
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11.27 Vide communications dated 7th November, 2017, NBCC alleged
that work relating to Packages I-A and II-B was still incomplete,
despite the expiry of the last date stipulated in that regard. Provisional
extension of time was granted, therefore, to 30th November, 2017,
reserving the right of NBCC to recover liquidated damages as per the
GCC. The plaintiff was directed to intimate the proposed programme
for completion of the remaining work.
11.28 On 22nd December, 2017, BSF again wrote to NBCC,
communicating the shortcomings/defects which still persisted in
Barrack-6 (Package II-B). This was forwarded by NBCC to the
plaintiff on 2nd January, 2018, with the request that the defects be
rectified. On the same day, i.e. 2nd January, 2018, NBCC forwarded,
to the plaintiff, defects noticed by the BSF in respect of Barrack-4
(Package II-B), with a request that they be attended to, immediately.
11.29 On 24th January, 2018, the plaintiff wrote to NBCC, asserting
that the work relating to Packages I-A and II-B had been completed,
and the work relating to Package I-B was also completed except one
building, i.e. Barrack-2, which would be completed shortly. The
attention of NBCC was drawn to the pending payments of the
plaintiff, with a request that the payments be expeditiously released,
extension of time be granted without liquidated damages and the
deviation file submitted by the plaintiff be approved.
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11.30 NBCC, vide its response, dated 25th January, 2018, to the
aforesaid letter dated 24th January, 2018, of the plaintiff, denied the
submission, of the plaintiff, that work relating to Packages I-A and II-
B was completed, or that the work relating to Package I-B was
completed, except for Barrack 2. Rather, submitted NBCC,
(i) in respect of Package I-A,
(a) despite repeated communications, the defects in
Training Building-A and Training Building-B were yet to
be rectified by the plaintiff;
(b) solar water heating system was not yet installed in
the SOS Mess, though the building had been handed over
on 16th November, 2016, due to which reason "this board
proceeding has not been concluded for starting the defect
liability period" and
(c) work was still in progress in the GOS Mess;
(ii) in respect of Package I-B,
(a) defects, pointed out in respect of the Shopping
Complex, MI Hospital and the Family Welfare Centre,
were yet to be rectified, and
(b) work, in respect of Barrack-2, was not progressing
well since long, and
(iii) in respect of Package II-B,
(a) Barracks 3, 4 and 6 had been handed over on 30 th
April, 2013, 9th September, 2017 and 19th June, 2017, but
rectification therein were yet to be carried out, and
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(b) Barrack 5 had been withdrawn from the scope of
work of the plaintiff, and would be executed otherwise, at
the risk and cost of the plaintiff.
No payments of the plaintiff, it was asserted, had been unjustifiably
withheld by NBCC.
11.31 The plaintiff rejoined to the aforesaid communication, dated
25th January, 2018, of NBCC, vide letter dated 10th February, 2018, re-
asserting that
(i) in Package I-A,
(a) Training Building-A, Training Building-B, the
SOS Mess and the GOS Mess were handed over, to
NBCC, on 20th September, 2014, 2nd June, 2013, 8th
February, 2017 and 24th January, 2018, respectively,
(b) resultantly, the DLP, in respect of Training
Buildings-A and B, and the SOS Mess, stood completed,
whereas the DLP, in respect of the GOS Mess was still
continuing,
(ii) in Package I-B, the MI Hospital, Shopping Complex and
Family Welfare Centre had been handed over on 15 th
December, 2013, 21st February, 2015 and 21st January, 2015,
respectively, and the DLP, in respect of all 3 buildings, already
stood completed, and
(iii) in Package II-B,
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(a) Barracks-3, 4 and 6 had been handed over on 30 th
April, 2017, 9th September, 2017 and 1019 June, 2017,
respectively, and
(b) consequently, the DLP, in respect of Barrack 3
stood completed, whereas the DLP in respect of Barracks
4 and 6 was still continuing.
The plaintiff further submitted that payment of its bills was being
unjustifiably delayed.
11.32 NBCC again wrote to the plaintiff on 7th March, 2018, alleging
that rectification of the enlisted defects, in the SOS Mess (Package I-
A) was still incomplete, and requesting the plaintiff to remedy the
situation at the earliest.
11.33 Vide letter dated 10th March, 2018, NBCC responded to the
communication dated 10th February, 2018 supra of the plaintiff, to the
following effect, in respect of the various Packages of work:
(i) in Package I-A, though all 4 buildings had been handed
over on the dates indicated by the plaintiff,
(a) the DLP, for Training Building-A, Training
Building-B and the SOS Mess, was "not concluded as on
date due to non-completion of rectification of defects",
and
(b) the work in respect of the GOS Mess was still
incomplete on the date of handing over,
(ii) in Package I-B,
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(a) though the MI Hospital Building, Shopping
Complex and Family Welfare Centre had been handed
over on the dates indicated by the plaintiff, the DLP, in
respect thereof, was "not concluded as on date due to
non-completion of rectification of defects", and
(b) work, in respect of Barrack-2, was not progressing
well, and
(iii) in Package II-B, too, though all 3 buildings (Barracks 3, 4
and 6) had been handed over on the dates indicated by the
plaintiff,
(a) the DLP, in respect of Barrack-3, was "not
concluded as on date due to non-completion of
rectification of defects", and
(b) the DLP, in respect of Barracks-4 and 6 was yet to
commence, as "rectification of defects/balance works had
not yet been completed".
11.34 On 19th April, 2018, the plaintiff again wrote to NBCC, inter
alia reiterating its earlier stand regarding handing over of the
buildings and status of completion of DLP, in respect of Packages I-A,
I-B and II-B. NBCC was once again requested to release the pending
payments of the plaintiff. NBCC, in its response dated 23 rd April,
2018, also reiterated its stand, as already conveyed to the plaintiff on
10th March, 2018. The plaintiff, too, in its communication dated 12th
May, 2018, addressed by way of response thereto, reiterated its stand.
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11.35 In the interregnum, on 8th May, 2018, the BSF wrote to NBCC,
alleging that defects continued to persist in the SOS Building
(Package I-A), and requesting that they be rectified so that the BSF
could recheck the defect/shortcomings "to complete the handing
taking over process". The said letter was forwarded by NBCC to the
plaintiff on 11th May, 2018, requesting that necessary remedial action
be taken.
11.36 On 15th May, 2018, NBCC wrote to the plaintiff, advising the
plaintiff to submit the Final Bill for Package IA in accordance with
Clause 43.6 of the GCC. Para-3 of the communication further stated
that, though Clause 37.3 of the GCC required payments to be made,
by NBCC to the plaintiff only on receipt of corresponding payment
from BSF, NBCC was releasing payment in the interests of work to
expedite the progress of work at site.
11.37 On 16th May, 2018, NBCC wrote to the plaintiff, granting
extension of time for completion of the work relating to Packages I-A
and II-B, as sought by the plaintiff, till 30th June, 2018, subject to levy
of liquidated damages.
11.38 Four Show Cause Notices were issued by the NBCC to the
plaintiff on 20th June, 2018, under sub- clauses (i) to (xi) of Clause
72.2 of the GCC, one for each Package, threatening the plaintiff with
cancellation of the contract for any Package in respect of which the
plaintiff failed to remedy the defaults, within 7 days.
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11.39 The plaintiff responded on 26th June, 2018, reiterating the
submissions already advanced by it earlier.
11.40 On 30th June, 2018, NBCC wrote to the Bank and invoked the
Performance Bank Guarantee provided by the plaintiff in respect of
Package II-A.
11.41 On 3rd July, 2018, NBCC again wrote to the plaintiff, alleging
that work remained incomplete in Packages I-A, I-B and II-B. The
plaintiff was, therefore, advised to "act as per the GCC and complete
the work immediately".
11.42 BSF wrote to NBCC on 17th July, 2018, again alleging that, at
the time of handing and taking over of the works performed by the
plaintiff, defects were found to be persisting, and had not been
rectified even 30 days after they had been brought to the notice of the
plaintiff. In the circumstances, NBCC was requested to expedite
rectification thereof. The letter was communicated, by NBCC to the
plaintiff on 19th July, 2018.
11.43 The plaintiff forwarded its Final Bill, for Package I-A, under
cover of letter dated 24th July, 2018, for a net payable amount of ₹
1,43,18,300/-. The appeal was accompanied by its abstract, a bill for
escalation and measurements of the work done.
11.44 The Final Bill, for Package II-B, for a net payable amount of ₹
1,64,03,331/- was forwarded by the plaintiff to NBCC under cover of
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letter dated 10th August, 2018, along with its abstract, a bill for
escalation, measurements of the work done and a "50% Excess
Quantity claim statement".
11.45 BSF again wrote to NBCC on 21st August, 2018, intimating that
"some defects were found by BOO during handing taking" and that,
despite 30 days having passed since then, the defects were yet to be
rectified. NBCC was, therefore, requested to take necessary action at
the earliest, to ensure that the defects were set right. Attached, to the
letter, was a list of defects/discrepancies/balance work as on 30th July,
2018, which included
(i) in respect of Package I-A,
(a) 5 civil and 3 electrical works in Training Building-
A,
(b) 10 civil works in Training Building-B,
(c) 16 civil and 13 electrical works, and 9 works
relating to firefighting, in the SOS Mess and 53 works in
the GOS Mess,
(ii) in respect of Package I-B,
(a) 8 civil works, 1 electrical work and 10 works
relating to firefighting in the MI Hospital Building,
(b) 12 civil works, 7 electrical works and 5 works
relating to firefighting in the Shopping Complex and
(c) 5 civil works, 5 electrical works and 9 works
relating to firefighting in the Family Welfare Centre, and
(iii) in respect of Package II-B,
(a) 13 civil works in Barrack-3,
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(b) 27 civil works, 11 electrical works and one item of
work relating to firefighting, in Barrack-4 and
(c) 20 civil works and 10 electrical works in Barrack-
6.
The communication was forwarded to the plaintiff on the very same
day, i.e. 21st August, 2018.
11.46 By a separate communication of the same date, i.e. 21st August,
2018, NBCC rejected the 23rd RA Bill submitted by the plaintiff in
respect of Package I-B. The plaintiff responded on 29th August, 2018,
requesting NBCC to grant extension of time, to the plaintiff, in respect
of Packages I-A and II-B till the date when the buildings in the said
packages were handed over to NBCC, and to grant extension of time,
without Liquidated Damages, up to 31st December, 2018, for Package
I-B (in respect of Barrack-2). In response, NBCC, vide letter dated
12th September, 2019, granted extension of time, for Package I-B, till
30th September, 2018, without prejudice to the right of NBCC to
recover liquidated damages as per the GCC.
11.47 Vide letter dated 24th September, 2018, NBCC intimated the
plaintiff that work, in respect of Package I-B still remained to be
completed. On 27th September, 2018, the plaintiff applied to NBCC
for extension of time, to complete Package I-B, till 31st December,
2018, without liquidated damages.
11.48 Vide letter dated 24th October, 2018, the plaintiff sought that the
time for completion of Package I-A be extended till 31st May, 2018,
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when the buildings relating to the said Package were handed over by
the petitioner to NBCC. A similar request was made, vide letter dated
27th October, 2018, in respect of Package II-B, for extension of time
till 30th June, 2018.
11.49 NBCC informed the plaintiff, vide letter dated 5th February,
2019, that the Final Bill relating to Package I-A had duly been
checked with the representative of the plaintiff, and requested the
plaintiff, therefore, to submit the deviation statement in respect of the
said Package, so that the Final Bill could be processed at the earliest.
The plaintiff submitted the said Deviation Statement, under cover of
letter dated 22nd February, 2019. It was requested, therefore, that the
Final Bill for Package I-A be processed and payment released.
11.50 On 30th March, 2019, NBCC wrote to BSF, informing the BSF
that Barrack-2 (Package I-B) was ready for handing over, and
requesting that Board be constituted for verifying inventories and
taking over of the building. As subsequent communications would
reveal, this has, however, not taken place till date.
11.51 Vide letter dated 18th April, 2019, addressed to NBCC, the
plaintiff asserted that, except for Barrack-2, which was ready for being
taken over by the BSF, all other buildings had been handed over and
DLP, in respect thereof, completed. The dates of handing over, in the
said communication, stated to be
(i) in respect of Package I-A,
(a) 20th September, 2013 for Training Building-A,
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(b) 2nd June, 2013 for Training Building-B,
(c) 8 February, 2017 for the SOS Mess and
(d) 24th January, 2018 for the GOS Mess,
(ii) in respect of Package I-B,
(a) 15th December, 2013, for the MI Hospital Building,
(b) 21st February, 2015, for the Shopping Complex and
(c) 21st January, 2015 for the Family Welfare Centre,
and
(iii) in respect of Package II-B,
(a) 30th April, 2013, for Barrack-3,
(b) 9th September, 2017, for Barrack-4 and
(c) 19th June, 2017, for Barrack-6.
It was also pointed out, in the said communication, that the Final Bills
for Packages I-A and II-B, submitted by the plaintiff, were awaiting
clearance. The plaintiff also requested that the Three Performance
Bank Guarantees and Nine Security Bank Guarantees, furnished by it,
be released, along with the Security Deposit of ₹ 65 lakhs.
11.52 Under cover of letter dated 23rd April, 2019, the plaintiff
submitted, to NBCC, the Final Deviation Statement for Package I-A,
for approval, with the request that the statement be approved on
priority basis.
11.53 Vide letter dated 26th April, 2019, the plaintiff submitted, to
NBCC, the Final Bill for Package I-B, for ₹ 1,17,17,328/-.
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11.54 Package I-B, however, faced a further hurdle, as BSF wrote, to
NBCC, on 3rd May, 2019, that as defects were found in Barrack-2, it
could not be handed over/taking over. NBCC was, therefore,
requested to ensure that the defects be remedied at the earliest. As a
consequence, NBCC, under cover of letter dated 28 th May, 2019,
returned, to the plaintiff, the Final Bill submitted by it in respect of
Package I-B, requiring the plaintiff to complete the work relating to
the said Package and re-submit the bill.
11.55 Vide letter dated 29th July, 2019, the defendant informed the
plaintiff that the Final Bills, submitted by the plaintiff in respect of
Package II-B, had been duly checked with the representative of the
plaintiff. The plaintiff was, therefore, directed to submit the Deviation
Statement, etc., in respect thereof.
11.56 On 16th April, 2019, BSF wrote to the NBCC, stating that
defects still remained in the GOS Mess (Package I-A).
11.57 Vide letter dated 30th August, 2019, NBCC informed the
plaintiff that the Final Deviation statement, as well as the statement of
extra/substituted items, submitted by the plaintiff in respect of
Package I-A, stood approved and that, therefore, the amended value
for Package I-A was ₹ 75,885,922/-.
11.58 On 30th November, 2019, NBCC informed the plaintiff that, as
the final Deviation Statement and statement of substituted items in
respect of Packages I-B and II-B were still awaited from the plaintiff,
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NBCC had prepared the Final Bill for all the packages. According to
the said Final Bill, the total value of Packages I-A, I-B and II-B was ₹
757.86 lakhs, ₹ 701.39 lakhs ₹ 896.66 lakhs. The plaintiff was
requested to acknowledge the communication and provide its
acquiescence to the finalisation of the Bills by NBCC within 15 days,
failing which, it was stated, the bills would be adjusted at the aforesaid
amounts without further communication. The plaintiff was also
requested to complete the work relating to Barrack-2 (Package I-B)
without further delay, as, otherwise, BSF would not accept the Final
Bill for the said Package.
11.59 The plaintiff responded on 18th December, 2019, objecting to
the Final Bills as computed by NBCC, clearly stating that they were
unacceptable. The plaintiff, therefore, requested that the bills be not
submitted to BSF. The plaintiff verified the measurements sent by
NBCC. It was also pointed out by the plaintiff, in the said letter, that
Barrack-2 had been completed by or on 30th March, 2019 and
inaugurated by the BSF on 23rd July, 2019. The plaintiff undertook to
rectify defects in Barrack-2, as pointed out during the DLP.
11.60 Reiterating this position, the plaintiff wrote, again, to NBCC on
8th January, 2020, asserting that the DLP was complete in respect of
all structures, except Barrack-2 (Package I-B). It was again reiterated
that Final Bills to be submitted by the plaintiff.
11.61 On 22nd January, 2020, NBCC wrote to the plaintiff, alleging
that the defects, pointed out in the MI Hospital, Shopping Complex
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and Family Welfare Centre (all of Package I-B) were still not
rectified. The plaintiff was, therefore, requested to provide a
programme for rectification of the said defects and also to complete
Barrack-2, so that the building could be taken over by the BSF.
11.62 On 6th March, 2020, BSF wrote to NBCC, clarifying that any
proposal for extension of time was to be obtained from NBCC only on
completion of the work, and not where the work was in progress. BSF
authorised NBCC, vide the said communication, to withhold, from the
bills of the plaintiff in cases where scheduled time had been extended,
10% of the sanctioned amount.
11.63 The plaintiff wrote, on 22nd May, 2020, to NBCC, drawing the
attention of NBCC to Office Memorandum dated 13th May, 2020,
issued by the Ministry of Finance (MOF), requiring Governmental and
public Sector undertakings to return the value of security/Bank
Guarantees to the contractors. The plaintiff asserted that it had
completed the work assigned to it, submitted the Final Bills and that
the DLP was also complete. In the circumstances, the plaintiff
requested NBCC to released, forthwith, all the bank Guarantees as
well as the security deposit furnished by the plaintiff.
11.64 This was followed by a communication, dated 15 th June, 2020,
from the plaintiff to NBCC, stating that, pursuant to the meeting
between the plaintiff and NBCC on 13th March 2020, the plaintiff had
signed the measurements and quantities as verified for Package I-A
vide letter dated 30th November, 2019. It was, therefore, requested
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that the amounts as per the said bill be released to the plaintiff,
including escalation. A similar request, for Package I-B, was sent by
the plaintiff to NBCC on 20th June, 2020.
11.65 On 6th July, 2020, NBCC wrote to its Bank to discharge the
PBGs submitted by the plaintiff for Packages I-A and II-B.
11.66 The plaintiff again wrote to NBCC on 10th July, 2020, vis-à-vis
Package I-B. It was asserted, in the said communication, that the
plaintiff had completed Barrack-2, which was handed over to NBCC
on 30th March, 2019, inaugurated on 23rd July, 2019 and was being
used by the BSF. It was further pointed out that the Final Bill for
Package I-B had also been submitted by the plaintiff on 30th April,
2019. Rectification, in respect of the said Package, too, it was
asserted, had been completed.
11.67 On 21st July, 2020, NBCC wrote to the plaintiff, apropos the
Final Bill raised by the plaintiff for Package I-A. The letter alleged
that defects, observed in Package I-A during the DLP had not yet been
rectified. It was further alleged that the Final Bill had not been
submitted in time. NBCC further drew attention to the GCC, which
required security deposit to be released only after the DLP was
completed and the final bill was adjusted, whichever was later. The
plaintiff was, therefore, requested to process the Final Bill for Package
I-A and resend it as soon as possible. Additionally, the plaintiff was
requested to submit the Final Bill for Package II-B without further
delay.
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11.68 On 25th July, 2020, NBCC again wrote to the petitioner,
drawing the attention of the petitioner to defects observed in Package
II-B during the taking over of the works and during the DLP. The
petitioner was directed to rectify the defects on or before 5th August,
2020. Similar correspondences were sent by NBCC to the plaintiff,
on the same day, i.e. 25th July, 2020, with respect to Packages I-A and
I-B, in the latter case specifically with respect to defects in Barrack-2.
With respect to Package I-B, the letter asserted that, as Barrack-2 had
not been taken over, DLP, in respect thereof, has yet to start.
The Upshot
12. The entitlement of the plaintiff, to the interlocutory prayers in
this application, has to be decided on the basis of the position as it
emerges from the above communications, vis-à-vis the clauses in the
GCC.
13. The communications between the plaintiff and NBCC make it
clear that, as on date, all buildings in Packages I-A, I-B and II-B,
except Barrack-5 in Package II-B and Barrack-2 in Package I-B, stand
handed over to NBCC. Barrack-5 in Package II-B was withdrawn,
from the contract, by NBCC, and, in respect of Barrack-2 in Package
I-B, defects still remain to be rectified.
14. Completion of DLP
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14.1 Clause 74.0 of the GCC requires the plaintiff to be responsible
for rectification of defects only for a period of 12 months from the
date of taking over of the works by the owner/client. The
communications on record make it clear that plaintiff and NBCC have
both been reckoning the DLP building-wise, and not package-wise. I
am unable, therefore, to agree with the submission of Mr. Wali,
learned Counsel for NBCC, that the DLP was required to be assessed
package-wise.
14.2 Clause 74.0 fixes the DLP as twelve months from the date of
taking over of the works by NBCC/BSF. The communications cited
hereinabove make it clear that all buildings have been taken over, in
all Packages, except those which were withdrawn from the contract
and Barrack-2. More than twelve months have also elapsed, since the
date of such taking over. Clause 74.0 does not permit extending the
DLP beyond twelve months, merely because defects are found in the
buildings after they are taken over. The import of Clause 74.0 is clear
and unequivocal. It is not open to the NBCC to, indefinitely, continue
to point out defects in the buildings as handed over by the plaintiff,
even after the buildings are taken over by the BSF. That liberty
enures, in favour of NBCC, only for a period of twelve months, and
no more. The attendant liability on the plaintiff is to ensure that
defects, pointed out within the said period of twelve months, are
remedied and rectified. The DLP does not stand extended till the
defects are remedied or rectified to the satisfaction of the NBCC or the
BSF. Clause 74.0 also provides for the consequence, in the event of
default, on the part of the plaintiff, in carrying out the rectifications, as
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pointed out during the DLP, which is that NBCC may have the defects
rectified otherwise, at the cost and expense of the plaintiff. The stand
of NBCC, as manifested from various communications addressed to
the plaintiff, that, as the defects, pointed out in the buildings handed
over by the plaintiff were yet to be completely rectified, the DLP
would not come to an end, is contrary to Clause 74.0 and cannot be
accepted. To reiterate, therefore, the DLP, in respect of all buildings
except Barrack-2 (Package I-B), has come to an end.
15. Re. Clause 37.3 of the GCC
Clause 37.3 of the GCC provides that plaintiff would be entitled to
payment, from NBCC, only after NBCC receives the corresponding
payment from BSF, for the work done by the plaintiff. The very
enforceability of such a clause, which makes payment to the plaintiff,
of the work done by the plaintiff, contingent on payment being made
by BSF to NBCC, with no stipulation as to time, may itself be
questionable under the Indian Contract Act, 1872. In the present case,
however, it would not be open to NBCC to seek shelter behind Clause
37.3, as NBCC itself novated the said clause, vide its communications
dated 3rd October, 2015 and 15th May, 2018 supra. In its letter dated
3rd October, 2015, NBCC clearly undertook to pay, "immediately", to
the plaintiff, payments against works executed by it, as the works
progress. The concluding sentence of the said communication further
advised the plaintiff to commence work immediately, so as to enable
NBCC "to release payment as work progresses". In its subsequent
communication dated 15th May, 2018, NBCC expressly noted that,
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despite Clause 37.3 of the GCC, it "was releasing payment in the
interest of work to expedite the progress of work at site". Prima facie,
in my view, NBCC cannot seek to oppose the application of the
plaintiff on the basis of Clause 37.3 of the GCC.
16. Clause 67.0 of the GCC
NBCC also relies on Clause 67.0 of the GCC, which confers, on
NBCC, the right to deduct or set off expenses incurred or likely to be
incurred in rectifying defects or any claim under the GCC against the
plaintiff against any amount payable to the plaintiff, from, inter alia,
"security deposit and proceeds of performance guarantee". This
clause applies, at best, only to the security deposit, or payment, to the
plaintiff, of the "proceeds of performance guarantee", and does not
impact, in any way, the entitlement of the plaintiff to release of the
Bank Guarantees provided by it as security. Even otherwise, what the
Clause permits NBCC to set off, are the expenses incurred or likely to
be incurred in rectifying defects. The actual expenses which NBCC
would have to incur, or would be likely to incur, for rectifying any
defects which remained after completion of the work by the plaintiff,
would be a matter of evidence and trial. NBCC has not, either in oral
arguments during hearing, or in its written submissions, specifically
identified any expenses which NBCC would have to incur, to rectify
defects, or provided any prima facie material on the basis of which
this Court could come to a conclusion, at this stage, that set off, or
deduction, of such amounts, from the dues of the plaintiff, could be
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justified under Clause 67.0. The reliance, by the plaintiff, on Clause
67.0 is also, therefore, in my view, at least at this stage, misguided.
17. Which takes us to the prayers in this application.
18. Re. Prayer (i)
18.1 Prayer (i) seeks a direction to NBCC to finalise the Final Bills
submitted by the plaintiff in respect of Packages I-A, I-B and II-B.
18.2 Unlike conclusion of the DLP, payment of the bills raised by
the plaintiff is, contractually, to be effected on a bill-wise, and
package-wise, rather than building-wise, basis. This position also
emerges from the communications between the parties, to which
detailed reference has already been made. NBCC had, vide its letter
dated 30th November, 2019, communicated, to the plaintiff, the
amount which, according to NBCC, was payable to the plaintiff in
respect of the three Packages. The plaintiff initially objected to the
said computation, vide its reply dated 18th December, 2019.
Thereafter, however, consequent on the meeting between the plaintiff
and NBCC on 13th March, 2020, the plaintiff had signed the
measurements and quantities as verified by NBCC for Package I-A in
its letter dated 30th November, 2019. The plaintiff, therefore,
requested NBCC to finalise the bill and release the amounts payable to
the plaintiff. To my mind, no further impediment, to the finalisation
of the Final Bill of the plaintiff, in respect of Package I-A, remains. A
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clear case is made out, therefore, for a direction to NBCC to finalise
the Final Bill in respect of Package I-A.
18.3 The position, in respect of the other two Packages under
consideration, is, however, different. The communications between
the parties indicate that, till date, Barrack-2 remains unfinished, for
which reason BSF has not taken over the said building either. As the
Final Bill has to be settled package-wise, no direction for finalising of
the Final Bill in respect of Package I-B can be issued, so long as
Barrack-2 is not completed to the satisfaction of NBCC.
18.4 The Final Bill in respect of Package II-B, as computed by
NBCC and communicated vide its letter dated 30th November, 2019,
has also been disputed by the plaintiff, in its reply dated 18 th
December, 2019. The record does not refer to any further
communications from the plaintiff to NBCC, apropos the
computation, by NBCC, of the amount payable to the plaintiff
thereunder. It would be for the plaintiff, therefore, now, to propose, to
NBCC, the amount which, according to the plaintiff, constitutes its
entitlement for the work done in respect of Package I-B. Thereafter,
the plaintiff and NBCC would have to work out the amount payable.
It is only after this exercise is undertaken that finalisation of the Final
Bill, in respect of Package I-B, is possible.
18.5 Resultantly, no direction, for finalisation of the Final Bills, in
respect of Packages I-B and II-B can be issued at this stage.
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19. Re. Prayers (ii) and (iii)
19.1 Two of the three Performance Bank Guarantees stand released
by NBCC. The Performance Bank Guarantee relating to Package I-B
is yet to be released. Clause 9.0 of the GCC required the Performance
Bank Guarantee to be kept alive only for a period of 90 days after the
end of the DLP. There is no stipulation, in the GCC, requiring the
continuance of the Performance Bank Guarantee even after the expiry
of the period of 90 days after conclusion of the DLP, or till all defects,
in respect of any particular Package, are remedied to the satisfaction
of NBCC or BSF. Indeed, the said stipulation would be manifestly
unreasonable, as NBCC and BSF could continue to point out defects
and, thereby, indefinitely protract the release of the Performance Bank
Guarantee. Clause 9.0 of the GCC requires the Performance Bank
Guarantee to be 5% of the contract value. In my prima facie opinion,
NBCC would be entitled to continuance of the Performance Bank
Guarantee, furnished by the plaintiff in respect of Package I-B, at best
to the extent of 5% of the value of Barrack-2.
19.2 Mr. Mehta had sought to contend that no building-wise
computation of value, for the contract, existed and that the values had
been worked out on a package-wise basis. Be that as it may, the value
of the contract has been worked out by NBCC in the first instance.
NBCC is, therefore, aware of the value to be apportioned to individual
buildings in any Package. Balancing of equities, in respect of the
Performance Bank Guarantee furnished by the plaintiff for Package I-
B would, therefore, in my opinion, require NBCC to indicate the value
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attributable to Barrack-2. The value of the Performance Bank
Guarantee, furnished by the plaintiff in respect of Package I-B, would
stand reduced to 5% of such value.
19.3 In the event NBCC is unwilling to apportion any specific value
to Barrack-2, then, given the fact that the DLP stands concluded in
respect of all buildings in the said Package except Barrack-2, the
Performance Bank Guarantee furnished by the plaintiff would have to
be released. In that event, the right of NBCC, to claim the differential
from the plaintiff would stand reserved.
19.4 The position, in relation to the Bank Guarantees furnished
towards security is, however, somewhat different.
19.5 Mr. Mehta has impressed, on this Court, the fact that Clause
10.0 of the GCC requires the Security Deposit - which, in his
submission, would include the Bank Guarantees furnished towards
security - to be returned only after expiry of the DLP, on payment of
the Final Bill to the plaintiff, whichever is later. Till payment of the
Final Bill, in respect of any Package, remains to be made, therefore,
Mr. Mehta would submit that there can be no question of release, to
the plaintiff, of the Bank Guarantee furnished by way of security for
that Package.
19.6 I am not willing, at least prima facie, to accord, to Clause 10.0,
as rigid interpretation as Mr. Mehta would lend to it.
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19.7 Clause 10.0 of the GCC cannot, in my prima facie opinion, be
so interpreted as to allow NBCC to delay payment of the Final Bill,
qua any particular Package, without due justification and, thereafter,
take advantage of the "whichever is later" caveat incorporated into the
said Clause. Where all buildings, for any particular Package have
been handed over by the plaintiff, and DLP also stands completed,
release of the Bank Guarantee provided by the plaintiff by way of
security for that Package cannot be allowed to remain pending
indefinitely, till payment is made, to the plaintiff, against the relevant
Final Bill.
19.8 At the same time, Clause 10.0 makes refund of the security
deposit conditional, not on finalisation of the Final Bill for any
particular Package, but on payment thereof. This is a contractual
covenant which the parties have executed with open eyes, and the
plaintiff, as much as NBCC, must remain bound thereby. It is not
possible for this Court, therefore, to direct release of the Security
Bank Guarantee, for any particular Package, unmindful of the fact of
payment, by NBCC, of the said Final Bill, to the plaintiff.
19.9 The sequitur would be that where, for any reason, the stage of
payment of the Final Bill, for any particular Package, has not reached,
there can be no direction, interlocutory or otherwise, to NBCC, to
release the Security Bank Guarantee furnished by the plaintiff in
respect of that Package.
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19.10 Where, however, the Final Bill, in respect of any particular
Package, is ripe for payment, in my opinion, release of the Security
Bank Guarantee, furnished by the plaintiff in respect of that particular
Package, cannot be delayed indefinitely merely by inaction, on the
part of NBCC, in making payment, to the plaintiff, of the Final Bill
raised in respect thereof.
19.11 Only thus, in my prima facie view, can the equities be balanced
at this stage.
19.12 I have already held, hereinabove, that the Final Bills, raised by
the plaintiff, in respect of Packages I-B and II-B, are not ripe for
finalisation. The only Final Bill which can be finalised at this stage is
the Final Bill pertaining to Package I-A, and necessary directions in
that regard have, therefore, already been incorporated in this order.
Consequent on finalisation, the only intervening act, which requires to
be performed, before the Security Bank Guarantee, in respect of
Package I-A, can be released to the plaintiff, is payment of the Final
Bill. There is, however, no prayer, in this application, for a direction
to NBCC to make payment, forthwith, to the plaintiff, against any of
the Final Bills raised by it. Directing release of the Security Bank
Guarantee, prior to making of payment, by NBCC, against the Final
Bills raised in respect of any particular Package would, however,
transgress Clause 10.0 of the GCC.
19.13 In order to ensure that equities are balanced, I am of the view
that NBCC requires to be directed to, consequent on finalisation of the
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Final Bill for Package I-A, deposit, with the Registrar General of this
Court, the amount found payable to the plaintiff against the said Final
Bill. Release of the Security Bank Guarantee is not specifically
dependent on the amount found to be payable to the plaintiff, against
any Final Bills raised by it, though Clause 10.0 does use the
expression "payment of the amount of the final bill". The letter, dated
30th November, 2019, from NBCC to the plaintiff, computed the total
amount payable, against Package I-A, as ₹ 757.86 lakhs. This figure
stands accepted by the plaintiff, consequent on the meeting between
the plaintiff and NBCC on 13th March, 2020 and the subsequent
communication dated 15th June, 2020, from the plaintiff to NBCC. In
any event, NBCC has acknowledged that the plaintiff is entitled to
further payment against the Final Bill raised in respect of Package I-A.
The balance payment requires, in my view, at this stage, to be
deposited, by NBCC, with the Registrar General of this Court, subject
to further proceedings in the suit.
19.14 Once payment, against the Final Bill raised by the plaintiff in
respect of Package I-A thus stands "made" by NBCC, Clause 10.0 of
the GCC would justify a direction to NBCC to release, to the plaintiff,
the Bank Guarantees furnished by the Plaintiff by way of security for
the said Package.
19.15 The prayer, in the application, for interlocutory directions to
NBCC to release, to the plaintiff, the Bank Guarantees furnished by
them as security, in my opinion, be, at this stage, allowed only to this
limited extent, and no more.
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19.16 Directions for release, to the plaintiff, of the entire security
deposit of ₹ 65 lakhs, made by it, cannot be issued at this juncture,
even while the work, in respect of Package I-B, remains to be
completed, and the amount payable to the plaintiff against the Final
Bill for Package II-B, remains to be finalised. Security Deposit has
been furnished for the entire contract as a whole, and not package-
wise. The maximum to which the plaintiff would be entitled, in the
matter of release of the Security Deposit, in view of the above
reasoning, would be for an amount proportionate to the quantum
found payable to the plaintiff, against the Final Bills raised by the
plaintiff in respect of Package I-A. At the same time, there is no
provision, in the GCC, for "piecemeal" or "package-wise" release of
the Security Deposit. I am not, therefore, inclined to direct, at this
stage, release, to the plaintiff, of the Security Deposit furnished by it.
The right of the plaintiff, for directions in that regard at a later more
appropriate stage would, however, stand reserved.
Conclusions and Order
20. Resultantly, the following directions are issued:
(1) DLP is to be reckoned on a building-wise, rather than a
Package-wise, basis.
(2) The DLP stands completed in respect of all buildings in
Packages I-A, I-B and II-B except Barrack-2 in Package I-B.
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(3) Clause 9.0 of the contract between the plaintiff and
NBCC requires Performance Bank Guarantee to be furnished
equivalent to 5% of the contract value. Separate Performance
Bank Guarantees have been furnished in respect of each
Package. The Performance Bank Guarantees in respect of
Packages I-A and II-B already stand released by NBCC. The
only justification, therefore, for non-release of the Performance
Bank Guarantee in respect of Package I-B, is the work
remaining to be completed in respect of Barrack 2. This,
however, in my view, cannot justify withholding of the entire
Performance Bank Guarantee. The Performance Bank
Guarantee furnished in respect of Package I-B has, therefore, in
my opinion, to be reduced to 5% of the value of the Package, as
attributable to Barrack 2. The contract value of each package
has been worked out by NBCC. NBCC is, therefore, directed to
file, under cover of an affidavit, the contract value applicable to
Barrack 2, within a period of two weeks. The value of the
Performance Bank Guarantee No. 00061PEBG120002,
furnished by the plaintiff in respect of Package I-B, would stand
reduced to 5% of the said contract value, attributable to Barrack
2.
(4) In the event the NBCC is unable, or unwilling, to
apportion or attribute a particular value to Barrack 2, out of the
total contract value in respect of Package I-B, I am of the
opinion that, possibly, a direction to release the Performance
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Bank Guarantee furnished by the plaintiff in respect of the said
Package, may be justified, as it would not be in the interests of
justice to withhold the entire Performance Bank Guarantee
merely because of work remaining to be done in respect of
Barrack 2. I refrain, however, from expressing any final
opinion in that regard at this stage, and the decision on this
aspect would be taken after compliance, by NBCC, with the
direction contained in (3) supra.
(5) The above directions are justified, even though Barrack 2
remains unfinished, as the value of the Performance Bank
Guarantee is based on the contract value of the concerned
Package, and not on the amount payable to the plaintiff against
the bill, or the Final Bill, raised by it.
(6) So long as Barrack 2 remains unfinished, no direction for
finalisation of the Final Bill, submitted by the plaintiff in
respect of Package I-B, can be issued, as the bill is required to
be finalised on package-wise, and not on a building-wise, basis.
Consequently, no interim directions, for release of Bank
Guarantees No. 00061PEBG150018, 00061PEBG140028 and
00061PEBG170013, can be passed at this stage, in view of
Clause 10.0 of the contract between the parties, which makes
refund of security deposit conditional on payment of the final
bill.
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(7) In respect of Package I-A, however, there is no
justification for further delay, on the part of NBCC, in finalising
the Final Bill, duly signed by the plaintiff and received by
NBCC on 3rd July, 2020. The NBCC is, accordingly, directed
to finalise the Final Bill relating to Package I-A within 30 days.
(8) Clause 10.0 makes the release of security deposit
conditional, however, not to finalisation of the final bill in
respect of any package, but to payment of the final bill. At this
stage, however, instead of directing release of payment of the
Final Bill to the plaintiff - in respect whereof no prayer is
contained in the application either - NBCC is directed to
deposit, with the Registrar General of this Court, the amount
found payable to the plaintiff, consequent to finalisation of the
Final Bill in respect of Package I-A, within 15 days of such
finalisation. Bank Guarantees No 00061PEBG150019,
00061PEBG140027 and 00061PEBG170012, furnished by the
plaintiff towards security in respect of Package I-A would be
released, in full, within a week thereof. Compliance report, in
respect of these directions, would be filed by the NBCC, before
this Court.
(9) In respect of Package II-B, the Final Bill, as computed by
NBCC and forwarded to the plaintiff, has been disputed by the
plaintiff. In this view of the matter, no directions, for release of
any Security Bank Guarantee, furnished by the plaintiff in
respect of Package II-B, can be issued at this stage.
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By:SUNIL SINGH NEGI
Signing Date:08.09.2021
19:49:51
Performance Bank Guarantee, furnished by the plaintiff in
respect of Package II-B, already stands released.
(10) As the plaintiff has chosen to dispute the amount payable
to it against the final bills raised by it in respect of Package II-
B, with a specific request not to forward the Final Bill to the
BSF, the ball, in respect of Package II-B is, so to speak, in the
court of the plaintiff. It would be for the plaintiff and NBCC to
work out, between themselves, the amount payable to the
plaintiff against Package II-B. Liberty would, therefore, stand
reserved to the plaintiff to move this Court, in respect of any
interlocutory directions, in respect of Package II-B, at a later,
and appropriate, stage.
(11) No direction for release of the Bank Guarantees furnished
by the plaintiff as security towards Package II-B can, therefore,
be passed at this stage. Liberty would, however, stand reserved
to the plaintiff to move the Court, in that regard, at any later,
and more appropriate, stage.
21. The time for compliance, by NBCC, with the above directions,
would stand reckoned from the date of uploading, on the website of
this Court, of this order or of communication by the Registry, to
NBCC, by email, of a copy thereof, whichever is earlier.
Signature Not Verified
Digitally Signed IA12354/2019 in CS(COMM) 1005/2018 Page 54 of 55
By:SUNIL SINGH NEGI
Signing Date:08.09.2021
19:49:51
22. Observations and findings, in this order, are only intended for
disposal of the present application, and would not influence the Court,
in further progress of the proceedings in the suit.
C. HARI SHANKAR, J.
SEPTEMBER 2, 2021/hmj Signature Not Verified Digitally Signed IA12354/2019 in CS(COMM) 1005/2018 Page 55 of 55 By:SUNIL SINGH NEGI Signing Date:08.09.2021 19:49:51