Delhi District Court
Rakesh vs Municipal Corporation Of Delhi on 11 November, 2024
IN THE COURT OF RAJESH KUMAR GOEL
District Judge (Commercial Court) -02, Central,
Tis Hazari, Delhi
DLCT010059072024
CS (COMM.) No. 485/2024
CNR No. DLCT010059072024
In the Matters of:
(As per amended Memo of Parties)
M/S Rakesh Kumar Goel
Through its partner
Rakesh Kumar Goel
140-Vivekanand Puri,
Sarai Rohila
Delhi -110007 ......Plaintiff
Versus
Municipal Corporation of Delhi
Through Its Commissioner
9th Floor, Civic Centre, Minto Road
Delhi -110 002
......Defendant
Date of filing of suit : 22.04.2023
Date of Argument : 11.11.2024
Date of Judgment : 11.11.2024
M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 1 of 20 )
JUDGMENT
1. Vide this judgment, I shall dispose of the present suit for recovery of Rs. 59,38,926/- ( Rs fifty Nine Lakh Thirty Eight Thousand Nine Hundred and Twenty Six only) i.e along with pendente lite and future interest filed by the plaintiff firm M/S Rakesh Kumar Goel (hereinafter referred to as 'Plaintiff') against the defendant ,Municipal Corporation of Delhi (MCD).
FACTUAL MATRIX
2. The brief facts of the case, as mentioned in the plaint are that the plaintiff is a partnership firm and Rakesh Kumar Goel is one of the Partners; plaintiff is duly enrolled as Municipal Contractor with the M.C.D. ; the work order bearing No. 01 dated 06.04.2021, for the nature of work as mentioned in the said work order, was awarded to the Plaintiff by the MCD; the Plaintiff completed the said work order on 14.07.2021 to the satisfaction of Engineer-in-Charge and the period prescribed for defect liability also passed over without any negative remark and to the satisfaction of the Engineer-in-Charge; the concerned engineer completed M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 2 of 20 ) the final measurement of the aforesaid work and same was recorded in the measurement books and was accepted by the plaintiff; thereafter, the concerned engineer prepared and passed the 1st and final bill and same was accepted by the plaintiff; as precondition of the award of work order, the plaintiff had also deposited the security/earnest money towards the aforesaid work order. The details of amount of bill, date of passing and amount of security/earnest money are tabulated below:
Bills Amount Date of Security/earnest
particular (Rs) passing money amoutn
s (Rs)
1st and 43,65,044/- 29.09.2021 4,96,229/-
final bill
Contingent 87,832/-
bill
Total 44,12,876/- 4,96,229/-
amount
Total 49,49,105/
-
3. It is the case of the plaintiff that despite passing of the aforesaid bills neither the payments were released nor the plaintiff was informed about for withholding the aforesaid payments; the plaintiff made several requests for release of the amount of the passed bills and the security amount but no heed was paid to M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 3 of 20 ) the request of the plaintiff.
4. It is further stated that as per clause 9 of General Terms and Conditions of the Contract, the Defendant is liable to release the payment of the passed bills within a period of 6 months for the bills upto Rs.5 lacs and within a period of 9 months for the bills above Rs.5 lakh; since the aforesaid sum of Rs.49,49,105/- is an admitted amount and the Plaintiff also did not raise any objection, the Defendant was under obligation to release the aforesaid amount to the Plaintiff within the aforesaid period as laid down in clause-9 or within a reasonable time but the defendant has failed to release the payment of the passed bills. Hence, the present suit was filed. The plaintiff has claimed the interest @ 12% p.a. on outstanding amount of Rs. 49,49,105/- in the sum of Rs. 9,89,821/- from 01.07.2022 to 30.03.2024. Thus, the total suit amount of Rs.59,38,926/- has been claimed.
5. Since, the subject matter of the suit is a commercial dispute, therefore, the plaintiff is said to have approached Central DLSA in terms of section 12 (A) of the Commercial Court Act, 2015 and the M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 4 of 20 ) Central DLSA has released a non-starter report dated 02.04.2024 in per-institution mediation process.
6. Here it is pertinent to mention that initially the present suit had been filed against two defendants.e. MCD and its Executive Engineer; plaintiff moved an application under Order 6 rule17 seeking amendment in the plant deleting defendant No.2; that application was allowed by this court and amended plaint was taken on record.
7. Thereafter, summons of the suit were issued to the defendant; the defendant contested the present suit and filed the written statement.
8. In the written statement, the defendant has taken certain preliminary objections. It is stated by the defendant that the present suit of the Plaintiff is nothing but gross misuse of process of law, hence liable to be dismissed with cost as it was agreed between the parties that the contractor can(not) file any kind of litigation qua the delay in payments by the defendant as the funds will be released by another civil authority and subject to the receiving of the funds from M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 5 of 20 ) the another civil authority the defendant will release the payment to the contractor; the plaintiff has no locus standi to file the present suit; the Plaintiff has not come to this Hon'ble Court with clean hands and has suppressed material facts with an intention to harass the Defendant; the final amount has already been approved by the defendant and now the same is pending for the releasing of the funds from the another civil authority. It is not the case that the defendant is avoiding its liability, it is only delayed due to following the proper procedure to make the payment of the plaintiff; the suit of the Plaintiff is not maintainable and liable to be dismissed as no cause of action has ever arisen in favour of the Plaintiff.
9. It is the further case of the defendant that the plaintiff had himself agreed with all the General terms and conditions of the contract which say that the defendant will release all the payment subject to availability of the funds under the particular head and the same will be released strictly in the queue basis i.e. first the past liabilities will be cleared and after that the release of payment for the passed bills will be in order M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 6 of 20 ) of the demand received at HQ of the defendant under particular head of account; it was made clear to the plaintiff prior to entering in the contract that the defendant shall not be liable to pay any interest to the contractor in case of delay in payment on account of non-availability of the founds in the particular head of Account of MCD.
10. On merits, it is not denied that the defendant issued the public notice /tender for the some work which was allotted to the plaintiff vide Work Order no. EE Pr II Shahdara North/SYS/2021-2022/1 dated 06/04/2021 but it is stated that the plaintiff had accepted the work order and all the terms and conditions mentioned in the work order as well as all the General Conditions of Contract of MCD; so the payment of the work given to any of the contractors shall be bound by the above mentioned General Terms and Conditions as well as the terms and conditions as mentioned in the work order/contract.
11. It is further stated that the present suit fall under the territorial Jurisdiction of the Shahdara District, New Delhi as the work order was issued by the EE Pr-
M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 7 of 20 ) II, Shahara North division, MCD, to the Plaintiff in the Shahdara District; even the work has been done in the area of District Shahdara, New Delhi; the work was completed by the Defendant in the Shahdara District; the payment in lieu of the concerned work was also made by the Plaintiff in the Shahdara District. Defendant has denied that Rakesh Kumar Goel is authorised to file the present case as no authorization has been filed by the plaintiff which proves that Rakesh Kumar Goel has authority from the other partners. It is further denied that the plaintiff had ever made any request in writing for the releasing of the payment qua the work in question and it was made clear to the plaintiff prior to entering into the contract that the defendant shall not be liable to pay any interest to the contractor in case of delay in payment on account of non-availability of the founds in the particular head of Account of MCD. It is therefore prayed that the present suit may kindly be dismissed.
12. The plaintiff filed the Replication denying the allegations made in the written statement and reiterated the facts as mentioned in the plaint.
M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 8 of 20 ) Settlement of issues and Fixing the Schedule for Second Case Management Hearing.
13. Vide order dated 03.09.2024 following issues were settled :
1. Whether the plaintiff is entitled for the recovery of Rs 59,38.926/- , as prayed for for in the plaint? (OPP)
2. If the issue no.1 is decided in affirmative, whether the plaintiff is entitled for the interest, as prayed for in the plaint? If yes, at what rate? (OPP)
3. Relief.
14. Thereafter, Schedule for the Second Case Management Hearing was fixed.
Evidence led by the parties:
15. In support of its case, the plaintiff has examined one of the partners namely Rakesh Kumar Goel as PW1 and has filed his evidence by way of affidavit ExPW1/A. PW1 has deposed on the lines of the averments made in the plaint . He has relied upon the documents i.e. copy of partnership deed EsxPW1/1, copy of Form- A ExPW1/2, copy of Form- B ExPW1/3, work order dated 06.04.2021 ExPW1/4, first final bill dated 29.092021 ExPW1/5, copy of contingent bill dated 30.09.2021 ExPW1/6, legal M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 9 of 20 ) notice dated 17.10.2023 ExPW1/7, General Conditions of Contract ExPW1/8 and non starter report ExPW1/9.
16. PW1 was cross examined by the Ld. Counsel for the defendant. No other witness was examined by the plaintiff.
17. Defendant has examined one Rakesh Kumar, AE in MCD as DW1. DW1 Rakesh Kumar tendered his evidence by way of affidavit ExDW1/A and has deposed on the lines of stand taken in the written statement filed by the defendant. DW1 was cross examined on behalf of the plaintiff. No other witness was examined by the defendant.
Arguments made by the Ld. Counsels:
18. Ld Counsels of both the parties have argued on the lines of their respective stand as taken by them in their pleadings, therefore, for the sake of brevity, I am not reproducing the same again and shall be considered wherever necessary. Ld counsel for the plaintiff has filed the written synopsys also.
19. I have gone through the material available on record and heard the Ld. Counsel for the plaintiff and M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 10 of 20 ) the defendant.
Discussion, Analysis and findings on the Issues
20. Before giving findings on the issues, I deem it appropriate to give findings on the technical objections raised during the arguments.
21. One of the objections taken by the Ld. Counsel for the defendant was regarding the jurisdiction. It is true that work order dated 06.04.2021 ExPW1/4 was allocated to the plaintiff for executing the work at Shahdara and at that time it was issued by MCD Office of Executive Engineer, Shahdara North division but it is also an admitted fact that all the three wings of MCD have already been amalgamated and now, there is only one MCD having its office at Civic Centre, Minto Road, Delhi 110002. It is not denied that on the date of filling the present suit, the present address of the defendant was in existence , which falls within the jurisdiction of this Court.
22. I am of the opinion that if an organisation or an entity, be it government or private, has shifted to a new address at the time of filing the suit, the cause of action would also lie at that place also, therefore, the M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 11 of 20 ) contention of the Ld. Counsel for the defendant that this court has no jurisdiction being devoid of merits is rejected.
23. Next objection taken by the Ld. Counsel for the defendant is that the plaintiff has not taken any authority from his other partners for filing the present suit. As evident from the documents ExPW1/1, ExPW1/2 and ExPW1/3, plaintiff is a registered partnership firm and Rakesh Kumar Goel(PW1) is one of the partners, who has filed the present suit. There is nothing on record indicating that other partners have any objection as to the filling of the present suit by Rakesh Kumar Goel(PW1). I am of the opinion that filling a suit before the court would come within the ambit of implied authority of the partner. That being so even if the plaintiff has not placed on record any such authorisation on record, it would not be fatal to the present case of the plaintiff.
Issue no.1 Whether the plaintiff is entitled for the recovery of Rs 59,38.926/- , as prayed for for in the plaint? (OPP)
24. In the present case, it is an admitted fact that work order no.1 dated 06.04.2021 ExPW1/4 was M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 12 of 20 ) awarded to the plaintiff by the defendant. It has also come on record that the plaintiff completed the work. It is nowhere a case of the defendant that no such work order was ever awarded to the plaintiff or the work was not completed by the plaintiff or the work was not as per the norms of the tender agreement or there was some delay on behalf of the plaintiff in execution of the work order. The only objection taken by the defendant is that the defendant was supposed to release the payment subject to availability of the funds under the particular head and that too on the queue basis.
25. Before proceeding further, I deem it appropriate to reproduce the clause 7 and 9 of the GCC ExPW1/8, which has been referred to by both the parties;
Clause 7 of the GCC "No payment shall be made for work estimated to cost Rs. Twenty thousand or less till after the whole of the work shall have been completed and certificate of completion given. For works estimated to cost overRs.twenty thousand, the interim or running account bills shall be submitted by the contractor for work executed on the basis of such recorded measurement on the format of the department in the triplicate on or before the date of every month of the fixed for the same by the Engineer-in- Charge. The contractor shall not be the entitled to be paid any such interim payment if the gross work done together with the note payment / adjustment of advances of material collected, if any, since the last such payment is less than the amount specified in Schedule 'F' in which M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 13 of 20 ) case the interim bill shall be prepared on the appointed date of month after the requisite progressives achieved. Engineer-in-charge shall arrange to have the bill verified by taking or causing to be taken,where necessary, the requisite measurement of the work. In the event of the failure of the contractor to submit the bills progress is achieved. Engineer-in-inCharge shall prepare or cause to be prepared such bills in which event no claims whatsoever due to delays on payment including that of interest shall be payable to the contract. Payment on account of admissible shall be made by the Engineer-in- Charge Certifying the sum to which the contractor is considered entitled by the way of interim payment at such rates as decided by the Engineer-in-Charge. The Amount admissible shall be paid by the 30th working day after the day of presentation of the bill by the contractor to the Engineer-in-Charge of his Asst.Engineer together with the account of the material is issued by the department, or dismantled materials, if any. The payment of passed bills will be subject to availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis the i.e. first the past liabilities will be cleared and after that the release of payment for passed bills be in order of the demand received at HO under particular head of accounts. Nointerest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of the MCD. Clause 9 of GCC:
The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in-Charge Whichever is earlier. No further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payment of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 14 of 20 ) byEngineer-in-Charge, will, as far as possible be made after the period specified herein under the period being reckoned from the date of receipt of bill by the Engineer- in-Charge Asstt. or his authorisedEngineer, complete with account of material issued by the department and dismantled. The payment of passed bills will depend on availability of funds in particular head of account from time to time in MCD.Payment of bills shall be made strictly on Queue basis.e. first the past liability will be cleared and after that the release of payment for passed bills will be in order of the demand-received at the HO and the particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund the particular head of account of MCD.
(i) If the tendered value of work is upto Rs. 5 lacs: 6 months
(ii) If the tendered value of work exceeds Rs. 5 lacs: 9.
months"
26. Here it would be appropriate to refer to the judgment of the North Delhi Municipal Corporation V. Sanjeev Kumar, RFA 430/2017., wherein the Hon'ble High Court held as under:
"...It is therefore, necessary and important that all the steps of the Contract are followed by the Contractors And the Corporations. The following guidelines are being passed:
1. Along with the work order, all the Clauses of the General Conditions of Contract should be attached;
2. On the award of the Work order, periodic inspections of the work being carried out should be done by the Engineer- in-Charge;
3. If possible, photographs of the works at different stages should be taken and maintained on the record;
M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 15 of 20 )
4. Interim bills should be submitted by the Contractor - duly certifying the work which has been carried out;
5.Final bills should be submitted by the Contractor - duly certifying the work carried out along with photographs;
6. The Bill should be scrutinized by the Engineer-in-
Charge,works should be recorded in the measurement book and thereafter, the bill should be passed;
7. Once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to. Delay in payments would result in Interest being levied;
8. For Refunds of Security deposit and Earnest Money deposit, the Contractor should unscrupulously comply with the conditions in Clauses 17 and 45. For refunds to be made,payment of final bill need not be awaited. Once the conditions of Clauses 17 and 45 are complied with and the final bill is passed, refunds ought to be made;
9. In suits relating recovery of Contractor's Dues, all the evidence including the NIT.General Conditions of Contract, periodic inspection reports, Final bill as submitted,Final bill as passed, Measurements carried out, Photographs etc., should be produced and duly exhibited.
10. IT infrastructure ought to be created to maintain records of the work orders,inspection reports, final bills, photographs etc., digitally, as it is noticed that the trial court record does not contain all the relevant documents and in several cases, different versions of clauses are relied upon by both sides, bills are not properly understandable and there is no evidence of actual inspections on measurements having been taken. Maintenance of digital records will make it more transparent and easily accessible for the officials and for production in the Court in case of future litigation.
Adherence to the above shall ensure that the works are duly carried out as per the quality standards prescribed and there is proper record of work being done. Once The work is carried out payments ought not to be delayed, inasmuch as delay in payments compromise on availability of quality civil work for the Corporations, who take care of basic amenities for citizens such as roads, pavements, civil works,sewerage lines etc. M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 16 of 20 )
27. Reverting back to the case at hand, it is an admitted case of the defendant that the defendant passed a bill pertaining to work order dated 06.04.021 ExPW1/4 and it was based on the basis of the entries made in the measurement book. During the cross examination, DW1 Rakesh Kumar has admitted that as per the bill ExPW1/5, the final amount passed and approved was Rs 43,65,044/-and the security amount was Rs 4,96,229/-. He also admitted that as and when the bill is passed the same is accepted by the contractor and in the present case the contingent bill ExPW1/6 was also passed by the MCD and the amount of contingent bill is Rs 87,832/-. Meaning thereby, there is no dispute regarding the allocation of work order, execution thereof by the plaintiff to the satisfaction of the defendant and finally passing of the bill ExPW1/5 dated 29.09.2021 and the contingent bill dated 30.09.2021 ExPW1/6 by the MCD.
28. The only objection of the defendant is that the bill of the plaintiff has already been processed and as and when the funds are available , payment shall be made. It is true that as per the terms and conditions of M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 17 of 20 ) the GCC ExPW1/8, the payment of the bill was supposed to be made strictly on queue basis and subject to the availability of the funds but in my opinion, this type of condition is against the public policy and state agencies are not expected to say that as and when the funds are released by the competent authority, it shall be paid to the defendant. For the inaction of the defendant, the plaintiff cannot be asked to wait in perpetuity.
29. Thus, the plaintiff has been able to establish on record that the defendant was under legal obligation to pay a total outstanding amount of Rs 49,49,105/-( Rs 43,65,044/-as per bill dated 29.9.2021 ExPW1/5 + Rs 87,832/-as per bill dated 30.9.2021 ExPW1/6 + Rs 4.96,229/-as as security amount) which is due and outstanding against the defendant as on 1.7.2022. Accordingly, issue no.1 is decided in favour of the plaintiff and against the defendant .
Issue No.2 If the issue no.1 is decided in affirmative, whether the plaintiff is entitled for the interest, as prayed for in the plaint? If yes, at what rate? (OPP) M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 18 of 20 )
30. The plaintiff has claimed the interest @ 12 % p.a but nothing has been brought on record indicating that there was an agreement between the parties that the plaintiff shall be entitled for the interest @ 12% p.a in case the payment is delayed by the defendant. However, it is also a matter of fact that the plaintiff cannot be deprived of the interest in case the payment is delayed by the defendant. It has already been established by the plaintiff that the work order was completed and the bills were passed on 30.09.2021 and till date payment has not been made. As per the guideline No 7 as laid down in the case of Sanjeev Kumar(supra) once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to and delay in payments would result in Interest being levied. In the present case there is no denial of the fact that payments have been delayed beyond the aforesaid period. The plaintiff has claimed the interest w.e.f. 01.07.2022.
31. Keeping in view the overall facts and circumstances of the case, Court is of the view that the interest of justice would be met by awarding interest @ 8 % per annum on Rs 49,49,105/- from 01.07.2022.
M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 19 of 20 ) till actual realization.
Issue No.4 Relief
32. In view of my aforesaid discussion, the Court is of the view that the plaintiff has been able to prove its case against the defendant. Thus, the suit is decreed in favour of plaintiff and against the defendant and following reliefs are granted:-
(i.) Plaintiff is entitled to recover Rs Rs 49,49,105/-
( Rs Forty Nine Lakh Forty Nine Thousand One Hundred and Five only) from the defendant.
(ii) Plaintiff is also awarded interest @ 8 % p.a on Rs 49,49,105/-from 01.07.2022 till its actual realization.
(ii) Cost of the suit is also awarded to the plaintiff
33. Decree sheet be prepared accordingly.
34. File be consigned to Record Room, after due compliance. RAJESH Digitally signed by RAJESH KUMAR KUMAR GOEL Date: 2024.11.13 GOEL 15:34:45 +0530 (Rajesh Kumar Goel) District Judge (Commercial)-02 Central, Tis Hazari Courts 11.11.2024 Announced in the Open Court today i.e: 11-11-2024 (digitally signed on 13.11.2024) M/s Rakesh Kumar Goel vs MCD Date of judgment 11.11.2024 (page 20 of 20 )