Delhi District Court
M/S N S Chaudhary vs Municipal Corporation Of Delhi on 7 January, 2026
BEFORE THE COURT OF SH. S S RATHI, DISTRICT JUDGE (COMM.)-11
CENTRAL, THC, DELHI
CS Comm. No.1367/2024
M/s N S Chaudhary
Through Partner Ashwani Sehgal
F-11, Pratap Nagar, Delhi-110007 .............Plaintiff
Vs.
1. Municipal Corporation of Delhi
Through its Commissioner, Civic Centre
Minto Road, New Delhi-110002
2. The Executive Engineer (Project-I) Sh. South.,
Municipal Corporation of Delhi,
A-108, 1st Floor, 419 Udhyog Sadan
Patparganj Industrial Area, Delhi-110092 ...........Defendants
Date of Institution : 11.12.2024
Date of Final Arguments : 07.01.2026
Date of Judgment : 07.01.2026
Decision : Dismissed
Judgment
1. This suit is filed by plaintiff for recovery of Rs.1,32,58,256/- along with
interest @ 12% per annum as unpaid dues of job work done.
Case of the Plaintiff
2. Case of the plaintiff as per plaint and the documents filed is that plaintiff
is a partnership firm and is an empanelled contractor of MCD. It has filed
the suit in hand through its partner Sh. Ashwani Sehgal. Upon
participation by the plaintiff in the tender process, it was granted a Work
Order no. 30 dated 03.01.2020 which was followed by execution of a
formal agreement with the defendant no. 2. Upon receipt of the work
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order plaintiff made all arrangement of execution and completion of the
wortk order and completed the same on 17.05.2021. The plaint is
conspicously silent about the tenure of the work order and whether it was
completed within the allocated time or not. It is pleaded that the work was
completed without any negative remark and to the satisfaction of the
defendant's officials.
3. It is pleaded that final mesaurements of the Work Order were taken and
bills were prepared and passed. It is pleaded that the plaintiff had
deposited earnest money and requisite security amount towards the said
work orders. The plaint carries a table of three bills reproduced hereunder:
S.N Work Order No. Amount of passed Date of passing of Amount of Security
o. (first and final) bill in bill deposit in Rs.
Rs.
1 1st running bills 1,06,08,201.00/- 03.12.2021 -
2 2nd running Bills 61,51,322.00/- 31.03.2022 -
rd
3 3 running Bills 1,06,29,255.00/- 17.12.2022 -
Total 2,73,88,778.00/-
4. Bare perusal of the above table shows that the plaint conceals several
material facts viz. how many of running bills stood paid, what was the
value of such bills and what was the total amount paid to the plaintiff by
the MCD before filing the suit in hand. However, in para 6 of the plaint it
is submitted that defendant has released payment of 1st and 2nd running
bills i.e. Rs.1,06,08,201/- and Rs.61,51,322/- on 17.10.2024.
5. It is the case of the plaintiff that despite passing of the remaining bills the
payments were not released. The plaint refers to Clause 9 of General
Terms and Conditions (GCC) according to which payments were
supposed to be made within 6-9 months of passing the bills. It is pertinent
to observe here that Clause 9 has been misquoted by the plaintiff
apparently on purpose since the period of 6-9 months starts from the date
of submission of advance GST paid invoice as per Section 31 r/w Rule 46
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of CGST Act 2017 and CGST Rules 2017 respectively. The plaint is
totally silent if any advance GST Paid invoice, as mandated under the law
and Clause 9 GCC, was submitted by the plaintiff or not.
6. The plaint pleads that plaintiff is entitled to recovery of outstanding
amount of Rs.1,06,29,456/- but defendant MCD and its officials are
paying no heed to plaintiff's demand. Plaintiff was constraint to issue
legal demand notice dated 08.05.2024, under Section 477 and Section
478 of Delhi Municipal Corporation Act (wrongly written as MCD Act)
seeking recovery of the above amount with 12% interest. The plaintiff
claims that the notice was duly served upon the defendant. It is pleaded
that MCD neither complied nor replied to the notice. Plaintiff was
constrained to approach Central DLSA for Pre-Institution Mediation
under Section 12A of Commercial Courts Act, 2015 where defendant
did not appear or participate in the same and as such Non-Starter Report
was issued on 30.11.2024. In this backdrop suit in hand was filed for
following reliefs:
Prayer:
1. To pass a decree in favour of the Plaintiff and against the Defendants for a sum of
Rs.1,32,58,256/- (Rupees One Core Thirty Two Lakhs Fifty Eight Thousand Two
Hundred & Fifty-Six Only);
2. To allow pendentelite and future interest @ 12% p.a. on the principal amount of
Rs.1,06,29,456/- from the date of filing of the suit till its realization;
3. To award the cost of the suit in favour of the Plaintiff and against the Defendants;
4. To pass such other/further order(s) as this Hon'ble Court may deem fit and proper in
the facts and circumstances of the suit, in the interest of natural justice.
7. Summons of the suit was served upon the defendant MCD on 18.03.2025
wherein they entered appearance through Sh. Ashutosh Gupta and WS
was filed within 30 days i.e. on 14.04.2025.
Defendant's Case
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8. In the detailed WS filed by the MCD, it sought dismissal of the suit on the
ground that it has been filed by the plaintiff, a partnership firm, without
consent of other partner. Dismissal of the suit is also sought on the ground
that the suit is without any cause of action as the remaining payment of
Rs.1,06,29,225/- under the third final bill has already been released to the
plaintiff on 08.04.2025. Dismissal is also sought on the ground that
plaintiff contractor has approached the Court with unclean hands and has
concealed material facts including breach of contract. It is also pleaded
that plaintiff is not entitled to any relief as it committed breach of
agreement entered between them. It is submitted no payment was released
as plaintiff did not carry out necessary documentation including
submission of 3rd bill as per guidelines laid by Hon'ble High Court in
NDMC Vs. Sanjeev Kumar, 2018 Latest Caselaw 1912 Del. It is
submitted that when the plaintiff has himself not abided by statutory
provisions and guidelines as also GCC Provisions, he is not entitled to any
interest.
9. On merits, MCD accepts that upon conclusion of a tender process it
awarded MCD a work order Order no. 30 dated 03.01.2020, which was to
be carrried out as per General Conditions of Contract (GCC). The WS
refers to Clause 9 of GCC which mandates that the contractor has to
submit interim bills/final bills within three months of completion of the
work and that payments would be released subject to satisfaction of the
MCD officials within 6/9 months of submission of such bills by the
contractor.
10. The WS also refers to celebrated case titled "North Delhi Municipal
Corporation vs. Sanjeev Kumar, 2018 Latest Caselaw 1912 Del dated
22.03.2018, wherein Hon'ble High Court of Delhi laid guidelines which
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M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
mandate that every contractor shall submit bills as per law with the MCD
qua job works carried out by them.
11. In its para wise reply to the plaint, the MCD has filed evasive replies to
almost all paras. It is not denied that plaintiff was awarded work order no.
30 dated 03.01.2020, followed by execution of an agreement. The WS is
in non-compliance of Order 8 Rule 3A CPC as amended for Commercial
Courts which mandates that defendant should not only specifically deny a
fact sought to be denied but should also share reason for denial as also its
own version of such facts. The WS is silent on this aspect. The WS is
silent to the plaintiff's plea that the work order was completed to the
satisfaction of Engineer-In-Charge of the MCD without any negative
remark and within stipulated time. With these pleas dismissal of the suit is
prayed.
12. In the affidavit of admission and denial of plaintiff's documents MCD has
admitted all the documents filed by the plaintiff.
13. No replication was filed.
14.Upon completion of pleadings following issues were identified by this
Court on 05.12.2025:
Issues:
1. Whether the suit is pre-mature and without any cause of action because no
advance GST paid invoice as per Section 31 of CGST Act, 2017 read with
Rule 46 of CGST Rules, 2017 has been deposited? OP Parties
2. Whether the plaintiff is entitled to recovery of Rs.1,32,58,256/- alongwith
interest @12% per annum? OPP
3. Relief
15.To prove its case plaintiff examined PW1, Ashwani Sehgal, its Partner.
Vide affidavit Ex.PW1/A he deposed on the lines of plaint and exhibited
following documents:
1. Copy of Partnership Deed is Mark A.
2. Copy of Form A & B issued by Registrar of Firms are Ex.PW1/2 (Colly.) (OSR).
3. Copy of Form C issued by Registrar of Firms is Mark B.
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M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
4. Copy of Registration Certificate is Ex.PW1/3 (OSR).
5. Copy of Work Order bearing No. 30 dated 03.01.2020 is Ex.PW1/4 (admitted
document).
6. Copy of Agreement between East Delhi Municipal Corporation and M/s N S
Chaudhary firm is Ex.PW1/5.
7. Copy of 1st Running Bill (measurement book) dated 03.12.2021 with respect to Work
Order No. 30 is Ex.PW1/6.
8. Copy of 2nd Running Bill (measurement book) dated 31.03.2022 with respect to Work
Order No. 30 is Ex.PW1/7.
9. Copy of 3rd Running Bill (measurement book) dated 17.12.2022 with respect to Work
Order No. 30 is Ex.PW1/8.
10. Copy of Legal Notice alongwith postal receipts is Ex.PW1/9 (Colly.) (OSR).
11. Copy of relevant pages of General Conditions of Contract for MCD works is
Ex.PW1/10.
12. Copy of Non-Starter Report dated 30.11.2024 is Ex.PW1/11 (OSR).
16. He was cross examined at length by Ld. Counsel for MCD, Sh. Ashutosh
Gupta, wherein he accepted that he is a MCD empanelled contractor since
2008. He categorically accepted that he did not submit advance GST paid
invoices with the MCD as well as not filed the same in judicial record for
seeking payments against the invoices in question. It is accepted that he
has not submitted any Labour Clearance Certificate with the plaint and
has not even applied for the same with the Office of Labour
Commissioner.
17.No other witness was examined by the plaintiff.
18.Defendant MCD did not examine any witness.
19.I have heard arguments of Sh. Satyendera Kumar Singh, Ld. Counsel
for plaintiff and Sh. Arman Monga, Ld. Proxy Counsel for defendant.
I have perused the case file carefully.
20.Now I shall dispose of individual issues framed in this case.
Issue no. 1 and 2:
1. Whether the suit is pre-mature and without any cause of action because no
advance GST paid invoice as per Section 31 of CGST Act, 2017 read with
Rule 46 of CGST Rules, 2017 has been deposited? OP Parties
2. Whether the plaintiff is entitled to recovery of Rs.1,32,58,256/- alongwith
interest @12% per annum? OPP
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M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
21. It would be appropriate to cull out facts admitted by both the sides.
Admittedly, plaintiff is empanelled with MCD for carrying out civil
construction. Admittedly, MCD issued Work Order no. 30 dated
03.01.2020 to the plaintiff. It is also not denied that the job work was
completed by the plaintiff and that first two running bills already stood
paid by the MCD to the plaintiff before filing of the suit in hand.
Admittedly, now even the 3rd running bill worth Rs.1,06,29,225/- under
the third final bill has also stood paid to the plaintiff on 08.04.2025 i.e.
post filing of the suit. Admittedly, the principal suit amount already stands
received in toto by the plaintiff from the MCD, the only triable issue is
whether the plaintiff is entitled to 12% interest for pre-suit and pendente
lite period.
22.Although, MCD has full liberty in law to contest the matter or agree to
pay the suit claim, but what surprises the Court is that in the WS dismissal
of the suit was prayed by the MCD on the ground that the suit is
premature since no mandatory final/running bills were submited by the
plaintiff contractor in terms of Clause 9 of General Conditions of
Contract (GCC) and Hon'ble Delhi High Court guidelines in "NDMC
Vs. Sanjeev Kumar, 2018 Latest Caselaw 1912 Del.
23. In an unrelated case CS (Comm.) No. 1215/2024 titled "Kamal Gupta
Vs. Municipal Corporation of Delhi" this Court had on 07.03.2025
found that under similar circumstances despite admitting issuance of work
order by the MCD to the contractor and the fact that contractor has
completed the work, dismissal of the suit was prayed on a plea that
plaintiff had failed to submit his final bill for the job work/services
provided to the MCD. The stand of the MCD was akin to the one taken in
this suit that until and unless Clause 9 of GCC is complied and a formal
tax paid invoice is submitted no cause of action arises in favour of the
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M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
contractor against the MCD. As such the conduct of the MCD and its
Contractors in processing the work orders and related payments to
contractors was found wanting on two aspects:
(1) Non-compliance of following statutory laws and guidelines laid by
Hon'ble High Court of Delhi by MCD and its Contractors:
i. Section 31 CGST Act, 2017 r/w Rule 46 of CGST Rules, 2017.
ii. Commission of Offence by MCD and its Contractors punishable
under Section 122 and 132 of CGST Act, 2017.
iii. Guidelines laid by Hon'ble High Court of Delhi in case titled
NDMC Vs. Sanjeev Kumar, 2018 Latest Caselaw 1912 Del
iv. Clause 9 of General Conditions of Contract (GCC)
v. Clause in work order mandating submission of tax paid bill by the
Contractor.
(2) Non-participation by MCD in mandatory Pre-Institution
Mediation in the breach of following:
i. Section 12A of Commercial Courts Act, 2015
ii. Pre-Institution Mediation Rules, 2018
iii. Mandatory directives of Hon'ble Supreme Court of India in Patil
Automation Limited Vs. Rakheja Engineering Private Ltd.,
2022 Latest Caselaw 645 SC
iv. Non-compliance of directions issued by this Court in CS Comm.
No. 936/2024 titled Krishan Kumar Gupta Vs. Municipal
Corporation of Delhi dated 10.12.2024
v. Non-compliance of directions issued by Commercial Appellate
Division Bench of Hon'ble High Court of Delhi in RFA
Comm. No. 220/2025 titled Municipal Corporation of Delhi
Vs. Krishan Kumar Gupta dated 13.05.2025.
24.As far as the "First Aspect of non-submission of GST paid bills by the
Contractor with the MCD" this Court on 07.03.2025 had observed in
Kamal Gupta case, supra as under:
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M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Submission of Final Bill mandatory as per Work Order and GCC:
At the onset, it would be appropriate to have a close look at the
contents of the Work Order and Clauses 7 & 9 of GCC as jointly cited and
relied by both the sides. The copy of the work order in question i.e. EE(M-KBZ)-
II(EE-XXIX)/SYS/2018-2019/169 shows that the job assigned seems to be
construction of Ramp at Old Age Home at Dev Nagar for barrier free mobility
for disabled and elderly person. Para 4, 6 & 7 of the 'Work Order' reads as
under:
Para 4. It should be noted -
(a) That as and when the work orders are given for the execution of any extra/substitute
item prior orders from the competent authority be obtained before the same to avoid any
further complications.
(b) That contractor has to submit his RA/Final Bill with measurement otherwise
nothing will be considered due on account of work execution.
Para 6. You shall be responsible for correctness/genuineness of all the documents whatsoever
submitted by you.
Para 7. All the circulars issued by MCD applicable to the nature of work will have to be
complied by the contractor.
(Emphasis Supplied)
Plain reading of the above binding clauses of the work order
shows that plaintiff/contractor is duty bound to complete the job work within
the stipulated time but is also supposed to submit his running/final bill, post-
completion of the work so that MCD can process his case for the payment.
Likewise, Clause 7 & 9 of the admittedly binding General
Conditions of Contract (GCC) also provides:
Clause 7 of GCC:
7."No payment shall be made for work estimated to cost Rs.Twenty Thousand or less till
after the whole of the work shall have been completed and certificate of completion given.
For works estimated to cost over Rs. twenty thousand, the interim or running account
bills shall be submitted by the contractor for work executed on the basis of such
recorded measurement on the format of the department in the triplicate on or before the
date of every month of the fixed for the same by the Engineer-in-Charge.........In the event
of the failure of the contractor to submit the bills progress is achieved. Engineer-in-
Charge shall prepare or cause to be prepared such bills in which event no claims
whatsoever due to delays on payment including that of interest shall be payable to the
contract. Payment on account of admissible shall be made by the Engineer-in-Charge
certifying the sum to which the contractor is considered entitled by 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
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contractor to the Engineer-in-Charge of his Asstt. Engineer together with the account of
the material is issued by the department, or dismantled materials, if any."
Clause 9 of GCC:
9."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."
(Emphasis Supplied)
Plain reading of the above binding Conditions of Contract shows
that MCD is not obliged to make any payment unless Running Account
Bill/Final Bill is submitted by the contractor for the executed work alongwith
requisite measurements in triplicate. It also provides that such bill has to be
submitted within three months of physical completion of work or within one
month from the date of final certification by Engineer In-charge, whichever is
earlier.
Non-submission of running/final bill by the plaintiff:
Upon being asked, Ld. Counsel for the plaintiff accepts that
plaintiff has not placed on record any running or final bill in support of the suit
claim which can be said to have been issued and submitted by the plaintiff with
the MCD qua the suit amount and the job work in question.
MCD paying contractors without insisting for Bills:
Attention of Ld. Counsel for the plaintiff is drawn to the above
admitted contractual position as per Work Order and Clause 7 & 9 of GCC but
Ld. Counsel maintain that it is a matter of general practice and a writing on the
wall that even though submission of such a bill from the side of the contractor
is mandatory but officials of the MCD never insist for any running/final bill
from the contractors and payments are being made by the MCD to all the
contractors sans submission of such bills routinely.
Although, initially this submission has been opposed by Ld.
Counsel for the defendant/MCD but it is seen by this Court in numerous other
cases that MCD does pay money to its contractors despite non-submission of
any Bill by them on the basis of its internal measurement book which they,
apparently wrongly, refer to as MCD's final bill.
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Ld. Counsel for the plaintiff has relied on a case title North Delhi
Municipal Corporation & Anr. Vs. Sanjeev Kumar, decided by Hon'ble
High Court of Delhi in RFA No. 430/2017 on 22.03.2018 which pertains to
work order issued in 2014. This cited judgment do touch several issues
pertaining to Clause 7 & 9 of GCC but it does not discuss at length, the
consequence of non-submission of any interim/final bill and is rather focusing
on delay in payment due to non-availability of fund and right of the contractors
to claim interest for delayed payment.
MCD's actions shall be Just, Fair, Reasonable And Lawful:
Ld. Counsel for MCD is apprised that the defendant municipal
corporation forms a part of State as provided under Article 12 of The
Constitution and as such MCD is expected to conduct its operations strictly in
consonance with all modified laws. Rather being an instrumentality of the State
it is saddled with a much higher responsibility and its actions and omissions
have to withstand the test of 'Just, Fair and Reasonable' as promulgated by
Hon'ble Supreme Court in celebrated case of Maneka Gandhi Vs. Union of
India, 1978 Latest Caselaw 16 SC, Hon'ble Supreme Court held as under:
"The procedure prescribed by law has to be fair, just and reasonable, not fanciful,
oppressive or arbitrary. The question whether the procedure prescribed by a law
which curtails or takes away the personal liberty guaranteed by article 21 is
reasonable or not has to be considered not in the abstract or on hypothetical
considerations like the provision for a full-dressed hearing as in a Courtroom trial,
but in the context, primarily, of the purpose which the Act is intended to achieve and of
urgent situations which those who are charged with the duty of administering the Act
may be called upon to deal with. Secondly, even the fullest compliance with the
requirements of article 21 is not the journey's end because, a law which prescribes fair
and reasonable procedure for curtailing or taking away the personal liberty
guaranteed by article 21 has still to meet a possible challenge under other Provisions
of the Constitution like, for example, articles 14 and 19."
In case titled Southern Power Distribution Power Vs. M/s Hinduja
National Power Corporation, 2022 Latest Caselaw 116 SC, Hon'ble
Supreme Court held as under:
"106. Undisputedly, the appellants - DISCOMS are instrumentalities of the State and
as such, a State Within the meaning of Article 12 of the Constitution of India. Every
action of a State is required to be guided by the touchstone of noarbitrariness,
reasonableness and rationality. Every action of a State is equally required to be
guided by public interest. Every holder of a public office is a trustee, whose highest
duty is to the people of the country. The Public Authority is therefore required to
exercise the powers only for the public good."
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In case titled Kumari Shrilekha Vidyarthi And Ors. Vs. State of UP
And Ors., 1990 Latest Caselaw 269 SC, Hon'ble Supreme Court held as
under:
"27. Unlike a private party whose acts uninformed by reason and influenced by
personal predilections in contractual matters may result in adverse consequences to
it alone without affecting the public interest, any such act of the State or a public
body even in this field would adversely affect the public interest. Every holder of a
public office by virtue of which he acts on behalf of the State or public body is
ultimately accountable to the people in whom the sovereignty vests. As such, all
powers so vested in him are meant to be exercised for public good and promoting the
public interest. This is equally true of all actions even in the field of contract. Thus,
every holder of a public office is a trustee whose highest duty is to the people of the
country and, therefore, every act of the holder of a public office, irrespective of the
label classifying that act, is in discharge of public duty meant ultimately for public
good. With the diversification of State activity in a Welfare State requiring the State
to discharge its 17 (1991) 1 SCC 212 wide ranging functions even through its several
instrumentalities, which requires entering into contracts also, it would be unreal and
not pragmatic, apart from being unjustified to exclude contractual matters from the
sphere of State actions required to be non-arbitrary and justified on the touchstone
of Article 14.
28. Even assuming that it is necessary to import the concept of presence of some
public element in a State action to attract Article 14 and permit judicial review, we
have no hesitation in saying that the ultimate impact of all actions of the State or a
public body being undoubtedly on public interest, the requisite public element for
this purpose is present also in contractual matters. We, therefore, find it difficult
and unrealistic to exclude the State actions in contractual matters, after the
contract has been made, from the purview of judicial review to test its validity on the
anvil of Article 14."
In case titled Food Corporation of India Vs. M/s Kamdhenu Cattle
Feed Industries, 1993 1 SCC 71, Hon'ble Supreme Court held as under:
"7. In contractual sphere as in all other State actions, the State and all its
instrumentalities have to conform to Article 14 of the Constitution of which and,
particularly, when it is adversarial to the public interest and public good. The
record would clearly show that the change in decision is arbitrary, irrational and
unreasonable."
In case titled Kalabharati Advertising v. Hemant Vimalnath
Narichania And Ors., 2010 Latest Caselaw 636 SC, Hon'ble Supreme Court
held as under:
"25. The State is under obligation to act fairly without ill will or malice- in fact or in law.
"Legal malice" or "malice in law" means something done without lawful ex cuse. It is an act
done wrongfully and wilfilly without reasonable or probable cause, and not necessarily an act
done from ill feeling and spite. It is a deliberate act in disregard to the rights of others. Where
malice is attributed to the State, it can never be a case of personal ill will or spite on the part
of the State. It is an act which is taken with an oblique or indirect object. It means exercise of
statutory power for "purposes foreign to those for which it is in law intended". It means
conscious violation of the law to the prejudice of another, a depraved inclination on the part
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of the authority to disregard the rights of others, which intent is manifested by its injurious
acts."
(Emphasis Supplied)
Binding Provisions of CGST Act, 2017:
Since the job work admittedly done by the plaintiff for the MCD
is a "service" as defined under Section 2 (102) of CGST Act, 2017 and is a
"Works Contract" as per Section 2 (119) of this Act. It is covered under
Section 7 of the Act and is amenable to levying of Central Goods & Services
Tax under Section 9 of the Act.
Attention of Ld. Counsel for the plaintiff is drawn to CGST Act,
2017 which was promulgated and implemented w.e.f. 01.07.2017. According to
this Act, no sale of goods or provision of service can be carried out unless seller
or a service provider is duly registered with GST and issues advance GST
levied invoices as per Section 31 of CGST Act, 2017 and Rule 46 of CGST
Rules, 2017. In the case in hand, Ld. Counsel for the plaintiff accepts that even
though the plaintiff is duly registered as per Section 22 of CGST Act, there is
no reference of GST number in the plaint. He, as a supplier, has orally shared
his GST No. as 07AIVPG2462M1ZQ. It is also accepted that prior to filing of
this suit, no GST has been assured, levied or deposited and no GST paid invoice
has been generated or submitted with MCD for the purpose of payment.
It goes without saying that every law promulgated by Parliament
deserves to be respected, complied and abided in letter and spirit. However,
when it comes to tax laws like Income Tax and GST, the legal professionals and
the judicial forums have to be more vigilant so that no loss of revenue happens
since it is this revenue which will help in building the infrastructure of the
nation and alleviating the poverty and strengthening the nation. Ld. Counsel for
the plaintiff seeks time to assess the Court qua the non-compliance of CGST
Act, 2017.
It can be safely observe that out of 100s of cases, dealt with by
this Court, this Court has not come across with any case where the contractor
has issued running/final bill for the job work carried out as per work order
which is in consonance with Section 31 of GST read with Rule 46 of CGST
Act.
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The plea that GST is deducted by the MCD before making
payments is nothing but a farce since the statute provides levying of advance
GST by the contractor in the invoices and it is not acceptable that the MCD
deducts GST before making payment in clear violation of the law. Contractors
like plaintiff are supposed to maintain complete account records as per Section
35 and submit quarterly returns as per Section 39 of the Act. Failure to do so is
a penal offence under Section 123 of the Act. Also, supply of services without
generating a GST paid invoice is a penal offence punishable under Section 122
(1) (i) of the Act.
MCD converts its irregularity into illegality and punishable offence:
It is brought to the notice of this Court that when in many a cases
it was found that officials of the MCD end up releasing part payments to the
contractors without insisting for submission of RA or final bill. This aspect was
raised by a Commercial District Judge, Commercial Court-01 in case titled
Umesh Tyagi Vs. MCD, CS 2049/2022 and an objection was taken as to why
the payments are being released without insisting of submission of final bill.
In response thereto, it is surprising to observe that instead to plugging
the wrong procedure of release of payments without submission of invoices,
MCD issued a circular dispensing to submission of invoices itself which is an
offence under Section 122 (3) (a) of the Act. A circular No. D/EE(P)-III/2024-
25/260 dated 04.11.2024 is said to have been issued by the MCD whereby
Clause 9 of GCC has amended by the MCD in such a way that they have totally
dispensed with the legal requirement of a contractor for submitting advance
GST paid bill for the purpose of payment. For ready reference, Clause 9 of
GCC is reproduced hereunder:
Clause 9 Payment of final bill
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.
In the event of the failure of the contractor to submit the final bill within prescribed time,
payment on account of amount admissible shall be made by the Engineer-in-Charge certifying
the sum to which the contractor is considered entitled by way of final payment at such rates as
decided by the Engineer-in-Charge. No further claims made by the contractor after submission of
the final bill shall be entertained and these shall be deemed to have been waived and extinguished.
Payments of those items of the bill in respect of which there is no dispute and for those items in
dispute on account of quantities and/or rates shall be paid at approved quantity and/or rates by the
Engineer-in-Charge, within three months period reckoned from the date of receipt of the bill by the
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Engineer-in-Charge or his authorized Assistant Engineer, complete with account of materials
issued by the Department and dismantled materials.
However, the payment of passed bills will depend on availability of funds in particular head of
account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. First
the past liabilities will be cleared and after that the release of payment for passed bills will be in
order of the demand received at HQ under particular head of account. No interest shall be payable
to the contractor in case of delay in payment on account of non-availability of funds in the
particular head of accounts of MCD.
(Emphasis Supplied)
The abovementioned circular is pictorially reproduced hereunder:
Show Cause Notice of MCD:
As such, issue notice to Commissioner, MCD to explain as to
why Clause 9 of the GCC has been amended which is not only clear violation
of the Section 31 of CGST Act, 2017 read with Rule 46 of CGST Rules,
2017 but is attracting penal offence. Also issue notice to the Commissioner,
MCD to explain as to why the MCD is making payment to its contractor
without insisting for mandatory advance GST levied invoices as per Section
31 of CGST Act, 2017 read with Rule 46 of CGST Rules, 2017 and other
applicable laws.
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Since, Ld. Counsel for the plaintiff is repeatedly asserting that
this has been a long drawn practice in the MCD that payments are made as per
measurement book of the MCD Engineers and the invoices of the contractors
are meaningless, it appears that this whole practice is gravely flawed since,
MCD has a budget of more than Rs.16,500/- crore per annum. It needs a deeper
insight and a review as to how come this Tax Payer's money is being spent
without adhering to the binding Parliamentary Enactment & Rules which are
aimed at generating Revenue for the Central and State Governments.
Also, issue notice to Commissioners, SGST and Commissioner,
CGST to notify their legal heads so as to assist the Court in critically
appraising as to how in the case in hand and similar such cases subjudice
before this Court, the contractor i.e. the plaintiff in hand and the MCD are
spending public money/tax payers money without adhering to the law of the
land.
25.Considering the gravity of the two aspects this Court had appointed Sh.
Saket Sikri, Advocate as Amicus Curie and he prepared following
questionaire for ascertaining and appreciating the stand of MCD and
extent of the violation of Section 31 CGST Act, 2017 read with Rule 46
of CGST Rules, 2017 as also guidelines laid by Hon'ble High Court of
Delhi in case titled NDMC Vs. Sanjeev Kumar, 2018 Latest Caselaw
1912 Del:
Questionnaire to be answered by Additional Commissioner (Finance), MCD
on affidavit with documents:
1. Does the MCD insist on proof of GST registration from empanelled
successful bidders/tenderers/contractors before declaring a bidder as L1 or
before awarding the contract to such a bidder?
2. Was submission of invoices as per Section 31 CGST Act, 2017 read with
format under Rule 46 of CGST Rules, 2017 made mandatory for MCD
Contractors w.e.f. 01.07.2017?
3. MCD may share approx data as under:
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Sl. FY wise No. of Cumulative Value of No. of Total Amount
No. (2017-2025) Work value of all GST Work amount disbursed
Orders Work payable Orders in disbursed without
issued Orders on Work which GST submissio
Orders leived n of GST
invoices levied
submitted invoices
1. 2017-2018 - - - - - -
2. 2018-2019 - - - - - -
3. 2019-2020 - - - - - -
4. 2020-2021 - - - - - -
5. 2021-2022 - - - - - -
6. 2022-2023 - - - - - -
7. 2023-2024 - - - - - -
8. 2024-2025 - - - - - -
4. Designation of officers who are supposed to receive bills from the
contractors, process them and sanction the payments made by the MCD
to its contractors as also the designation of officers who are supposed to
supervise the actions/omissions/non-compliance of statutory laws, by-
laws, guidelines etc. in this regard in a step-by-step manner with specific
roles?
5. What action does the MCD leadership proposes for identifying and
prosecuting the erring delinquent officers who continued to release
payments to the Contractors in violation of Work Orders, Clause 9 of
GCC, Section 31 CGST Act, 2017 read with Rule 46 of CGST Rules,
2017 as also Guidelines laid by Hon'ble High Court of Delhi in Sanjeev
Kumar case (Supra) since 01.07.2017?
6. MCD may share complete list of all empanalled contractors and other
contractors awarded work including their GST numbers and addresses for
the benefit of CGST & SGST Departments?
26.In response to the above questionaire, MCD submitted as under:
1. Does the MCD insist on proof of GST registration from empanelled
successful bidders/tenderers/contractors before declaring a bidder as
L1 or before awarding the contract to such a bidder?
Ans: Yes, the MCD do insist of the proof of GST registration from its successful
bidders/tenderers/contractors both from its empanelled bidders and also from
any such bidders who has been declared as successful bidders in case of an open
tender. It is submitted that out of abundant precaution, while empanelling any
contractor it has been made mandatory and incumbent for such a contractor to
furnish information such as PAN, GST, Copy of Registration etc. It is further
submitted that such information is also recorded by the said firm while the said
firm/contractor quotes its rates online at the time of bidding process. Further, to
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
suffice the same, it is submitted that it has been made mandatory by the MCD for
such firm/contractors to provide the said mandatory details before or at the time
of registering itself on the e-Portal (Government e-Procurement System
https://etenders.gov.in/eprocure app) for the sale of tender. For the kind perusal
and reference of this Hon'ble Court an available bid-submission confirmation
sheet of the said government e-Procurement system showing the GST/PAN
details is annexed herewith as Annexure-А.
2. Was submission of invoices as per Section 31 CGST Act, 2017 read with
format under Rule 46 of CGST Rules, 2017 made mandatory for MCD
Contractors w.e.f. 01.07.2017?
Ans: Yes, it has been made mandatory for all the empanelled contractors to raise
invoices in terms of Section 31 of the GST Act, 2017. It is imperative to submit
that at the relevant time the erstwhile unified MCD had already been trifurcated
into three separate entities i.e., North DMC, South DMC and East DMC. The
relevant Circulars issued by the said entities in this regard are annexed herewith
for kind perusal and reference of this Hon'ble Court and are collectively marked
as Annexure-B.
3. MCD may share approx data as under:
Sl. FY wise No. of Cumulative Value of No. of Total Amount
No. (2017-2025) Work value of all GST Work amount disbursed
Orders Work payable Orders in disbursed without
issued Orders on Work which GST submissio
Orders leived n of GST
invoices levied
submitted invoices
1. 2017-2018 - - - - - -
2. 2018-2019 - - - - - -
3. 2019-2020 - - - - - -
4. 2020-2021 - - - - - -
5. 2021-2022 - - - - - -
6. 2022-2023 - - - - - -
7. 2023-2024 - - - - - -
8 2024-2025 - - - - - -
Ans: It is submitted that the data as sought by this Hon'ble Court to be provided in a
tabular form as provided in questionnaire 3, is a humongous exercise and
requires considerable time as well as manpower, as such the same is not readily
available and compiled for it to be filed before this Hon'ble Court, at this stage.
However, the Engineering Departments of various Zones/Divisions of MCD
have been asked to provide some of the files which have been processed by the
said Zones/Divisions for release of payment. The copies of some of the files so
forwarded by the various Zones/Divisions are enclosed herewith, which would
show that GST invoice in terms of format under Rule 46 of the GST Rules, 2017
have been duly called and insisted by the respective Zones/Divisions.
It is submitted that as per Section 31 (5)(b) of the GST Act, 2017 which reads
as under:
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
"Section 31. Tax Invoice
(5) subject to the provisions of Clause (d) of Sub-Section (3), in case of
continuous supply of services;
(a)....
(b) where the due date of payment is not ascertainable from the contract, the
invoice shall be issued before or at the time when the supplier of service
receives the payment."
It is submitted that as per Section 31 of the GST Act, it is clear and explicit that
it is the incumbent responsibility and statutory duty of the service provider to
raise a tax invoice, in terms of Section 31 read with Rule 46 of the GST Act
upon the service recipient.
Further, since a contract/work order issued by the MCD for supply of services
is a contract/work order where the date of payment is ascertainable, as such
the service provider/contractor is required to raise the tax invoice at the time
when the payment is received by it and not at the time of raising the bill as it
was construed in the earlier proceedings.
It is submitted that in order to oversee the said compliance, as submitted above,
the Engineering Departments of various Zones/Divisions of MCD were asked
to provide some of the files in which the release of payments have been
processed by the said Zones/Divisions for payment. The copies of some of the
files so forwarded by the various Zones/Divisions are enclosed herewith, which
would show that a separate GST invoice în terms of format under Rule 46 of
the GST Rules, 2017 were duly obtained and insisted by the respective
Zones/Divisions from the contractor at the time of release of payment and in
some cases even at the time of passing of the bills. The copies of some of the
work orders, contractor passed bills, GST invoice and TDS Returns are
enclosed herewith and marked collectively as Annexure-C.
4. Designation of officers who are supposed to receive bills from the
contractors, process them and sanction the payments made by the MCD
to its contractors as also the designation of officers who are supposed to
supervise the actions/omissions/non-compliance of statutory laws, by-laws,
guidelines etc. in this regard in a step-by-step manner with specific roles?
Ans. While processing and passing a bill of a contractor for payment, the Executive
Engineer of the Division relating to the work order in question, who is also the
Engineer in-charge, is the person responsible to do the same, as per CPWD
Manual being Clause 5.18.2. Further, in case of any deliberate act/deliberate
omission/deliberate non-compliance of the law of land, the concerned
Superintendent Engineer (SE) and the concerned Chief Engineer (CE) would be
the officials who would supervise the acts and conducts of the concerned
Engineer in-charge.
5. What action does the MCD leadership proposes for identifying and
prosecuting the erring delinquent officers who continued to release
payments to the Contractors in violation of Work Orders, Clause 9 of
GCC, Section 31 CGST Act, 2017 read with Rule 46 of CGST Rules,
2017 as also Guidelines laid by Hon'ble High Court of Delhi in Sanjeev
Kumar case (Supra) since 01.07.2017?
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Ans. As submitted earlier, that in terms of Section 31 (5)(b), the GST invoice is to be
provided by the service provider at the time of receiving the payment which, has
been complied with in letter and spirit, and in most of the cases, however, in
cases where the said compliance has not been insisted upon, requisite action
shall be initiated against the erring officials in consultation with the higher
authorities. It is submitted that non-adherence to the guidelines laid by the
Hon'ble High Court of Delhi in the batch matters, Sanjeev Kumar & Ors. If any,
is definitely a serious issue, which needs to be viewed strictly and any deliberate
non-compliance thereof is not only contemptuous but shall call for strict
departmental action against any/all of the erring officials.
6. MCD may share complete list of all empanalled contractors and other
contractors awarded work including their GST numbers and addresses for
the benefit of CGST & SGST Departments?
Ans The complete exhaustive list of all the empanelled contractors as well as those
who have been awarded work orders/contracts in an open tender is annexed
herewith as Annexure-D (Colly.) for kind perusal of this Hon'ble Court.
27.When this Court passed the above directions and issued notice to
Commissioner MCD as well as Commissioner CGST and Commissioner
SGST, they assigned their Standing Counsels to assist the Court namely
Sh. Aditya Singla and Sh. Sanyat Lodha, Ld. Standing Counsels for
CGST, Sh. Mukesh Kumar, Ld. Counsel for SGST.
28.In Kamal Gupta case (supra) on 09.05.2025 this Court was apprised by
Ld. Amicus that MCD issued following circular stating therein that The
para 1 of the circular mandates that compliance of Section 31 CGST Act,
2015 r/w Rule 46 of CGST Rules, 2017 is mandatory for MCD's
contractors. In para 2 of the circular it is mentioned that "in hearing of
District Court in Delhi" highlighted to the MCD that the Circular
no.41/DCA/FMB/EDMC/2018 dated 23.10.2018 was not being followed
by various departments of the MCD and bills were passed without tax
invoices.:
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
29.The response of the MCD and the aspect as to whether MCD and its
officials including all the Executive Engineers who deal with the aspect of
payment is pending consideration as to whether MCD has committed
Contempt of Court and has committed offence punishable under Section
122 and Section 132 of CGST Act, 2017.
30.As far as the "Second Aspect of non-participation by the MCD and its
officials for Pre-Institution Mediation" following observations were
made by the Court in Kamal Gupta case, supra:
MCD non-compliant of Section 12 A Commercial Courts Act, 2015 and
Hon'ble Supreme Court's direction in Patil Automation Case:
Another pertinent aspect in the conduct of the MCD is its practice of non-
participating in Pre-Institution Mediation. A Strong objection is taken on this
conduct of Municipal Corporation of Delhi which is itself a creation of law under
Delhi Municipal Corporation Act, 1957. Not only Pre-Institution Mediation is
mandatory on account of its promulgation and inclusion in Commercial Courts
Act 2015 by way of Commercial Court Amendment Act, 2018 whereby
Chapter 3 and Section 12A were introduced. For ready reference Section 12A of
Commercial Courts Act, 2015 is reproduced hereunder:
Section 12A CC Act, 2015: Pre-Institution Mediation and Settlement:
"(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be
instituted unless the plaintiff exhausts the remedy of pre-institution mediation in accordance
with such manner and procedure as may be prescribed by rules made by the Central
Government.
(2) The Central Government may, by notification, authorise the Authorities constituted under
the Legal Services Authorities Act. 1987, for the purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987, the
Authority authorised by the Central Government under sub-section (2) shall complete the
process of mediation within a period of three months from the date of application made by the
plaintiff under sub-section (l ): 19 of 1987
Provided that the period of mediation may be extended for a further period of two months with
the consent of the parties:
Provided further that, the period during which the parties remained occupied with the pre-
institution mediation, such period shall not be computed for the purpose of limitation under the
Limitation Act, 1963.
(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced
into writing and shall be signed by the parties to the dispute and the mediator.
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
(5)The settlement arrived at under this section shall have 26 or 1996 the same status and effect
as if it is an arbitral award on agreed terms under sub-section(4) of section 30 of the
Arbitration and Conciliation Act, 1996."
Parliament in its wisdom even promulgated PIMS Rules, 2018. Hon'ble
Supreme Court in celebrated jugement of Patil Automation Limited Vs.
Rakheja Engineering Private Ltd. (2022) Latest Caselaw 645 SC has already
ruled that carrying out preinstitution mediation is not optional or directory but is
rather mandatory. For ready reference relevant paras of Patil Automation
Judgment are reproduced hereunder:
43. "Section 12A cannot be described as a mere procedural law. Exhausting pre-institution
mediation by the plaintiff, with all the benefits that may accrue to the parties and, more
importantly, the justice delivery system as a whole, would make Section 12A not a mere
procedural provision. The design and scope of the Act, as amended in 2018, by which Section
12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour.
Any other interpretation would not only be in the teeth of the express language used but, more
importantly, result in frustration of the object of the Act and the Rules"...........
58. A perusal of the Act and the Rules reveal the existence of a complete Code. Mediation
contemplated under Section 12A and the Rules, may not succeed in every case. To begin with,
the figures may not be reassuring but even if success does not elude the Mediator, in a few of
the cases, a good part of the object of the Legislature, would stand achieved.
72. The Act did not originally contain Section 12A. It is by amendment in the year 2018 that
Section 12A was inserted. The Statement of Objects and Reasons are explicit that Section 12A
was contemplated as compulsory. The object of the Act and the Amending Act of 2018,
unerringly point to at least partly foisting compulsory mediation on a plaintiff who does not
contemplate urgent interim relief......
The object is clear. It is an undeniable reality that Court in India are reeling under an
extraordinary docket explosion. Mediation, as an Alternative Dispute Mechanism, has been
identified as a workable solution in commercial matters. In other words, the cases under the
Act lend themselves to be resolved through mediation. Nobody has an absolute right to file a
civil suit. A civil suit can be barred absolutely or the bar may operate unless certain
conditions are fulfilled. A trained Mediator can work wonders. Mediation must be perceived
as a new mechanism of access to justice.........
The fact that the mediation can become a non-starter, cannot be a reason to hold the
provision not mandatory.
84. Having regard to all these circumstances, we would dispose of the matters in the
following manner. We declare that Section 12A of the Act is mandatory and hold that any suit
instituted violating the mandate of Section 12A must be visited with rejection of the plaint
under Order 7 Rule 11. This power can be exercised even suo moto by the Court as explained
earlier in the judgment. We, however, make this declaration effective from 20.08.2022 so that
concerned stakeholders become sufficiently informed. Still further, we however direct that in
case 95 plaints have already been rejected and no steps have been taken within the period of
limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the
order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of
prospective effect will not avail the plaintiff. Finally, if the plaint is filed violating Section
12A after the jurisdictional High Court has declared Section 12A mandatory also, the
plaintiff will not be entitled to the relief.
(Emphasis Supplied)
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Despite the statutory promulgation and strict interpretation of the same by
Hon'ble Supreme Court it is surprising to observe that defendant MCD and its
officials appears to be having scant regard for the law as promulgated by the
Parliament or the judgment passed by Hon'ble Supreme Court which is itself a
law under Article 141 of Constitution of India. The above legal position
mandates every citizen and corporation to strictly follow the same. Defendant
which is itself a creation of law too has no option but to participate in the same in
all sincerity and conviction.
Upon being asked no cogent reason is stated as to why the MCD
or its officials did not participate in the Pre-Institution Mediation proceedings.
Mediation is one of the pivotal alternate Dispute Resolution Mechanism which
finds recognition in Section 89 CPC as it was reintroduced in the 2002
Amendment. Gauging the success of its inclusion the Parliament decided to
make it mandatory for Commercial Courts at a pre-institution stage with an aim
to elevate India's position in the Ease of Doing Business, Report prepared by
World Bank for ranking investment friendly countries. Out of the 10
components of Ease of Doing Business one of the component is time taken by
the countries in "enforcement of contracts". While India's dismal ranking of
161 in 2014 has now reached a somewhat respectable position at 63 rank but in
the enforcement of contract component which pertains to time taken by the
country in resolving commercial disputes our country still ranks at poorly 171
out of 191 countries.
Outlook of a country depends on the endeavors put in by the
citizenry and the state machinery in such cases. While all the functionaries of
Central and State Departments are endeavoring and doing their best in improving
India's ranking in this regard but here is a Department which absolutely, as it
seems ex-facie, has no interest in doing its bit. All that the defendant MCD was
supposed to do is to participate in the Pre-Institution Mediation but the blunt
stand that they did not participate despite receipt of notice of Secretary, Central
DLSA shows that they are doing lot of disservice not only to the mechanism of
mediation as a process but is also disregarding the law in its totality.
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
In a similar case recently Hon'ble High Court of Delhi in case
titled Maxwell Partnership Firm Regards Vs. National Insurance Company
Ltd. And Anr. in I.A. No. 9893/2024 on 03.05.2024. Hon'ble High Court was
pained to observe that the defendant in the cited case, despite being a flagship
Government owned insurance company did not participate in the Pre-Institution
Mediation proceedings. For ready reference the relevant paras are reproduced
hereunder:
9. A perusal of the report would show that the insurance company has failed to appear in the
pre-litigation mediation as well. Such conduct on behalf of the Insurance Company is
contrary to the spirit of Section 12A of the Commercial Courts Act, to say the least. The
Plaintiff has already borne 25% of the court fees in the first round as the same could not be
returned in terms of decicion in Patil Automation Private Limited & Ors. v. Rakheja Engineers
Private Limited ((2022) 10 SCC OnLine SC 1028). Due to the mediation being a non-starter, it
has been compelled to again file the present suit. The entire purpose of pre-litigation mediation
has been defeated by the Insurance company.
10. The non-appearance of parties in mediation proceedings carries significant legal
ramifications,as provided by various legal provisions. Under the Punjab and Haryana High
Court Mediation Rules (Rule 12), parties are mandated to attend mediation sessions, whether in
person, through legal representatives, or by means of power of attorney holders. Failure to
comply with this requirement may lead to the Mediator or other parties to seek court
intervention. Upon finding unjustified absence, the Court can impose costs or initiate contempt
proceedings against the parties. Similarly, Rule 13 of the Delhi High Court Mediation
Conciliation Rules stipulates that deliberate or wilful non-attendance warrants Court
intervention, with the Court empowered to issue appropriate directions. The said Rule is
extracted hereinbelow:
"12. Consequences of Non-Attendance: If a party deliberately or willfully fails to
attend a session, the other party or mediator/conciliator may apply to the Court. The
Court may issue directions based on the case's facts and circumstances"
11. This principle is also prevalent in Rule 14 of the Telangana High Court Mediation Rules
2015 and Rule 13 of the Karnataka Civil Procedure (Mediation) Rules, 2005 wherein it is
elucidated that failure to attend mediation due to deliberate acts may result in judicial
intervention and the issuance of necessary directives. The same has been emphasized in the
case of Smt Amalapooh Mary & Ors. v. Sri V Ravindra & Ors. (WP51491/2016) wherein it
was held that if the party is absent in the mediation proceedings, the Court could impose
costs.
21. In terms of Rule 13 of Mediation Rules, 2005, the Court has the power to direct a
party to appearbefore the mediator, in the event of a Court finding that a party is
absenting himself before the mediator without sufficient reason, costs could be imposed
on such a party. The quantum of costs that could be imposed by the Court is at the
discretion of the Court, which the Court could decide upon and impose depending on the
nature of the matter.
22. In view of Rule 13 of the Mediation Rules, 2005, it is no longer permissible for either
counsel orthe party in a proceeding to refuse participation in mediation proceedings, if at
all a party were to absent himself, the Court could impose costs as also repeated costs
until the party were to appear and participate in the mediation proceedings. The Court is
not powerless to issue appropriate directions to the parties to attend the Mediation infact
it is the bounden duty of the Court to issue necessary directions so that all the parties
participate in the mediation process in terms of the Mediation Rules, 2005.
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
xxx xxx xxx 43.3. In terms of Paragraph 36 of the Afcon's Judgment, there is no
requirement to obtain consent of either lawyers appearing for the parties or of the parties
themselves.
xxx xxx xxx 43.4. In the event of any of the parties not presenting themselves before the
Mediation Centre or the Lok- adalat, the Court could exercise powers under Rule 13 of the
Karnataka Civil Procedure (Mediation) Rules 2005 and impose such costs as it may deem
fit to compel the attendance of the parties before the Mediator so appointed. "
14. In essence, the obligation to attend mediation is of paramount importance as theentire
purpose of the enactment of the provision, as a mandatory step to be taken before
commencing litigation, would otherwise be defeated. Especially in the case of
organisations which have a public character, effective participation in pre-litigation
mediation is essential. If mediation has to be taken seriously and with a result oriented
approach, institutions with a public character including government departments etc., ought
to participate through proper appearance of officials or duly authorised persons. Any non-
participation ought to invite consequences in law.
16. Let the written statement to the plaint be filed within 30 days. Along with thewritten
statement, the Defendants shall also file an affidavit of admission/denial of the documents of
the Plaintiffs, without which the written statement shall not be taken on record. In view of the
conduct of the Defendant through the previous litigation and non-attendance in the
mediation proceedings, non-appearance despite service of advance copy, the Defendants
are shall deposit costs of Rs. 5 lakhs with the worthy Registrar General of this Court, as a
pre-condition to file the written statement. If the costs are not deposited, the Written
statement would not be liable to be taken on record.
(Emphasis Supplied)
Questions qua compliance of Section 12A of the Commercial Courts Act,
2015:
7. How many commercial suits have been filed against MCD after
03.07.2018, i.e., the date on which the Section 12 A of Commercial
Courts Act, 2015 and Pre-Institution Mediation and Settlement Rules,
2018 (the "PIMS Rules") came into force?
8. What distinct steps were taken by all the three wings of the MCD,
namely, North Delhi Municipal Corporation (NDMC), South Delhi
Municipal Corporation (SDMC) and East Delhi Municipal
Corporation (EDMC) for compliance?
9. Is there a set procedure that is followed by the MCD after the receipt of a
notice for the Pre-Institution Mediation process?
10. Is the matter assigned to a counsel/lawyer after the receipt of notice for
the Pre- Institution Mediation or after the receipt of summons from the
court once the matter is filed in court?
11 Whether MCD issued any circular or carried out any training of its
concerned officers that it is mandatory for Legal Officers to appear and
participate in Pre-Institution Mediation hearings?
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CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
12. In how many cases MCD appeared and participated in the Pre-Institution
Mediation hearings before Ld. Secretary, District Legal Service
Authority?
13. What led to incorporation/amendment of Clause 9 of GCC vide Circular
No. D/EE(P)-111/2024-25/260 dated 04.11.2024 in direct violation of
Section 31 CGST Act, 2017 read with Rule 46 of CGST Rules, 2017?
14. Who is the authorized and competent authority/entity on behalf of MCD
to receive notices from the DLSAs for the Pre-Institution Mediation
process?
31.In response to the above questionaire MCD submitted as under:
7. How many commercial suits have been filed against MCD after
03.07.2018, i.e., the date on which the Section 12 A of Commercial Courts
Act, 2015 and Pre-Institution Mediation and Settlement Rules, 2018 (the
"PIMS Rules") came into force?
Ans It is submitted that some reasonable time may be granted to provide the exact
number of commercial suits, which have been filed against MCD after
03.07.2018, as the said data prior to 22.05.2022, on which date the erstwhile
three MCDs were unified is not readily available being manually maintained at
the relevant time, as such collecting and compiling the said data requires
sufficient time. The data shall be duly collected and compiled for filing it before
this Hon'ble Court in due course of time as expeditiously as possible and
preferably go or before the next date of hearing by Law Deptt (HQ) of MCD.
8. What distinct steps were taken by all the three wings of the MCD, namely,
North Delhi Municipal Corporation (NDMC), South Delhi
Municipal Corporation (SDMC) and East Delhi Municipal Corporation
(EDMC) for compliance?
Ans It is submitted that no separate or overt steps have been taken for the
compliance of Section 12A of the Commercial Courts Act, however, it is
submitted that a Circular in this regard is under administrative scrutiny and the
same shall be issued shortly, making the participation in the process of pre-
litigation mediation mandatory for the MCD.
9. Is there a set procedure that is followed by the MCD after the receipt of a
notice for the Pre-Institution Mediation process?
10. Is the matter assigned to a counsel/lawyer after the receipt of notice for
the Pre- Institution Mediation or after the receipt of summons from the
court once the matter is filed in court?
Ans Questionnaire 9 & 10 are sought to be answered jointly. It is submitted that
there is no procedure which is being followed by the MCD after the receipt of
the Notice in terms of Section 12A of the Act, however, upon issuance of the
Circular as mentioned in answer to Questionnaire 8, it is submitted that a
designated officer of the law department and contract signing authorities shall
be directed to participate in the pre-litigation mediation process in terms of the
page 27
CS Comm. No.1367/2024
M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
law of land. The said participation would be made mandatorily and non-
compliance of the same would be viewed strictly. It is also submitted that as a
matter of general practice, till the filing of the present reply, no
Counsels/lawyers are engaged for participation at the stage of pre-institution
mediation.
11 Whether MCD issued any circular or carried out any training of its
concerned officers that it is mandatory for Legal Officers to appear and
participate in Pre-Institution Mediation hearings?
Ans Neither any circular nor any training has been provided saying that it is
mandatory for legal officers to appear and participate in pre-institution
mediation hearings. However, Circular as mentioned in answer to questionnaire
No.8 is at its advance stage and under administrative scrutiny.
12. In how many cases MCD appeared and participated in the Pre-Institution
Mediation hearings before Ld. Secretary, District Legal Service
Authority?
Ans: Answer to questionnaire No.12 can only be made after collecting and compiling data
as referred in answer to questionnaire No.7.
13. What led to incorporation/amendment of Clause 9 of GCC vide Circular
No. D/EE(P)-111/2024-25/260 dated 04.11.2024 in direct violation of Section
31CGST Act, 2017 read with Rule 46 of CGST Rules, 2017?
Ans It is submitted that as a matter of general practice, Engineering Department of
MCD adopts the General Conditions of Contracts (GCC) on works matters
circulated by CPWD, The said practice is also followed by other local
authorities like - DDA, NDMC etc. It is submitted that at the time of issuing the
Circular dated 04.11.2024 as referred to in questionnaire 13, the same was got
issued by the competent authority keeping in mind that finalization of bills of the
Contractor were being prolonged for one reason or the other and to obviate the
delay and to prevent a possible litigation, it was proposed to amend Clause 9 of
the GCC only to the extent that henceforth, in the event of the failure of a
contractor to submit a final bill within the prescribed time, payment on account
of amount admissible shall be made by the Engineer in-charge. However, on
being made wise by this Hon'ble Court, the said amendment was revisited by the
Engineering Department whereby it was decided to revert to the earlier
prevailing un-amended Clause 9 of the GCC and the same was issued vide
Circular dated 03.04.2025. It is submitted that the two circulars were issued
keeping in mind that the interest of the Corporation is paramount.
14. Who is the authorized and competent authority/entity on behalf of MCD to
receive notices from the DLSAs for the Pre-Institution Mediation process?
Ans In response to questionnaire 14, it is submitted that the notices from DLSA are
issued to the respondent/defendant on the basis of the details furnished by the
petitioner/plaintiff. It is submitted that generally, a contractor, who is also a plaintiff/petitioner, arrays the Executive Engineer of the Division qua which he has performed the work, as such, DLSA issues the notices to the arrayed Executive Engineer, the same. In case, the a who receives contractor/plaintiff/petitioner arrays the Commissioner MCD as page 28 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
respondent/defendant, notices are issued in the name of Commissioner MCD and are being received either in the office of Commissioner MCD or in the office of Chief Law Officer MCD both situated at Dr. SPM Civic Centre, Jawaharlal Nehru Marg, New Delhi.
32. It would be out of place to mention here that in another unrelated case of this Court "Krishan Kumar Gupta Vs. Municipal Corporation of Delhi" bearing CS (Comm.) No. 936/2024, this Court had imposed a cost of Rs.1 lakh on the MCD and had issued directions to the MCD Commissioner to issue a circular by pressing his officials to comply with the mandatory law as interpreted by Hon'ble Supreme Court and start participating in Pre-Institution Mediation proceedings in District Legal Services Authority (DLSA) in District Courts so that eligible commercial disputes can be compromised and necessity to file a suit in Court is minimized by using this ADR. The cost of Rs.1 lakhs was imposed on the MCD with a rider in case the Commissioner, MCD issues a circular within one month i.e. by 31.01.2025, the cost of Rs.1 lakh would be waived. The relevant paras of judgment of this Court dated 10.12.2024 are reproduced hereunder:
58. Despite the statutory promulgation and strict interpretation of the same by Hon'ble Supreme Court it is surprising to observe that defendant MCD and its officials appears to be having scant regard for the law as promulgated by the Parliament or the judgment passed by Hon'ble Supreme Court which is itself a law under Article 141 of Constitution of India. The above legal position mandates every citizen and corporation to strictly follow the same. Defendant which is itself a creation of law too has no option but to participate in the same in all sincerity and conviction.
59. Upon being asked no cogent reason is stated as to why the MCD or its officials did not participate in the Pre-Institution Mediation proceedings. Mediation is one of the pivotal alternate Dispute Resolution Mechanism which finds recognition in Section 89 CPC as it was reintroduced in the 2002 Amendment. Gauging the success of its inclusion the Parliament decided to make it mandatory for Commercial Courts at a pre-institution stage with an aim to elevate India's position in the Ease of Doing Business, a report prepared by World Bank for ranking investment friendly countries. Out of the 10 components of Ease of Doing Business one of the component is time page 29 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
taken by the countries in "enforcement of contracts". While India's dismal ranking of 161 in 2014 has now reached a somewhat respectable position at 63 rank but in the enforcement of contract component which pertains to time taken by the country in resolving commercial disputes our country still ranks at poorly 171 out of 191 countries.
60. Outlook of a country depends on the endeavours put in by the citizenary and the state machinery in such cases. While all the functionaries of Central and State Departments are endeavouring and doing their best in improving India's ranking in this regard but here is a Department which absolutely, as it seems exfacie, has no interest in doing its bit. All that the defendant MCD was supposed to do is to participate in the Pre-Institution Mediation but the blunt stand that they did not participate despite receipt of notice of Secretary, Central DLSA shows that they are doing lot of disservice not only to the mechanism of mediation as a process but is also disregarding the law in its totality..........
62. In the light of the above, let a cost of Rs.1 lakhs be imposed on the defendant MCD to be deposited with Advocates' Welfare Fund, Delhi Bar Association. Copy of this order be sent to Commissioner MCD so that he can look into the matter and ascertain the reasons as to why the employees of the Corporation are not participating in mandatory Pre-Institution Mediation despite binding nature of the statutory provisions and relevance of its bindingness by Hon'ble Supreme Court in Patil Automation case supra.
63. The above cost of Rs. 1 lakhs can be waived in case Office of Commissioner MCD issues a circular on or by 31.01.2025 to all concerned Departments and Gazetted officers directing and mandating to the effect that the MCD would henceforth participate in all Pre-Institution Mediation hearings and all endeavour to settle the disputes by carrying out sincere deliberations under the aegis of District Legal Services Authorities. The Commissioner MCD is at liberty to move an appropriate application before this Court alongwith copy of such circular for waiver of the above conditional imposition of cost. Copy of the judgment be sent to President/Secretary, Delhi Bar Association.
Record reveals that neither any circular was issued by the Commissioner, MCD as directed nor the cost of Rs. 1 lakh imposed on the MCD was deposited with Advocate's Welfare Fund, Delhi Bar Association. Rather the MCD chose to challenge this direction of this Court in RFA (Comm.) No. 220/2025. However, Commercial Appellate page 30 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
Division Bench of Hon'ble High Court of Delhi vide order dated 13.05.2025 has upheld the directions issued by this Court to the Commissioner, MCD. Hon'ble Division Bench not only directed the Commissioner, MCD to issue the circular as directed by this Court but also directed the MCD to deposit the cost with Advocates' Welfare Fund, Delhi Bar Association. The relevant paras are reproduced as under:
10. At the same time, we do not find any merit in the submission of the learned counsel for the appellant with respect to the cost of Rs.1,00,000/-
that has been imposed on the appellant for not participating in the pre- institution mediation process. Section 12A of the Commercial Courts Act, 2015, has been inserted in the Commercial Courts Act with a specific object and intent of expediting the process of resolution of commercial disputes. The object and purpose of the Act is also explained by the Supreme Court in Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1..........
12. We, therefore, find no merit in the challenge of the appellant to the cost of Rs.1,00,000/- that has been imposed on the appellant by the learned Trial Court. In fact, the learned Trial Court by the Impugned Order, has been lenient by stating that in case the Commissioner, MCD issues necessary directions to its officers to participate in such pre- institution mediation process in the right spirit, the cost can be waived. The appellant cannot take a regressive approach and insist on continuing to defeat the object of the Act. We cannot countenance such an approach on the part of the appellant.
13. .........However, the cost imposed on the appellant for not participating in the preinstitution mediation process, must be deposited by the appellant within a period of two weeks from today. We also expect the appellant to ensure that necessary instructions are issued in terms of what has been observed by the learned Trial Court in the Impugned Order with respect to pre-institutiopn mediation.
33.It is a matter of record that the MCD did not deposit the cost of Rs. 1 lakh as directed by the Hon'ble Division Bench within two weeks of 13.05.2025 and rather deposited it on 15.07.2025 followed by issuance of circular dated 29.08.2025 for mandatory participation in Pre-Institution Mediation under Section 12A of Commercial Courts Act, 2015. For ready reference the same is reproduced hereunder:
page 31 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
page 32 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
34.In case titled NDMC Vs. Sanjeev Kumar, 2018 Latest Caselaw 1912 Del dated 22.03.2018, Hon'ble High Court has laid following guidelines:
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;
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 alongwith photographs;
6. The Bill should be scrutinised 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 to recovery of Contractor's dues, all the evidence including the NIT, General Conditions of Contract, period 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 propertly understandable and there is no evidence of actual inspections or 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."
35.Section 31 CGST ACT, 2017 and Rule 46 of CGST Rules, 2017 is reproduced as under:
Section 31. Tax invoice.-
(1) A registered person supplying taxable goods shall, before or at the time of,-
(a) Removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) Delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed:
Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed.
page 33 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:
[Provided that the Government may, on the recommendations of the Council, by notification,-
(a) Specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed;
(b) Subject to the condition mentioned therein, specify the categories of services in respect of which-
(i) Any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(ii) tax invoice may not be issued.] (3) Notwithstanding anything contained in sub-sections (1) and (2)-
(a) A registered person may, within one month from the date of issuance of certificate of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him;
(b) A registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:
Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;
(d) A registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment;
(f) a registered person who is liable to pay tax under sub-section (3) or subsection (4) of section 9 shall 2[, within the period as may be prescribed,] issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;
(g) a registered person who is liable to pay tax under sub-section (3) or subsection (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier.
2[Explanation.--For the purposes of clause (f), the expression "supplier who is not registered" shall include the supplier who is registered solely for the purpose of deduction of tax under section 51.] (4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received. (5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,-
page 34 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
(a) Where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;
(b) Where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment;
(c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation. (7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.
Explanation.-For the purposes of this section, the expression "tax invoice" shall include any revised invoice issued by the supplier in respect of a supply made earlier.
Rule 46 Tax invoice.-
Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,-
(a) Name, address and Goods and Services Tax Identification Number of the supplier;
(b) A consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolised as "-'' and "/" respectively, and any combination thereof, unique for a financial year;
(c) date of its issue;
(d) Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;
(e) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is fifty thousand rupees or more;
(f) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice in cases involving supply of online money gaming or in cases] that where any taxable service is supplied by or through an electronic commerce operator or by a supplier of online information and database access or retrieval services to a recipient who is un-registered, irrespective of the value of such supply, a tax invoice issued by the registered person shall contain the 9[name of the state of the recipient and the same shall be deemed to be the address on record of the recipient]];
(g) Harmonised System of Nomenclature code for goods or services;
(h) description of goods or services;
(i) Quantity in case of goods and unit or Unique Quantity Code thereof;
(j) Total value of supply of goods or services or both;
(k) Taxable value of the supply of goods or services or both taking into account discount or abatement, if any;
(l) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess );
(m) Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess );
page 35 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
(n) Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce;
(o) Address of delivery where the same is different from the place of supply;
(p) Whether the tax is payable on reverse charge basis; and
(q) Signature or digital signature of the supplier or his authorised representative; and
(r) Quick Response code, having embedded Invoice Reference Number (IRN) in it, in case invoice has been issued in the manner prescribed under sub-rule (4) of rule 48].
(s) a declaration as below, that invoice is not required to be issued in the manner specified under sub-rule (4) of rule 48, in all cases where an invoice Is issued, other than in the manner so specified under the said sub-rule (4) of rule 48, by the taxpayer having aggregate turnover in any preceding financial year from 2017-18 onwards more than the aggregate turnover as notified under the said sub-rule (4) of rule 48-
"I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule."] [Provided that the Board may, on the recommendations of the Council, by notification, specify-
(i) The number of digits of Harmonised System of Nomenclature code for goods or services that a class of registered persons shall be required to mention; or
(ii) A class of supply of goods or services for which specified number of digits of Harmonised System of Nomenclature code shall be required to be mentioned by all registered taxpayers; and
(iii) The class of registered persons that would not be required to mention the Harmonised System of Nomenclature code for goods or services:] [Provided further that in the case of] the export of goods or services, the invoice shall carry an endorsement "SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX" or "SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX", as the case maybe, and shall, in lieu of the details specified in clause (e), contain the following details, namely,-
(i) Name and address of the recipient;
(ii) Address of delivery; and
(iii) Name of the country of destination:]
Provided also that a registered person 5[other than the supplier engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens,] may no tissue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 subject to the following conditions, namely,-
(a) The recipient is not a registered person; and
(b) The recipient does not require such invoice, and Shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.
[Provided also that the signature or digital signature of the supplier or his authorised representative shall not be required in the case of issuance of an electronic invoice in accordance with the provisions of the Information Technology Act,2000 (21 of 2000):] [Provided also that the Government may, by notification, on the recommendations of the Council, and subject to such conditions and restrictions as mentioned therein, specify that the tax invoice shall have Quick Response (QR) code.] page 36 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
36. Ld. Counsel for the plaintiff argued that for no fault of his client, the payment was witheld by the MCD. Ld. Counsel is relying on Clause 7 of HC Guidelines. This Court is not in conformity with this plea in so far as the Guidelines have to be abided by and adhered to in totality and not in isolation. A plaintiff which did not adhere to the Guidelines laid by Hon'ble High Court as also binding statutory provisions under CGST Act, 2017 cannot seek equitable relief of seeking interest when admitedly it has never been agreed to in the contractual agreement entered between the parties. More so, non-compliance of Section 31 of CGST Act, 2017 r/w Rule 46 of CGST Rules, 2017 is a punishable offence under Section 122 and Section 132 CGST Act, 2017. For the ongoing reasons, this Court has no hesitation in concluding that the plaintiff is not entitled to any interest in the present suit.
37. I also do not find any strength in the plea that the fact that MCD has paid up without submission of any GST bill by the plaintiff, MCD should be burderned with the interest.
38. As mentioned supra, the gesture of the MCD in releasing the payment without submission of the final bill is a decision taken by the MCD and its officials on their own wisdom. However, this Court finds it pertinent to mention that MCD is a statutory body created under DMC Act 1956, and its action and omissions should be strictly guided by the law. Such statutory bodies and its officials are expected to work in a transparent manner and not in a manner as seen by this Court in different cases where payment of certain contractors are made randomly even though they have not complied with the statutoty documentations like submission of GST Bills.
39.As discussed supra, MCD has already undertaken and has issued fresh strict fresh guidelines that henceforth no single payment shall be released page 37 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.
to any contractor unless they submit 18% advance GST paid bills with the MCD.
40.In the light of decision of Hon'ble High Court in CS Comm. No. 936/2024 titled Krishan Kumar Gupta Vs. Municipal Corporation of Delhi dated 10.12.2024 (supra) of upholding of this Court's order of imposition of cost of Rs.1 lakhs on MCD for non-participation in Pre- Institution Mediation, MCD deserves to be imposed cost in this suit as well. Hence the conduct of MCD for not participating in Pre-Institution Mediation under Section 12A of Commercial Courts Act, 2015 calls for imposition of cost. As such MCD is imposed a cost of Rs.1 lakhs to be deposited with Advocates' Welfare Fund, Delhi Bar Association, Tis Hazari Courts within three months failing which Delhi Bar Association would be at liberty to file an execution in this Court. Copy of judgment be sent to President/Secretary, Delhi Bar Association for information and necessary action. With these submissions, the above issues are answered against the plaintiff and in favour of the defendant.
41. Since plaintiff has already received principal amount and plaintiff has failed to make out a case for payment of interest, suit of the plaintiff is accordingly dismissed. Parties to bear their own costs.
42.Decree sheet be prepared accordingly. File be consigned to Record Room after due compliance. Digitally signed by SURINDER SURINDER S RATHI S RATHI Date:
2026.01.14 15:58:18 +0530 (S S RATHI) District Judge, Commercial Court -11 Central District, THC Delhi/07.01.2026 page 38 CS Comm. No.1367/2024 M/s N S Chaudhary Vs. Municipal Corporation of Delhi and Anr.