Delhi District Court
Kamal Gupta vs Municipal Corporation Of Delhi Through ... on 29 July, 2024
IN THE COURT OF SH MUKESH KUMAR GUPTA
DISTRICT JUDGE(COMMERCIAL)-07(CENTRAL)
TIS HAZARI COURTS: DELHI
CS (Comm.) No. 1072/2023
CNR No. DLCT01-0093812023
DLCT010093812023
KAMAL GUPTA,
Proprietor of M/s Kamal Gupta,
C6B/177, Janakpuri,
Delhi-110058
......Plaintiff.
Vs
MUNICIPAL CORPORATION OF DELHI .
Through: its Commissioner,
Civic Centre, J.L. Nehru Marg,
New Delhi-110002
...... Defendant.
SUIT FOR RECOVERY OF RS.17,93,241/-
Date of institution of suit : 14.07.2023
First Date before this court : 04.04.2024
Date of hearing of final argument : 25.07.2024
MUKESH by
Digitally signed
MUKESH
KUMAR GUPTA
Date of Judgment : 29.07.2024
KUMAR Date:
2024.07.29
GUPTA 17:31:04
+0530
Appearance(s) : Shri Vinay Kumar, Adv. Ld. Counsel for plaintiff.
Shri Sanjeet Malik, Advocate, Ld. Counsel for the
defendant.
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 1 of 29
JUDGMENT
(A) PRELUDE:
1. By way of present judgment, I shall conscientiously adjudicate upon plaintiff's suit for Recovery of Rs. 17,93,241/- alongwith interest @ 12% per annum pendentlite and future from the date of filing of suit till its realisation. The plaintiff has also prayed for costs of the suit against the defendant.
(B) PLAINTIFF'S CASE:-
2. Eschewing prolix reference to the pleadings crystallizing the same the plaintiff has averred in the plaint that:-
2.1) The plaintiff is the sole proprietor of M/s Kamal Gupta having its registered office address at C-6B/177, Janakpuri, Delhi-58 duly registered as a Municipal Contractor with the defendant. The plaintiff firm is engaged in the civil constructions and supply of building material.
2.2) The defendant is a body corporate of the state of Delhi, established and governed under the Municipal Corporation of Delhi Act,1957. The suit is being filed against the defendant through its Commissioner who is in-charge of all the acts and day to day activities of the defendant. The defendant is engaged in taking care of all the civil amenities, developments etc of Delhi and the Executive Engineer (M) I/CLZ, MCD is involved in all the processes of the subject tender since Digitally the date of the tender for the works till finalization of the bills on behalf signed by MUKESH MUKESH KUMAR GUPTA KUMAR GUPTA Date:
of the defendant corporation.
2024.07.29 17:31:17 +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 2 of 29 2.3) It is further the case of the plaintiff that plaintiff being Government Contractor approached the defendant for the work through tender invited by the Executive Engineer (M) I/CLZ, and after due process became successful. After satisfaction and completion of required conditions at the stage of pre-work order, the works covered by the tender were awarded to the plaintiff. Accordingly, the works order No. EE(M-CLZ)-I (EE-XII) SYS/2022-23/3 dated 12.05.2022 EE (M-
CLZ)-I (EE-XI) SYS/2022-23/24 dated 16.06.2022 EE (M-CLZ)-I (EE- XII) SYS/2022-23/25 dated 16.06.2022 ( in short "WO-3, 24,25") were issued to the plaintiff. The plaintiff has also deposited the security/earnest money and entered into an agreement with the defendant as a pre-condition of the award. The work was completed by the plaintiff to the satisfaction of the Engineer-in-charge within the stipulated period and the period for defect liability has also passed without any negative remarks with the satisfaction of the defendant.
2.4) The defendant completed the final measurement of the aforesaid works and bills pertaining to the aforesaid works were passed and recorded in the measurement books. The detail of the composite amount of the passed bill and security amount are given below:-
Work Date of Amount Date of Earnest/ Withheld Order Work of passed passing of Security amount No. order bill in Rs. the bills Amount
3 12.05.2022 2,26,533/- 30.04.2023 26,36/- --- 24 16.06.2022 6,70,251/- 30.04.2023 79,750/- 20,000/-
Digitally signed25 16.06.2022 6,70,842/- 30.04.2023 79,539 20,000/-
by MUKESH
MUKESH KUMAR GUPTA
KUMAR Date:
2024.07.29
GUPTA 17:31:25
+0530
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 3 of 29
2.5) Despite passing of the bills, the defendant has neither
released the payment nor informed the plaintiff and amounts were withheld for which the plaintiff has made several request to the defendant for release of the amount of passed bills as also the security amount but to no avail. According to the clause 9 of the General Terms and conditions of the agreement, the defendant is liable to release the same within a period of six/nine months. The plaintiff has thus also claimed, an interest @ 12% per annum on the suit amount of Rs.17,93,241/-against the defendant.
2.6) The plaintiff has written a letter dated 16.09.2022 for release of the bill amount in respect of WO No.3,24,25 to the Executive Engineer (M) 1 CLZ, 16-Rajpur Road, Civil Line Zone, Delhi which was not responded to. The defendant, on the other hand, has tried to evade the payment on one pretext or the other compelling the plaintiff to issue a legal notice dated 19.09.2022 u/s 477/478 of the MCD Act, calling upon the defendant to pay the suit amount with interest @ 18% per annum which was also not replied to by the defendant. It is averred in the plaint that pursuant to the said legal notice, the defendant has also passed the Final Bill in respect of the WO No.3 and first running bill in respect of WO No.24 & 25 but the legal notice was neither replied nor complied.
2.7) The plaintiff has claimed the cause of action arose on the date when the defendant awarded the works order to the plaintiff, written a letter dated 16.09.2022 to the defendant, raised the final bills in respect of WO No.3 dated 15.05.2022 and WO No. 24 & 25 both dated 16.06.2022 and finally, on issuance of legal notice which was not Digitally signed MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
2024.07.29 GUPTA responded to. Hence the present suit for recovery of Rs.17,93,341/- with 17:31:38 +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 4 of 29 pendentlite and future interest @ 12% per annum and costs.
(C) DEFENDANT'S CASE:-
3. On receipt of summons for settlement of issues, the defendant contested the suit by filing a detailed Written Statement thereby taking various preliminary objections as averred and mentioned herein under:-
3.1) The suit filed by the plaintiff is premature, without any cause of action and therefore deserves to be rejected at the threshold. The plaintiff has not approached the court with clean hands and has concealed the material facts, plaintiff has also breached the agreement. It has further been contended that the plaintiff has not submitted any bill either interim or final which he was contractually required to and as such in absence of any bill, no amount can be said to be due or payable to the plaintiff. The plea of the defendant is that the purported bills which the plaintiff seeks to rely upon are only internal notings of the defendant and they do not constitute bills for the purposes of payment. It is further contended that the plaintiff has failed to disclose a cause of action to maintain the present suit and the plaintiff has failed to comply with and adhere to the contractual obligation as set out in the Work orders and the General Conditions of Contract (GCC). The defendant has virtually reproduced clause 7, 9, 17 and 45 of the GCC to support its defence.
3.2) On merits, all the allegations made in the plaint have been denied as incorrect. It has been contended that the plaintiff himself admits being bound by the terms of the NIT, the Work Order and the Digitally signed by MUKESH MUKESH KUMAR KUMAR GUPTA Date:
2024.07.29 GCC, however, the plaintiff has failed to abide by the same and do what GUPTA 17:32:08 +0530 was necessary thereunder. The defendant has also denied that the plaintiff CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 5 of 29 made necessary arrangements for execution and completion of the work within the stipulated time and that the work was completed by the plaintiff to the satisfaction of the defendants. It has also been contended that once the plaintiff is aware of his obligations under the GCC and the law, issuance of legal notice would not absolve him of his legal and contractual duty to furnish the bills. It has also been contended that the amounts given as security deposit cannot be refunded unless the plaintiff complies with provisions of the GCC. It has also been denied that defendants are liable to pay interest as claimed by the plaintiff as no amounts have become due on date. The entire claim of the plaintiff including the claim of the interest is stated to be pre-mature and false.
4. The plaintiff has not preferred any replication to the Written Statement filed by the defendant.
(D) CRYSTALISING THE DISPUTE :-
5. On the pleadings of the parties and documents placed on record the following issues were framed for adjudication vide order dated 18.12.2023.
ISSUES.
(i) Whether the suit is liable to be dismissed for the reason that the plaintiff has not complied with the partnership clauses of the Digitally signed by MUKESH Agreement with the defendant ?OPD MUKESH KUMAR KUMAR GUPTA
(ii) Whether the plaintiff is entitled to recover Date:
GUPTA 2024.07.29
17:32:16
the suit amount from the defendant ?OPP
+0530
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 6 of 29
(iii) Whether the plaintiff is entitled to recover
any interest from the defendant, if so, at what rate and for what period ?OPP
(iv) Relief.
6. It is also pertinent to mention here that vide order dated 18.12.2023, Ld. Predecessor of this court has re-casted Issue No.1 as under:
"Whether the suit is liable to be dismissed for the reason that the plaintiff has not complied with the terms and conditions of the Agreement with the defendant ?OPD"
(E) EVIDENCE OF PLAINTIFF.
7. Plaintiff, in support of his case, got examined himself as PW1 and reiterated the contents of the plaint on oath in his affidavit Ex.PW1/A. He got exhibited the Registration Certificate of the plaintiff proprietorship firm with the MCD as Ex.PW1/1, Copy of Work Orders No. EE(M-CLZ)-I (EE-XII) SYS/2022-23 dated 12.05.2022, EE (M- CLZ)-I (EE-XI) SYS/2022-23/24 dated 16.06.2022 and EE (M-CLZ)-I (EE-XII) SYS/2022-23/25 dated 16.06.2022 as Ex.PW1/2 (colly), photocopy of passed bills as Ex.PW1/3 (colly), Copy of General Terms and Conditions of Agreement as Ex.PW1/4, Copy of the letter dated 16.09.2022 asking the defendant for release of amount of bills as Ex.PW1/5, Legal Notice dated 19.09.2022 alongwith its postal receipts as Ex.PW1/6 and Ex.PW1/7 respectively and copy of Non-Starter Report as Ex.PW1/8. He has also exhibited the copies of three original letters Digitally signed by MUKESH KUMAR MUKESH KUMAR GUPTA dated 29.03.2023 as Ex.PW1/9 (colly) and the copies of two letters GUPTA Date:
written by him to the Executive Engineer MCD both dated 19.06.2023 as 2024.07.29 17:32:33 +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 7 of 29 Ex.PW1/10 (colly). He has deposed that the defendant has merely passed the bills of the plaintiff pursuant to the legal notice but has failed to release the payments to the plaintiff. It has further been deposed that the suit is correct and the defendant is liable to pay the outstanding amount alongwith interest and costs.
8. During a detailed cross-examination, Ld. Counsel for defendant has tried to puncture the testimony of PW1 on the point of compliance of terms & conditions of the Agreement, bills in question and other aspects.
PW1 during cross-examination has admitted that he has read the terms and conditions of the Agreement before he signing the same. He has further deposed that he has not retained any record of measurement in respect of the work done for the work orders in question. He has voluntarily deposed that he has furnished the details of the measurement to the JE alongwith the bills, however, no acknowledgement of receipt of bills was given to him by the JE. He has further deposed that he had procured raw material for execution of the work orders in question and he has not filed any bills in respect of such raw material on court record. He has further voluntarily deposed that there is no requirement of submitting the bills for the raw material in case of repair work and the same is required in case of Work Orders for supply of material. No separate Completion Certificate was provided to him by the MCD. However, he has also written various letters to the MCD for release of MUKESH KUMAR payment. He has also deposed that he has executed the Work Orders GUPTA Digitally signed by MUKESH KUMAR GUPTA within the stipulated time. He has also admitted that he has not filed any Date: 2024.07.29 17:32:42 +0530 proof of payment made by him to the labourers engaged by him for CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 8 of 29 execution of the Work Orders. He has also denied the suggestion that he has not entitled for any interest as claimed or that he has deposed falsely.
9. No other witness was examined by the plaintiff and the evidence of the plaintiff was closed on 06.03.2024.
(F) DEFENDANT'S EVIDENCE :-
10. The defendant in its defence examined one Shri J.S. Khatri, Assistant Engineer (M-1), as DW1 who has filed his evidence by way of affidavit Ex.DW1/A. He reiterated the contents of the Written Statement on oath. He has not exhibited any document on record. He has also deposed in his evidence that the plaintiff has not submitted any bill (either interim or final) that he was contractually required to and that in the absence of any bill submitted by the plaintiff no amount can be said to be due or payable to the plaintiff. He has further deposed that the purported bills that the plaintiff seeks to rely upon are only internal noting of the defendants and they do not constituted bills for the purpose of payment. He has also deposed that the plaintiff has failed to comply with clause 17 and clause 45 of the GCC and unless the conditions of clause 17 and 45 are fulfilled, there can be no refund of security deposit to the plaintiff. He has deposed that the suit of the plaintiff is liable to be dismissed as pre-mature, misconceived and bereft of cause of action with exemplary costs.
Digitally signed by MUKESH MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29
11. The witness was subjected to a detailed cross-examination by Ld. 17:32:51 +0530 Counsel for the plaintiff, during which DW1 has admitted that the bills CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 9 of 29 Ex.PW1/3 (colly) has been issued by the defendant corporation and the same has now been sent to the Head Quarters for demand liability. He has also admitted that the said bills Ex.PW1/3 (colly) has been prepared on the basis of the Measurement Book by the concerned Assistant Engineer. He has also deposed that no labour complaint is pending or received against the plaintiff in respect of the Work Orders in question. He has also admitted that the final bill in respect of Work Orders No. 24 and 25 are still pending. However, he has voluntarily deposed that certain formalities are yet to be completed by the plaintiff. When asked about by the Court specifically by way of a Court Question regarding what formalities/compliances are pending for clearance of the Work orders, the witness has answered that he does not know and the question can be answered only by the Accounts Clerk who is a person who prepares the bills. He has also admitted that the running bills Ex.PW1/3(colly) also bear the signatures of the Contractor i.e. the plaintiff. He has also denied the suggestions that no compliance with regard to the work Orders No. 24 and 25 is pending on the part of the plaintiff or that is why there is no document placed on record to this effect.
12. No other witness was examined by the defendant and the evidence of the defendant was closed vide statement dated 12.03.2024.
Digitally
signed by
MUKESH
(G) ARGUMENTS ADDRESSED:-
MUKESH KUMAR
ARGUMENTS OF PLAINTIFF.
KUMAR GUPTA
GUPTA Date:
2024.07.29
17:33:00
+0530
13. Ld. counsel for the plaintiff Shri Vinay Kumar has vehemently CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 10 of 29 argued that the plaintiff has succcessfully executed the awarded Work Orders No.3, 24 and 25 to the satisfaction of the defendant within time and as per the guidelines of the GCC. It has been argued that despite the aforesaid the defendant has failed to clear the outstanding amount which are legitimate dues of the plaintiff for reasons best known to the defendant. It has been stated that even after passing of the bills in respect of the work orders, the defendant has not released the payment of the plaintiff leading to withholding a substantial amount and continued loss to the plaintiff. He has argued that the original bills were submitted to the concerned JE of the defendant after completion of the work and the same has been duly entered in the Measurement Book and it was after completion of necessary documentation and formalities only the defendant has proceeded further to pass the bills as can be reflected from Ex.PW1/3 (colly) which not only bears the signature of the concerned Engineer but also the Accounts Officer and the Executive Engineer on behalf of the commissioner of the MCD. Ld. Counsel has argued that the defendant on one pretext or other, has been deferring the payment and not releasing the same. He has prayed that not only the suit be decreed with interest and costs but exemplary costs and damages should also be granted to the plaintiff against the defendant.
ARGUMENTS OF DEFENDANT:
14. Ld. counsel for the defendant Shri Sanjeet Malik on the other Digitally hand has vehemently opposed the arguments of the Ld. Counsel for the signed by MUKESH MUKESH KUMAR KUMAR GUPTA plaintiff and has stated that the plaintiff has not submitted the bills qua GUPTA Date:
2024.07.29 17:33:08 +0530 the Work Orders No. 3, 24 and 25 and therefore not complied with the CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 11 of 29 terms and conditions of the GCC which he himself is relying upon and as such the suit of the plaintiff is pre-mature and misconceived. Ld. Counsel for defendant while making specific reference to clause 7 and 9 of GCC has vehemently argued that the submission of the bills is a pre- condition on which a cause of action can arise. On the aspect of refund of security deposit, Ld. Counsel has again referred to clause 17 and 45 of GCC to state that it was on account of plaintiff failure to complete the formalities, the same was not released as no occasion has arisen for the defendant to release the same. Ld. Counsel Shri Malik has also referred to the Judgment of Hon'ble High Court in New Delhi Municipal Corporation & Ors. Vs. Sanjeev Kumar RFA No. 430/17 (DOD 22.03.2018). Finally, he has argued that the plaintiff has failed to comply with the provisions of MCD Act in as much as no notice u/s 478 of the Act has ever been issued to the defendant corporation which is mandatory. He has further stated that the suit is liable to be dismissed with exemplary costs (H) ANALYSIS & DETERMINATION:-
15. I have heard the arguments addressed by the Ld. Counsels for the parties, perused the entire record including the oral and documentary evidence. I have given a thoughtful consideration to the same. My issue-
Digitally wise determination is as under:-
signed by MUKESH MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 17:33:18 Issue no.1. "Whether the suit is liable to be dismissed for the reason that the plaintiff +0530 has not complied with the terms and conditions of the Agreement with the defendant ?OPD"
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 12 of 29
16. The onus of proving this issue was held upon the defendant who has taken a preliminary objection in its Written Statement that the suit is liable to be dismissed for the reason that the plaintiff has not complied with the terms and conditions of the GCC which governs the tender and work orders. This issue is pivotal to the entire controversy between the parties as there is no dispute regarding the award of contract, completion of work within stipulated time, labour complaint or any other issue regarding the satisfactory work being completed except the alleged non- compliance of GCC. Ld. Counsel for the defendant has vehemently taken only one stand in defence that the plaintiff has not submitted the bills( interim or final), which he was contractually required to submit. It has also been argued that as per specific clause 7 and 9 of GCC and clause 4 of the work order, the contractor shall not be entitled for any payment, if he does not submit the certificate of completion and further plaintiff was required to submit final bill within one month of the date of the final certificate of completion furnished by the Engineer-in-charge or within three months of physical completion of the work.
17. Per Contra, Ld. counsel for the plaintiff has argued that the defendant had passed the bills which have been exhibited as Ex.PW-1/3 (colly) a copy of which was also provided to the plaintiff which he had accepted after counter signing the same and hence, there was due compliance of the clause 7 and 9 of the GCC and as such, the plaintiff is Digitally entitled for the amount of the bills as claimed and which the defendant is signed by MUKESH MUKESH KUMAR GUPTA KUMAR GUPTA Date:
withholding without any justifiable reason. He has relied upon the 2024.07.29 17:33:59 +0530 decisions of Hon'ble High Court of Delhi in North Delhi Municipal CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 13 of 29 Corporation Vs. Barahi Construction RFA (COMM) 6/2021 (Neutral citation: 2021/DHC/958-D) and the judgment of Hon'ble Division Bench of High Court of Delhi in North Delhi Municipal Corporation Vs. Vipin Gupta RFA 160/2017 to support his point. He has further relied upon the judgment of Mr. Rajnish Yadav proprietor of M/s. Bharat Construction Company Vs. North Delhi Municipal Corporation, RFA (OS) (COMM) 1/2021 (Neutral citation:
2023/DHC/000174) to argue that once the defendant had accepted the execution of the work by the plaintiff as also after submission of the measurement duly entered in the Measurement Book even processed the bills pertaining to the work orders without any dispute whatsoever and therefore, the defendant was under the liability to pay the contractual work amount to the plaintiff.
18. Before proceeding further, I deem it appropriate to reproduce the Clause 4,7 and 9 of the GCC which has been referred to by both the parties:-
Clause 4 of Work order:
"It should be noted - (a) that as and when orders are given for execution of any extra/substitute item prior orders from the competent Authority to be obtained before execution of the same to avoid any further complications; (b) that contractor has to submit his RA/Final bill with measurement otherwise nothing will be consider due on account of work execution".
Clause 7 GCC:
Digitally signed by MUKESH MUKESH KUMAR KUMAR GUPTA "No payment shall be made for work estimated to cost GUPTA Date:
2024.07.29 17:34:06 +0530 Rs. Twenty thousand or less till after the whole of the CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 14 of 29 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. The contractor shall not be entitled to be paid any such interim payment if the gross work done together with the note payment/adjustment of advances of material collected., if any, since the last such payment is less then the amount specified in Schedule 'F' in which case the interim bill shall be prepared on the appointed date of month after the requisite progress is achieved. Engineer-in Charge shall arrange to have the bill verified by taking or causing to be taken, where necessary, the requisite measurement of the work. In the even 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 way of interim payment at such rates as decided by the Engineer-in-charge of his Asstt. Engineer together with the account of the material as issued by the department, or dismantled materials, if any. The payment of passed bills will be subject to availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first and past liabilities will be cleared and after that the release Digitally signed by MUKESH of payment for passed bills be in order of the demand MUKESH KUMAR GUPTA KUMAR Date:
received at HQ under particular head of accounts. No GUPTA 2024.07.29 17:34:14 interest shall be payable to the contractor in case of +0530 delay in payment on account of non-availability of fund in the particular head of account of the MCD."
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 15 of 29 Section 9 of GCC "The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in-charge whichever is earlier. Nor further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payment of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer-in-charge, will, as far as possible be made after the period specified here-in-under the period being reckoned from the date of receipt of bill by the Engineer-in-charge or his authorized Asstt. Engineer, complete with account of material issued by the department and dismantled. The payment of passed bills will depend on availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first the past liability will be cleared and after that the release of payment for passed bills will be in order of the demand received at the HQ and the particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of MCD.
(i) If the tendered value of work is upto Rs.5 lacs : 6 months.
(ii) If the tendered value of work exceeds Rs.5 lacs :9 months."
19. On harmonious constructions of these provisions, it is clear that :
"a. for payments of bills regarding the works, the Engineer-in-Chief is required to certify the payments. Digitally signed by MUKESH b. the payments of the passed bills shall be made subject MUKESH KUMAR KUMAR GUPTA to availability of the funds in specific head from time to time with the MCD.
GUPTA Date:
2024.07.29
17:34:24
c. the payments of the bills shall be strictly made on que
+0530
basis, and
d. the interest shall not be payable by MCD for delayed
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 16 of 29
payment on account of non-availability of funds".
20. Hon'ble High Court of Delhi had the occasion of examining the aforesaid clauses where it has been observed that a corporation which gets the work done to the satisfaction cannot be allowed to include a term in a contract which is per se unconscionable and unreasonable in so far as the availability of the funds are concerned as there is no fixed period or mechanism to determine as and when these funds shall be made available in a particular head of account that too without any knowledge of the aforesaid two factors to the plaintiff. Reliance placed on Sanjeev Kumar (supra). The Hon'ble High Court after examining the entire issue has even passed guidelines in the batch of appeals on 22.03.2018 where the bills after submission was required to be scrutinized by the Engineer in- chief and the work should be recorded in measurement book and bills should be passed. The Hon'ble High Court has been categoric that payment of 6 months and 9 months should be strictly adhered to and any delay in payment thereof would entail interest to be paid by the defendant corporation.
21. The Hon'ble Hifgh Court has gone to the extent of directing that for refund of security deposit and earnest money deposit the contractor shall unscrupulously comply with the condition of clause 17 and 45 for Digitally which even the payment of final bills need not be awaited. The Hon'ble signed by MUKESH MUKESH KUMAR KUMAR GUPTA Date:
High Court has further passed a plethora of directions for streamlining GUPTA 2024.07.29 17:34:45 +0530 the aforesaid issue which results in avoidable litigation between the CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 17 of 29 corporation and the contractors executing the work.
22. Adverting to the present case, it is not in dispute that the plaintiff firm was awarded WO No.3, 24 and 25 dated 12.05.2022, 16.02.2022 and 16.06.2022 respectively Ex. PW1/2 (colly) by the defendant and the said work were duly executed by the plaintiff and as a precondition earnest money was also deposited by the plaintiff. It is also not in dispute that the work was completed within time and the plaintiff has completed the necessary formalities including the measurement immediately on completion of the work leading to preparation of the bills passed the Executive Engineer concerned mentioning not only the details of the work done, rates on which the work was done and the actual amount due to be paid by the defendant corporation. The only question which has raised by the defendant is technical non-filing of final bills by the plaintiff which the plaintiff has refuted even during his cross-examination by stating that "I had furnished the details of measurement to the JE alongwith the bills. However, no acknowledgement of receipt of bills was given to me by JE".
I have not filed any bill on court record. Vol. As no acknowledgement of receipt was given to me by JE".
23. According to the plaintiff, bills were passed on 30.04.2023 for Rs.2,26,533/- qua WO No.3, Rs.6,70,251/-, Rs.6,70,251/- qua Work Order No. 24 and Rs. 6,70,842/- qua Work Order No.25 and their earnest amount for three Work Orders No.3,24 and 25 for Rs.26,326/-, Digitally signed by MUKESH KUMAR MUKESH KUMAR GUPTA Rs.79,750 and Rs. 79,539/- total amount of Rs. 17,53,241/- .
GUPTA Date:
2024.07.29
17:34:53
+0530
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 18 of 29
24. The defendant on the other hand, has taken a technical objection that no bills were submitted for clearance by the defendant corporation and that Ex.PW1/3 (colly) was an internal noting of the defendant corporation only. However, if the cross-examination of DW1 Shri J.S. Khatri AE is considered, he has not only admitted Ex.PW1/3 but has stated that these bills were issued by the defendant corporation and sent for demand liability to the Head Quarters. It has also been admitted that the running bills Ex.PW1/3 (colly) also bears the signature of contractor i.e. the plaintiff herein. If these bills are carefully examined and as already discussed they contain not only the details of work, rates on which the work was completed but also the total amounts against each work order. These bills have been signed by the concerned JE, the Assistant Account Officer and even the Executive Engineer on behalf of the Commissioner MCD which clearly indicates that these bills have been duly approved by the competent officers of the defendant corporation who are duly authorised not only to verify and check the same but also approve the same. These bills are admittedly based on the measurement book which contains the details and particulars of work done duly cross-checked by the officers of defendant corporation after physical verification at the site. These bills have admittedly been also given to the plaintiff after his due signatures on the same. It is not the case of the defendant that these bills have been obtained by the contractor through illegitimate means or through back door. It is unfathomable for Digitally signed by MUKESH MUKESH KUMAR KUMAR GUPTA the court to understand as to how the defendant corporation will reach GUPTA Date:
this stage of preparation, cross-verification and approval of the bills 2024.07.29 17:35:01 +0530 without the necessary formalities being completed by the CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 19 of 29 plaintiff/contractor. Thus, taken on the yardstick of preponderance of probabilities, Ex.PW1/3(colly) cannot be merely called an internal noting of the department but is a document to which the plaintiff is clearly also a party.
25. It is further not in dispute that these bills were prepared, cross- checked and also sent to headquarters for demand liability and has been prepared strictly after verification on the basis of the measurement book. DW1 Shri J.S. Khatri during cross-examination has admitted that the final bills have not been released because there are certain formalities which are yet to be completed but when asked specifically by the court (by way of court question) during cross-examination about what formalities or compliance are required to be completed and pending at the end of plaintiff. The witness has stated hat he does not know and same can be answered only by Accounts Clerk who prepares the bills. The Accounts Clerk has admittedly failed to enter in the witness box. It is also an admitted case of the defendant that there is no labour complaint pending or received against the plaintiff in respect of the work orders in question. Thus, taken comprehensively the defendant has though admitted the liability on satisfaction of the works covered by the work orders Ex.PW1/2(colly) but is deliberately denying the claim of the plaintiff on the plea of non-submission of bills. Certainly law and equity cannot permit the same to happen, more so, when there is clear admission Digitally signed by MUKESH MUKESH KUMAR of completion of work without any complaint or lack of compliance and KUMAR GUPTA GUPTA Date:
2024.07.29 17:35:09 +0530 even the liability by the corporation. The defendant has admittedly failed to show any document on record showing failure of compliance or CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 20 of 29 guidelines at the end of the plaintiff.
26. Thus, on taken on the yardstick of preponderance of probabilities and on the basis of oral as well as documentary evidence on record, the court is of the considered opinion that the defendant has failed to discharge the onus casted upon him to prove the aforesaid issue.
27. This issue is, accordingly decided against the defendant and in favour of plaintiff.
Issue No.2: "Whether the plaintiff is entitled to recover the suit amount from the defendant ?OPP"
28. The onus to prove this issue was held upon the plaintiff. The plaintiff has prayed for recovery of Rs.17,95,241/- for the work done against the work orders no.3, 24 and 25 (Ex.PW1/2). The plaintiff has also claimed interest @ 12% per annum pendentlite and future from the date of filing of the suit till its realisation.
29. As already discussed above, there is no dispute with regard to the fact that plaintiff was awarded work orders no. 3, 24 and 25 on 15.5.2022, 16.06.2022 and 16.06.2022 respectively Ex.PW1/2 (colly). The plaintiff completed the works on 01.08.2020. The bills Ex.PW- 1/3(colly) were prepared, verified through measurement book and Digitally signed by MUKESH passed by the defendant on 30.04.2023 but the payment was not released MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 by the defendant corporation.
17:35:17 +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 21 of 29
30. Defendant has taken a defence that plaintiff is not entitled for the amount as he had not complied with the contractual obligations and had failed to submit the final bills as required under clause 7 and clause 9 of GCC and clause 4 of the work order. It was also submitted that the plaintiff also failed to comply with clause 17 and 45 of GCC for refund of the security deposit and did not apply for the labour clearance certificate. Ld. Counsel for the defendant relied upon the judgment of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Sanjeev Kumar (RFA 430/2016) in support of his arguments. It was also argued that unless the provision of clause 17 and 45 of GCC are complied with, the claim for refund of the security deposit is pre-mature and untenable. He has also argued that there was a delay in completion of works and plaintiff failed to apply for extension of time.
31. As already held in the foregoing paras, admittedly the plaintiff had completed the works awarded to him pursuant to work orders Ex.PW1/2 (colly) and even the bills have been prepared, verified and passed by the defendant corporation on 30.04.2023. The defendant has admitted its liability by preparing and passing of the bills Ex.PW-1/3(colly) which were counter signed by the plaintiff in token of its correctness.
32. As regards the amount of Rs.17,93,241/- withheld by the defendant Digitally signed by MUKESH in the bills Ex.PW-1/3 (colly)5, DW-1 Shri J.R. Khatri in his cross MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 examination has admitted that this amount was withheld in both the work 17:35:24 +0530 orders against final report of quality checking. He further admitted that the plaintiff had no role in obtaining the final report of quality checking CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 22 of 29 as it was inter departmental procedure and generally the final report of quality checking is required to be received in 2-3 months. It is now almost 2 years that the work has been completed and defect liability period has also expired and there is no complaint qua the work done by the plaintiff. The bills in question covering the amount of work done have admittedly been sent by the defendant to the Head Quarters for demand liability. The plaintiff on his part has written repeated letters to the defendant corporation for release of the payment at the earliest which has already exhibited on record as Ex.PW1/5 and even as Ex.PW1/10 besides issuance of a legal notice dated 19.09.2022 Ex.PW1/6, the receipt of which has not been disputed or denied by the defendant, though, the defendant during the course of arguments has taken a stand that the notice was not in accordance with section 478 of DMC Act, 1957. Pertinently, though the legal notice Ex.PW1/6 do not specifically mention the provision of Section 478 DMC Act but when the contents thereof is examined, the plaintiff has made request for passing of the bills and release of payment in respect of the works completed pursuant to the work orders Ex.PW1/2 (colly) awarded to him. Even before approaching the court, the plaintiff has taken due recourse to pre- institution mediation (PIMS) by making an application before the concerned authority under Section 12-A of the Commercial Courts Act, 2015 on 23.11.2022 on which notice were issued to the defendant corporation for 19.11.2022 and 23.01.2023. As per Ex.PW1/8 which is Digitally signed by a non-starter report, these notices were duly served upon the defendant MUKESH MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 but the defendant has failed to even appear before the concerned 17:35:33 +0530 authority for an amicable settlement resulting into the plaintiff CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 23 of 29 approaching the court for redressal of his grievance.
33. The plaintiff has also claimed refund of the security deposit of Rs.26,326/-, Rs.79,750/- and Rs.79,539/- against the three work orders.
PW-1 Shri Kamal Gupta in his cross examination admitted that he has not obtained any certificate from the Labour Department, MCD as there were no complaint of the labour whereas defendant has opposed the refund of the security amount citing non compliance of clause 17 and 45 of GCC.
34. Perusal of clause 17 of GCC makes it clear that plaintiff cannot claim the security deposit before the expiry of 12 months after the issue of the final certificate of completion of the work or till the time final bill has been prepared and passed, whichever is later. Clause 45 of the GCC also provides that security deposit of the work will not be refunded till the contractor produces a clearance certificate from the labour office. However, it further says that if no complaint is pending on record till after three months after completion of the work and/or no communication is received from the labour officer to this effect till 6 months after the date of completion, it will be deemed to have received the clearance and the security deposit will be released, if otherwise due.
35. In the present case, the works were completed by the plaintiff on Digitally signed by 01.08.2022 and the bills were prepared and passed by the defendant on MUKESH MUKESH 30.04.2023. A period of almost 2 years has expired from the date of KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 17:35:41 completion of work. Admittedly, there is no complaint regarding the +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 24 of 29 quality of work done by the plaintiff nor there is any complaint against the plaintiff regarding any labour dispute in respect of the aforesaid work orders (the maximum period for which was 6 months). A considerable time has expired since the contract was completed and admittedly there is no claim made by the defendant on account of any acts of commission or omission on the part of the plaintiff. DW-1 Shri J.S. Khatri has also admitted in his cross examination that there are no labour complaints in respect of the work orders Ex.PW-1/3 (colly). Hence, there are no grounds for the defendant to withhold the security amount of the plaintiff. Accordingly, taken on the yardstick of preponderance of probability and in view of oral as well as documentary evidence which has come on record, the same is also required to be refunded to the plaintiff. The plaintiff has also claimed a sum of Rs.20,000/- each against work orders No.24 and 25 which on enquiry from the Ld. Counsel for plaintiff is stated to be for Lab Test. However, there is no pleadings or evidence in respect of the Lab Test nor any receipt for the aforesaid against Lab Test is brought and proved by the plaintiff during the course of proceedings.
36. In view of the aforesaid discussions and findings, this issue is decided in favour of the plaintiff and against the defendant and it is held that plaintiff has been establish on record that the defendant was under
legal obligation to pay outstanding amount of Rs..17,53,241/-, which is due and outstanding against the defendant. Therefore, said outstanding amount of Rs. 17,53, 241/- shall be treated as an outstanding amount.Digitally signed
MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2024.07.29 Therefore, the plaintiff is entitled to recover the total amount of 17:35:57 +0530 Rs.17,53,241/- i.e. Rs.2,26,533/-, Rs.6,70,251/- and Rs.6,70,842/-, CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 25 of 29 (Amount of Work Orders No.3, 24 and 25 respectively) + Rs.26,326/-, Rs.79,750/- and Rs.79,539/- ( Earnest Money) from the defendant. This issue is decided accordingly.
Issue no.3: "Whether the plaintiff is entitled to recover any interest from the defendant, if so, at what rate and for what period ?OPP"
37. The onus to prove this issue was on the plaintiff. The plaintiff has claimed pendente lite and future interest @ 12% per annum on the due amount of Rs.17,53,241/- from the date of filing of the suit till its realization.
38. Ld. Counsel for the plaintiff has argued that defendant has illegally withheld the amount of bills. It is further argued that the plaintiff has suffered financial losses as defendant failed to release the payments within a period of 6/9 months as required under clause 9 of GCC and hence, the plaintiff is entitled for the interest on the delayed payment.
39. Ld. Counsel for the defendant has argued that plaintiff is claiming the decreetal amount without submitting the requisite documents and compliance of terms and conditions of GCC. It has also been submitted that plaintiff is not entitled for any interest or refund of deposit as it has failed to adhere to the terms and conditions of the GCC.
40. Counsel for the plaintiff has not submitted on what basis the Digitally signed by MUKESH MUKESH KUMAR interest is being claimed @ 12% per annum by the plaintiff. In NDMC KUMAR GUPTA GUPTA & Others Vs. Shish Pal MANU/DE/1200/2018, it was observed that:-
Date:
2024.07.29 17:36:05 +0530 CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 26 of 29 "45. In the present case, the combined effect of the Clauses and the Circular and amendments, set out above, is that if the Corporation does not procure funds, it is not liable to even pay the Contractor any interest and the Contractor has no remedy. This by itself would mean that such a Clause could be read as leading to a contract without consideration and hence unlawful under Section 23 of the Contract Act.
The Corporation being an instrumentality of State, such a contract would also be opposed to public policy under Section 23 of the Contract Act. Section 46 of the Contract Act is also clear that if no time for performance of a contract is specified, it has to be performed within a reasonable time. Reading these provisions together, it is clear that an open ended Clause which in effect says that the payment shall be made at an undetermined time in the future, subject to availability of funds, in a particular head of accounts is wholly unreasonable and such a term would also be unfair.....
71. A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the Contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months Digitally signed by and 9 months to be the reasonable periods for MUKESH KUMAR MUKESH KUMAR GUPTA which the payments of the final bills can be GUPTA Date:
2024.07.29 17:36:13 held back. Obviously, therefore, if payments +0530 are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 27 of 29
72. In view of the question of interest having been gone into detail and non-payment having been held to be illegal by various Single Judges of this Court, in cases involving the Corporations, it is held that non-payment of interest beyond the period of 6 months and 9 months, as stipulated in Clause 9 of the General Conditions of Contract, would be contrary to law. Hence, the Contractors are entitled for payment of interest after a period of 6 months - 9 months respectively."
41. The award of interest is discretionary as the contract nowhere mentions about the rate of interest, each case has to be adjudged on its own merit. Keeping in view the facts and circumstances of this case, this court is not inclined to grant pre suit interest to the plaintiff which in any case the plaintiff has not claimed in the suit.
42. However, this court is of the considered opinion that the interest of justice would be subserved if the plaintiff is awarded simple interest @ 7.5% per annum on the amount of Rs.17,53,241/- from the date of filing of the suit till its realization. This issue is, accordingly decided in favour of the plaintiff and against the defendant.
(I) CONCLUSION:-
ISSUE No.6: Relief.
Digitally
signed by
MUKESH
43. In view of the aforesaid discussions and finding of the court on MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2024.07.29 17:36:20 the aforesaid issues, the court is of the considered opinion that the +0530 plaintiff has been able to successfully prove its entitlement to the CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 28 of 29 recovery against the defendant. The suit of the plaintiff is, accordingly decreed against the defendant for a sum of Rs. 17,53,241/-. The plaintiff shall also be entitled to a simple interest @ 7.5% per annum on such amount pendente-lite and future from the date of institution of the suit till its realization.
44. In the specific facts and circumstances of the case, the plaintiff shall also be entitled to the costs of the suit throughout.
45. Decree sheet be drawn accordingly.
46. File be consigned to record room after due completion.
PRONOUNCED IN OPEN COURT .
On this 29th July, 2024 MUKESH Digitally
by MUKESH
signed
KUMAR KUMAR GUPTA
Date: 2024.07.29
GUPTA 17:36:27 +0530
(MUKESH KUMAR GUPTA)
DISTRICT JUDGE (COMM. COURT)-07
CENTRAL/DELHI(pk)
CS (Comm.) No. 1072/2023 Kamal Gupta Vs. Municipal Corporation o f Delhi Page no. 29 of 29