Delhi District Court
Davinder Sarin vs Airports Authority Of India Ltd on 30 September, 2024
IN THE COURT OF SH.AJAY GUPTA
DISTRICT JUDGE (COMMERCIAL COURT)-05
TIS HAZARI COURTS, WEST: DELHI
CNR No. DLWT01-000717-2021
Case No. CS(COMM) No.73/2021
Sh.Davinder Sarin (Proprietor)
M/s IBS - Intelligent Building Solutions
office at: B-53A, First Floor
Moti Nagar
New Delhi-110015
.....PLAINTIFF
Versus
M/s Airport Authority of India Ltd.
Through its Chairman
Office at:Rajiv Gandhi Bhawan
Safdarjung Airport
New Delhi-110003
....DEFENDANT
Date of Institution of Case : 25.01.2021
Date of Arguments : 24.08.2024
Date of Pronouncement of Judgment : 30.09.2024
JUDGMENT
PLAINTIFF'S CASE
1. The plaintiff has filed the present suit for recovery of Rs.24,95,672/- (Rs.Twenty Four Lac Ninety Five thousand Six Hundred Seventy Two only) alongwith pendentelite and future interest.
Case No. CS(COMM)/73/2021 Page No. 1 of 612. In the present suit, plaintiff has claimed himself to be the sub contractor of M/s C&C Constructions Ltd. (Originally impleaded as defendant no.1 but stands deleted vide order dated 04.08.2022) (hereinafter referred to as M/s C&C/D1 in short) and Airport Authority of India Ltd (Originally impleaded as defendant no.2 and after deletion of D1, AAI is the sole defendant in the present suit, hereinafter referred to as AAI/D2 in short) has been specified as the Principal agency which awarded the contract to M/s C&C Constructions. In the original plaint, plaintiff impleaded M/s C&C Constructions Ltd. as defendant no.1 and AAI as defendant no.2. After the summons were served upon M/s C&C, an application u/o 7 rule 11 CPC was filed on their behalf on the ground that the M/s C&C has gone into liquidation and moratorium period has been announced by Hon'ble NCLT, thus, M/s C&C sought rejection of the present suit against them. In view of the aforesaid development, Ld. Counsel for plaintiff did not object to the aforesaid application filed on behalf of M/s C&C and therefore, the application u/o 7 rule 11 CPC was allowed and vide order dated 04.08.2022 M/s C&C was deleted from the array of defendants. Thus, the present suit continued only against AAI/D2. Since in the suit M/s C&C Construction has been referred as defendant no.1 (D1 in short) and AAI as defendant no.2 (D2 is short) therefore, while deciding the issues framed in the matter these defendants have been referred to as D1 and D2.
Case No. CS(COMM)/73/2021 Page No. 2 of 613. The plaintiff has inter-alia averred in the plaint that :-
(i) that D2 is a Statutory Government body and it was in the process of constructing the Indian Aviation Academy and Hostel Block at Vasant Kunj, New Delhi and for completion of the said project, D2 had given a contract of the aforesaid project to D1 and in turn D1 placed orders for various parts of the project on different sub vendors (sub contractors).
(ii) that plaintiff is in the business of undertaking turnkey projects for sound system of auditorium and allied work and for getting the part of the project done, D1 had placed a purchase order (ACOUSTICAL WORK) upon plaintiff vide purchase order no. 119 dated 26.11.2016 which was revised after GST was implemented vide revised Purchase Order i.e. P.O. 119-
A dated 15.07.2017). As per agreement, the Plaintiff was to give 20% discount on the prices of the different items as ordered by D2 to D1, except the electrical items. The plaintiff sent various material at the site and most of the material was directly sent by other vendors at the site.
(iii) that D1 was irregular in making payments to the plaintiff, therefore, it was brought to the notice of the D2 through emails dated 03.05.2017, 01.07.2017, and 14.07.2017. Thus, to resolve the payment issue, the Case No. CS(COMM)/73/2021 Page No. 3 of 61 then Executive Director of D2 called a meeting on and around 06.09.2017 and plaintiff was assured that D2 shall directly make the payment to the plaintiff, if D1 defaults in making payment. The Minutes of the said Meeting were also prepared but copy of the same was not provided to the plaintiff.
(iv) that to seek a written confirmation of the aforesaid promise made by D2, on 13.09.2017, plaintiff wrote a detailed email to D2 seeking a written assurance and confirmation and on the same day, a reply was sent by Mr. Prem Khandelwal, the senior official of D2 confirming the aforesaid promise. It is stated that on the same day (13.09.2017), another official of D2 sent an email (keeping all other senior Officers in loop) through which plaintiff was again assured that all his payment shall be cleared by D1. Believing the said assurances of the Officers of D2, plaintiff started completing the balance work at the site.
(v) that D1 cleared some payments but again started defaulting and delaying the same, thus, on 08.01.2018, plaintiff again sent an email to D2 to bring the payment issue to the notice of D2. In response to the said mail, the official of D2 sent a reply to the plaintiff on 10.01.2018, keeping many senior Officers of D1 and D2 in loop and the said Officers again confirmed and Case No. CS(COMM)/73/2021 Page No. 4 of 61 assured the plaintiff that D2 shall directly make payments to the plaintiff, if D1 would commit a default in making payment.
(vi) that plaintiff raised his final invoice upon D1 vide invoice no. ibs/2017-2018/022 dated 01.01.2018 which was received by D1 on 13.01.2018. The entire work was completed in the month of May 2018 and detailed measurement sheet of the work done were jointly prepared by the Officers of D1 and D2. On 25.10.2018, the plaintiff wrote another email to D2 seeking payment and plaintiff received the last part payment from D1 on 03.11.2018. After lot of efforts, the final bill was accepted by D1 on 02.09.2019 i.e. IBS/19- 20/015 dated 02.09.2019. The defendants did not raise any dispute regarding the work/dues/invoices of the plaintiff. As per ledger account of D1 as maintained by plaintiff, a sum of Rs.24,95,672/- is outstanding against D1. The said balance amount was not released despite lapse of long time, thus, plaintiff sent a legal notice dated 19.02.2020 to the defendants. D1 was asked to release the payment immediately and D2 was also asked to release the payment as they had promised to pay the amount in case of default by D1. The legal notice was duly served upon the defendants, however, no reply was received by the plaintiff. The defendants Case No. CS(COMM)/73/2021 Page No. 5 of 61 also did not participate in pre-institution mediation thus, a non starter report was issued on 06.11.2020.
(vii) that on 20.12.2020, plaintiff sent an email to D2 asking them to pay the due amount on behalf of D1 as per their promise, however, plaintiff did not receive any response from D2. It is stated that D2 despite being a Statutory Government Body made false written promises to the plaintiff to get their project completed in time and this kind of act is usually done by the petty contractors. Thus, on the basis of these averments, plaintiff has prayed for a decree of Rs.24,95,672/- alongwith interest from the time plaintiff instituted pre- institution mediation proceedings till actual payment is made by D2 to plaintiff alongwith cost of the suit.
DEFENDANT'S CASE (AAI)
4. Defendant no.2 (AAI) sought dismissal of the suit on the basis of following averments:-
Preliminary Submissions
(i) that D2 is neither aware nor privy to the agreement/contract/work order between plaintiff and D1. There is no cause of action with the plaintiff to file the present suit against D2. D2 awarded the work of construction of Indian Aviation Academy and Hostel Block at Vasant Kunj, New Delhi to D1 vide letter no.Case No. CS(COMM)/73/2021 Page No. 6 of 61
ENGG/METRO/369/IAA/2013/841-53 dt. 18.04.2013 for a contract amount of Rs.93,64,59,249/-.
(ii) that the time of completion of the work was 18 months w.e.f. 13.5.2013 however, work was completed on 30.05.2018 by D1. From time to time, the payments were released to D1 and after completion of the work, the final bill of D1 was accepted and same was settled on 30.09.2019. The work of auditorium construction was part of the main contract executed between D1 and D2 and there was no separate contract for the same. D2 never executed any contract/agreement/work order with plaintiff for construction of auditorium thus, there is no privity of contract between plaintiff and D2.
(iii) that there was delay by D1 in completion of work, thus, liquidated damages of Rs.2,19,17,243/- was imposed and recovered from final bill dated 30.09.2019 from D1.
(iv) that there were delays in completion of work by D1, thus, regular progressive review meetings were conducted by the Executive Director (Eng) to review the progress of the work and in this meeting D1 had assured that there will be no delay in work and D1 also assured the officer concerned regarding payments of Case No. CS(COMM)/73/2021 Page No. 7 of 61 vendors and sub-contractors. On the said assurance of D1 and in the interest of work, D2 assured all vendors that due payments shall be cleared by D1 to them. Plaintiff is misinterpreting the said assurance and filed the present suit for recovery against D2 though dues of the plaintiff were to be cleared by D1.
(v) that vide order dated 14.02.2019, the Hon'ble NCLT in the matter of ICICI Bank Ltd. Vs. C&C Constructions Ltd. Initiated the CIRP proceedings against D1 and D2 was not notified about the same by D1 or any other party. Unaware of the said fact, D2 passed the final bill of D1 on 30.09.2019 and therefore, D2 is not responsible for the payment which is to be made by D1 to the plaintiff.
(vi) that D2 is not aware if any amount is due from D1 to plaintiff. Since the payment of final bill has been made by D2 to main contractor, therefore, at this belated stage, plaintiff cannot claim any amount from D2. It is stated that since there was no privity of contract between plaintiff and D2, therefore, D2 is not under any contractual obligation to pay any dues to plaintiff and plaintiff can avail his legal remedies to recover his rightful dues from D1.
Case No. CS(COMM)/73/2021 Page No. 8 of 61Reply on Merits
(vii)that while replying on merits the D2 has admitted that it had awarded the work of the aforesaid project to D1, however, D2 has showed their ignorance about award of any work by D1 to plaintiff.
(viii) that D2 did not specifically deny the factum of communication between plaintiff and D2 through email mentioned in para no.4 of the plaint but stated that the said emails filed by plaintiff are incomplete/distorted version, therefore, the same cannot be relied upon. It is also stated that D2 wrote letters dated 08.11.2017 and 17.11.2017 to D1 since there was delay in completion of work as the vendors/sub vendors/suppliers engaged by D1 had stopped the work of the said project and had been approaching D2 for their payment as the payment was not made by D1 to its vendors/suppliers despite release of the payment by D2 to D1. Thus, it is stated that D2 has done its best to get the payment of sub contractors/sub vendors released from D1, however, it cannot be assumed that in case, the contractor(D1) fails to fulfill its obligation of payment of dues to their vendors including plaintiff, they (D-2) will be liable for the same in any manner.
(ix) that D2 has denied calling of the meeting dated 06.09.2017 as well as preparation of minutes, however, Case No. CS(COMM)/73/2021 Page No. 9 of 61 D2 has not specifically denied their communication with the plaintiff through the emails mentioned in para no. 6 & 7 of the plaint. However, it has been reiterated that these emails are incomplete/distorted version which were addressed to the Officers of D2. It is also stated that in the email dated 10.01.2018, the official of D2 assured the reimbursement subject to plaintiff completing the balance work by 20.01.2018. In regard to the delay in completion of work, it is stated that D2 had granted extension to D1 for completion of the work till 30.05.2018.
(x) that D2 did not deny the contents of para no.10 regarding preparation of measurement sheets jointly by plaintiff, D1 and D2. However, in regard to the email written by plaintiff to D2 on 25.10.2018, it is stated that since D2 had already released the payment to D1, therefore, plaintiff cannot claim any amount from D2. It is stated that there exists no implied or express contract between plaintiff and D2 thus, they cannot be held accountable for the default in payment by D1. It is also stated that submission of final invoice by plaintiff with D1 is not within their knowledge. Plaintiff never shared the said invoice with D2 and therefore, question of disputing the same does not arise. D2 has admitted the receipt of the legal notice. On the basis of these Case No. CS(COMM)/73/2021 Page No. 10 of 61 aforesaid contentions, D2 sought dismissal of the suit of the plaintiff.
5. In his rejoinder, plaintiff denied the averments and contentions made by D2 in their written statement and contents of the plaint have been reiterated and reaffirmed by the plaintiff.
6. On the basis of the pleadings of the parties following issues were framed on 19.10.2023:-
ISSUES
1. Whether there was no privity of contract between the plaintiff and defendant (Airport Authority of India), if so, its effect? OPD
2. Whether the plaintiff is entitled for recovery of Rs.24,95,672/- alongwith cost and interest? OPP
3. Relief PLAINTIFF'S EVIDENCE
7. In his evidence, plaintiff has examined himself as PW1. PW1 filed his affidavit Ex.PW1/A on the similar lines of the averments of the plaint. Besides, his affidavit (Ex.PW1/A), PW1 has tendered the following documents in his evidence:-
(i) Purchase order dated 26.11.2016 as Ex.PW1/1.Case No. CS(COMM)/73/2021 Page No. 11 of 61
(ii) Revised Purchase order dated 15.07.2017 as Ex.PW1/2.
(iii) Delivery challans as Ex.PW1/3 (Colly.).
(iv) Print outs of emails dated 03.05.2017, 01.07.2017 and 14.07.2017 as Ex.PW1/4 (Colly.).
(v) Print out of email dated 13.09.2017 as Ex.PW1/5.
(vi) Print out of email dated 13.09.2017 as Ex.PW1/6.
(vii) Print out of email dated 08.01.2018 as Ex.PW1/7.
(viii) Print out of email dated 10.01.2018 as Ex.PW1/8.
(ix) Invoice no.22 dated 01.01.2018 as Ex.PW1/9.
(x) Measurement sheets as Ex.PW1/10 (Colly.).
(xi) Print out of email dated 25.10.2018 as Ex.PW1/11.
(xii) Invoice no.015 dated 02.09.2019 as Ex.PW1/12.
(Witness stated that there is a clerical error in mentioning the invoice number of one of the invoices. Witness further stated that invoice number 015 has been inadvertently mentioned as invoice no. 22 in the affidavit).
(xiii) Ledger account as Ex.PW1/13.
(xiv) Bank Statement as Ex.PW1/14 (Colly.).
(xv) Legal Notice as Ex.PW1/15.
(xvi) Speed Post receipts as Ex.PW1/16 (Colly.). (xvii) Tracking reports as Ex.PW1/17 (Colly.). (xviii) Non-starter report as Ex.PW1/18. (xix) Printout of email dated 20.12.2020 as Ex.PW1/19. (xx) Certificate u/s 65-B of Evidence Act as Ex.PW1/20.
DEFENDANT'S EVIDENCE
8. In their defence, defendant examined Sh Deepak Kumar Chaudhary, AGM (Engineering Civil) as DW1. DW1 also deposed in his affidavit (Ex.DW1/A), on the similar lines Case No. CS(COMM)/73/2021 Page No. 12 of 61 of the defence taken by D2 in their WS. Besides, in his affidavit, DW1 has relied upon the following documents:-
(i) Copy of delegation of powers as Ex.DW1/1.
(ii) Copy of agreement/Award letter dated 18.04.2013 between defendant/AAI and C&C Constructions Ltd. as Ex.DW1/2 (OSR).
(iii) Copy of payment sheet of C&C Constructions maintained by defendant AAI as Ex.DW1/3 (OSR).
9. I have heard the Ld. Counsel for the plaintiff as well as the Ld. Counsel for the defendant/AAI and gone through the record and the written submission filed by both the Ld. Counsels. Ld. Counsel for the D2 has relied upon the following case laws:-
(i) Ircon International Ltd. Vs. Vinay Heavy Equipments (2015) 15 SCC 680.
(ii) Deepali Designs & Exhibits (P) Ltd. Vs. Encompass Events (P) Ltd., 2022 SCC Online Del 3269.
(iii) Kashi Nath (Dead) through Lrs. Vs. Jagannath, (2003) 8 SCC 740.
(iv) Union of India Vs. Ibrahim Uddin, (2012) 8 SCC 148.
(v) Prakash Rattan Lal Vs. Mankey Ram, 2010 SCC OnLine Del 184.
(vi) Essar Oil Ltd. Vs. Hindustan Shipyard Ltd. & ors, (2015) 10 SCC 642.
My issues wise finding is as under:-
Case No. CS(COMM)/73/2021 Page No. 13 of 61 ISSUE NO.1 & 21. Whether there was no privity of contract between the plaintiff and defendant (Airport Authority of India), if so, its effect? OPD
2. Whether the plaintiff is entitled for recovery of Rs.24,95,672/- alongwith cost and interest?
OPP.
10.1 Both these issues are interconnected and thus, both these issues are taken up together for disposal.
LEGAL POSITION 10.2 The present case relates to the Doctrine of Promissory Estoppel. In the case of M/s South East U.P. Power Transmission Co.Ltd. Vs. UP Transmission Corporation Ltd, it has been held by Hon'ble High Court as to in what manner and under what circumstance, principal of promissory estoppel applies while referring to the Judgement of Hon'ble Supreme Court in Kalyapur Cement case. The relevant paras of the said Judgement are reproduced as under:-
"15. Question No. A & B: With regard to applicability of the principle of promissory estoppel, the leading authority on the same in India is the case of M/s Moti Lal Padampat Sugar Mills Company Limited Versus State of Uttar Pradesh and Others reported in (1979) 2 SCC 409 in which the Hon'ble Supreme Court applied the aforesaid principle enunciated in the judgment of Central London Property Trust Limited versus High Trees House Limited with approval as made applicable by the judgment of the Hon'ble Supreme Court Case No. CS(COMM)/73/2021 Page No. 14 of 61 itself in Union of India Versus Anglo Aftan Agencies reported in AIR 1968 SC 718. In the case of Moti Lal Padampat (supra), Hon'ble the Supreme Court has held that the true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so.
16. The Hon'ble Supreme Court in the case of Sharma Transport Versus government of A.P. and Others reported in (2002) 2 SCC 188 has held that the principle has been evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel and its object is to interpose equity shorn of its form to mitigate the rigor of strict laws. The aforesaid principle has subsequently been followed in the cases of Kanishka Tradeing Vs. Union of India reported in (1995) 1 SCC 274, Manuel Sons Hotel Private Limited v. State of Kerala and others reported in (2016) 6 SCC 766, State of Bihar and Others Vs. Kalyanpur Cement Ltd. reported in (2010) 3 SCC 274 and various other cases.
17. In the decision in Kalyanpur Cement Limited (supra), Hon'ble the Supreme Court has explained the doctrine to the effect that for applicability of the doctrine of promissory estoppel, it must be established - (a) that a party must make an unequivocal promise or representation by word or conduct to the other party;(b) the representation was intended to create legal relations or affect the legal relationship to arise in the future;(c) it has to be shown that the party invoking the doctrine has altered his position relying on the promise and that (d) the Court will not apply the doctrine in abstract".
10.3 In case of Shailaja R.Khan Vilakar and Ors Vs. Union of India & Ors., the Hon'ble Bombay High Court has discussed the law related to promissory estoppels as laid down by Hon'ble Supreme Court in Moti Lal Padampat Sugar Mills Case No. CS(COMM)/73/2021 Page No. 15 of 61 Co. Ltd. Vs. .State of U.P. Relevant paras of the said Judgement are reproduced as under:-
18. With the aforesaid context in mind, we now propose to analyse the scope of the doctrine of Promissory Estoppel as has been e plained by the Ape Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.15 as under:
"7.That takes us to the question whether the assurance given by Respondent 4 on behalf of the State Government that the appellant would be exempt from Sales Tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel. Though the origins of the doctrine of promissory estoppel may be found inHughesv.Metropolitan Railway Co.[(1877) 2 AC 439 : 36 LT 932] and Birmingham and District Land Co.v.London and North-Western Rail Co. [(1888) 40 Ch D 268, 286 : 60 LT 527] , authorities of old standing decided about a century ago by the House of Lords, it was only recently in 1947 that it was rediscovered by Mr Justice Denning, as he then was, in his celebrated judgment inCentral London Property Trust Ltd.v.High Trees House Ltd.[(1956) 1 All ER 15 (1979) 2 SCC 409 wp 8753 of 2018-final.doc 256 : 1947 KB 130] This doctrine has been variously called "promissory estoppel", "equitable estoppel", "quasi estoppel" and "new estoppel". It is a principle evolved by equity to avoid injustice and though commonly named "promissory estoppel", it is, as we shall presently point out, neither in the realm of contract nor in the realm of estoppel. It is interesting to trace the evolution of this doctrine in England and to refer to some of the English decisions in order to appreciate the true scope and ambit of the doctrine particularly because it has been the subject of considerable recent development and is steadily expanding. The basis of this doctrine is the inter-position of equity. Equity has always, true to form, stepped in to mitigate the rigours of strict law. The early cases did not speak of this doctrine as estoppel. They spoke of it as "raising an equity". Lord Cairns stated the doctrine in its earliest form -- it has undergone considerable development since then -- in the following words inHughesv.Metropolitan Railway Company:Case No. CS(COMM)/73/2021 Page No. 16 of 61
"It is the first principle upon which all Courts of Equity proceed if parties, who have entered into defnite and distinct terms involving certain legal results... afterwards by their own act, or with their own consent, enter upon a course of negotiation which has the efect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, that the person who otherwise might have enforced these rights will not be allowed to enforce them where it would be inequitable, having regard to the dealings which have taken place between the parties."
........
This observation of Lord Denning clearly suggests that the parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel takes its origin. The doctrine would seem to apply even where there is no pre-existing legal relationship between the parties, but the promise is intended to create legal relations or afect a legal relationship which will arise in future. Vide Halsbury's Laws of England 4th Edn., p. 1018, Note 2 to para 1514. Of course it must be pointed out in fairness to Lord Denning that he made it clear in the High Trees casethat the doctrine of promissory estoppel cannot found a cause of action in itself, since it can never do away with the necessity of consideration in the formation of a contract, but he totally repudiated in Evenden casethe necessity of a pre-existing relationship between the parties and pointed out in Crabbv.Arun District Council[(1975) 3 All ER 865 : (1975) 3 WLR 847] , that equity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or afect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. 19.When we turn to the Indian law on the subject it is heartening to fnd that in India not only has the Case No. CS(COMM)/73/2021 Page No. 17 of 61 doctrine of promissory estoppel been adopted in its fullness but wp 8753 of 2018-final.doc it has been recognized as afording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J., in England, a Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in theGanges Manufacturing Co.v.Sourujmull[(1880) ILR 5 Cal 669 : 5 CLR 533] . The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court inMunicipal Corporation of Bombayv.Secretary of State[(1905) ILR 29 Bom 580 : 7 Bom LR 27] ." It would also be apposite to reproduce the following from Godfrey Phillips India Limited16 : "9. Now the doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the interposition of equity which has always, true to its form, stepped in to mitigate the rigour of strict law. This doctrine, though of ancient vintage, was rescued from obscurity by the decision of Mr Justice Denning as he then was, in his celebrated judgment in Central London Property Trust Ltd. v. High Trees House Ltd. [(1956) 1 All ER 256] The true principle of 16 (1985) 4 SCC 369 wp 8753 of 2018-final.doc promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or efect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. It has often been said in England that the doctrine of promissory estoppel cannot itself be the basis of an action: it can only be a shield and not a sword: but the law in India has gone far ahead of the narrow position adopted in England and as a Case No. CS(COMM)/73/2021 Page No. 18 of 61 result of the decision of this Court in Motilal Padampat Sugar Mills v. State of U.P. [(1979) 2 SCC 409 : 1979 SCC (Tax) 144 : (1979) 2 SCR 641] it is now well settled that the doctrine of promissory estoppel is not limited in its application only to defence but it can also found a cause of action. The decision of this Court in Motilal Sugar Mills case [(1979) 2 SCC 409 : 1979 SCC (Tax) 144 : (1979) 2 SCR 641] contains an exhaustive discussion of the doctrine of promissory estoppel and we fnd ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision."
19. The principal laid down in the aforesaid decisions of the Apec Court prohibits the State and/or an instrumentality thereof from resiling on a promise made earlier by it on which promise a citizen has acted upon. In the facts and circumstances of the present case and in view of the correspondence repeatedly addressed by BPCL to the Petitioners as referred to hereinabove, we are of the considered opinion that the wp 8753 of 2018-final.doc doctrine of Promissory Estoppel would impede the existence of the Impugned Circular. BPCL has failed to consider and/or appreciate aspects such as the added obligations upon existing distributors towards retrenchment of manpower in the event the Impugned Circular is given effect to....
10.4 In the case of Dr. S.B.Singh & Ors. Vs. State of Uttar Pradesh and Ors., it has been held by Hon'ble Allahabad High Court that where a party makes investment and change his position after a promise is made then the promiser is bound to fulfill the promise in view of the doctrine of promissory estoppel. The relevant paras of the said Judgement are reproduced as under:-
"19. M/s. Vij Resins Pvt. Ltd. and another v. State of Jammu and Kashmir AIR 1989 Supreme Court 129, it was held in para 25 page 1637 that where the petitioner made Investment in pursuance of the offer made by the Government, and invested considerable amount in this way they changed their position, and the legal effect of the impugned Act of the legislature was to obliterate the rights of the petitioners. The Case No. CS(COMM)/73/2021 Page No. 19 of 61 State Government was directed not to get out of the commitments in view of the doctrine of promissory estoppel.
20. In M/s. Jagannath Roller Flour Mill and others v. State of Orissa AIR 1986 Orissa 163 their Lordships of the Supreme Court ruled that where a promise was made by the State Government and relying on such promise, the petitioners changed their position. Consequently, the State Government, applying the Doctrine of Promissory estoppel, was directed not to withdraw the exemption by changing their policy before expiry of that period. (See Union of India and others v. M/s. Anglo Afghan Agencies etc. AIR 1908 Supreme Court 718, Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, AllR 1971, S.C. 1021. Excise Commissioner, U.P., Allahabad v. Ram Kumar AIR 1976 Supreme Court 2237. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh AIR 1979 Supreme Court 621. Jit Ram Shiv Kumar v. State of Haryana AIR 1980 Supreme Court 1285.
10.5 In the case of DAW PO VS. U PO HMYIN (AIR 1940 Rangoon 91), it has been held that a stranger to a contract can sue if he has been promised to pay directly.
10.6 In the case of Hansa Vision Pvt.Ltd. Vs. Dabur India Ltd., Hon'ble Delhi High Court has held that principal is liable towards third party or sub agents if enjoyed the benefits.
10.7 Plaintiff/PW1 has claimed that since D1 was not making the payment, therefore, to resolve the payment issue, (as per email Ex.PW1/4 date of said meeting is 06.02.2019) a meeting was called by the then Executive Director of D2 and in that meeting plaintiff was assured that D2 shall directly make payments to the plaintiff if D1 will commit default in making payments. PW1 has further deposed that when D1 was Case No. CS(COMM)/73/2021 Page No. 20 of 61 irregular in making payment,this fact was also brought to the notice of D2 through Emails dated 03.05.2017, 01.07.2017, 14.07.2017 (Ex.PW1/4 Colly.). PW1 has further deposed that in order to seek a written confirmation of the promise made by defendant no.2 a detailed email was sent by plaintiff to D2, on 13.09.2017, which was replied by the senior Officers of D2 on the same day and through the aforesaid reply a written confirmation about the promise for making direct payment was made by D2 to plaintiff. Plaintiff has brought the aforesaid emails and their replies on record as Ex.PW1/5. Likewise, when issue of payment still persisted, plaintiff wrote further email Ex.PW1/7 dated 08.01.2018 to D2 which was responded to by the senior Officers of D2 on the same day. The contents of the emails written by plaintiff to the Officers of D2 and the reply given by the Officers of D2 to these emails are the very basis of the claim raised by the plaintiff as these communications stated to contain the aforesaid specific and clear promise of D2 to the plaintiff. Thus, the contents of aforesaid emails (Ex.PW1/4 to Ex.PW1/11) are required to be considered and analyzed to see if infact any such promise was made by D2. Therefore, the contents of these emails are reproduced as under:-
(Ex.PW1/4 Colly.) "Davinder Sarin<[email protected]> to:prem_8855, Ashish, bcc:kamal May 3 Dear Sir, As discussed with you, the payment situation is very grim with C & C. As per meeting with the honorable Executive director on 06.02.2017 and your assurance for payment, we have supplied the material and carried out the auditorium acoustic works.Case No. CS(COMM)/73/2021 Page No. 21 of 61
We have been working on your project since November 2016 and almost work worth 1 cr has been done. We have not received a single payment against work done or material supplied. Payment to C & C has been done against our work in Auditorium For last two months, we have been promised for payment within one week.
We request you to please release our payments from C & C account on urgent basis.
the performa submitted to C & C is attached herewith for your reference and to account for.
We seek your immediate intervention on this matter urgently and please guide for further work to be done with payment schedule for the same. Thanks & Warm Regards Davinder Sarin ibs-Intelligent Building Solutions B-53a, first floor, Moti Nagar, New Delhi-110015 Tel: 011-2546 5030/97114 10051 e-mail: [email protected]: [email protected] Follow us on: www.facebook.com/IBS.india1 Davinder Sarin <[email protected]> to akb, prem 8855 Jul 1 Dear Sir, Despite repeated requests, meetings and assurances from your side, situation for timely payment has not improved with C&C. Despite the fact C & C have received payment of approx. 60 lakhs against work done by us, we have received only 35 lakh payment. Not only we are solely investing on your project, the payments given by AAI against our work done is also used by C & C for their other works. We request you to please intervene on urgent basis and release us funds enabling us to complete the project on time (though its already delayed due to non completion of services work on time).
Davinder Sarin<[email protected]> July 14 to: Kamal341, prem_8855 Dear Sir As discussed with you during our site meetings, that despite confirmation and agreement to work on BOQ rates and release of payment by AAI to M/s C & C for electrical works done by us, they have not paid us for the same.
The work is delayed due to delay in payment.Case No. CS(COMM)/73/2021 Page No. 22 of 61
We request you to please give us your concrete confirmation for release of payment against work done and material supplied immediately. We can still complete the work within 45 days on BOQ rates only, if and only if our due payments are cleared immediately and balance payments against work done should be paid timely (within 15 days of work done).
We request you to please intervene to resolve the payment issue as assured by honourable ED sir on 6th Feb', 2017. We look forward for your positive reply and confirmation.
Thanks & Warm Regards Davinder Sarin (Ex.PW1/5) Davinder Sarin <[email protected]> Wed, Sep 13, 2017 at 7:38 AM Prem Khandelwal <[email protected]> Reply-To: Prem Khandelwal <[email protected] To Davinder Sarin < [email protected]> Cc:"A.K.Bansal" <[email protected]>, [email protected], Devam [email protected]> Dear Sarin As you know the inauguration date is finalized for 21 sept 2017 and Minister of Civil Aviation is coming to inaugurate this building. And as you know all the functions are scheduled in Auditorum block only. You are doing all the work in auditorum. AAl again assure you for your balance payment which is supposed to be paid by C&C construction Ltd to you against your work done. If C&C will fails to pay you, AAI will directly pay the amount against your work done as per terms & conditions between you & C&C construction Ltd.
Thanks & Regard Prem Khandelwal Sr. Manager Engg.© On Wed,13/9/17, Devinder Sarin <[email protected]> wrote: Subject: request for your confirmations To: "р[email protected]" <prem [email protected]> Cc:"kamal kant" <[email protected]> Date: Wednesday, 13 September, 2017, 10:58 AM Dear Sir with reference to our discussions, we seek your assurance and confirmations for the following:
1.Payment of Rs. 15,00000/-on or before 15.09.2017 from C & C or AAl on their behalf (PDC required today) Case No. CS(COMM)/73/2021 Page No. 23 of 61
2. Payment of Rs. 25,00000/- on or before 25.09.2017. PDC required by 15.09.2017)
3. Complete clearance of our payments for all works including electrical works before 21st October. Performa for total work is attached herewith. (Total work value is approx. 190lakhs +34Lakhs =224 Lakhs) 4 PO for electrical work required immediately on today basis as C & C is deliberately delaying the same. Without PO confirmation and confirmations for above today, we shall not commission any electrical work. We have no trust on C & C as they have always breached their words. We request PDC/DD/Bank Garantee in line with above agreed payment commitments as C&C have no commitments and even their MD fails to honour his words.
Thanks & Warm RegardsDavinder Sarin ibs-Intelligent Building Solutions B-53a, first floor, Moti Nagar, New Delhi-110015 3 attachments PI for electrical work in auditorium.pdf 29K PI for installation work done.pdf 16K Pl for stage electrical works done AAl.pdf 52K (Ex.PW1/6) Kamal Kataria <[email protected]> Wed, Sep 13, 2017 at 11:49 PM To:DavinderSarin<[email protected]>, "[email protected]"<[email protected]>, "[email protected]"<[email protected]>, "[email protected]" <[email protected]> "[email protected]" <[email protected]> Cc:"[email protected]"<[email protected]>,Ajind er Singh Ahuja <[email protected]>, CG Raveendran <[email protected]>, H S Suresh <[email protected]>, "A K. Bansal" <[email protected]>, "S P. Yadav" <[email protected]> Dear Sir, It is confirmed & assured that Your all payments shall be paid to you through M/s C&C Construction Ltd., and do not worry about payments but work activities should not be stopped.
Please complete your all work activities on or before 15/09/2017.
Thxs & Regards Case No. CS(COMM)/73/2021 Page No. 24 of 61 Kamal Kataria Asst. General Manager (Engg. - Elect.), Airports Authority of India, CHQ, IAA Project, Rangpuri, Operational Offices New Delhi-110037 Mobile: +91-9540801999 From: Davinder Sarin <[email protected]> Sent: Wednesday, September 13, 2017 10:55 AM Davinder Sarin <[email protected]> COMMITMENT FAILURE to Shri Sp Yadav ji: Fwd: Request for release of payment for auditorium work at AAI, Vasant Kunj site 2 messages Mon, Jan 8, 2018 at 12:53 PM Davinder Sarin <[email protected]> To: H S Suresh <[email protected]>
---------Forwarded message------
From: Davinder Sarin <[email protected]> Date: Fri, Nov 17, 2017 at 10:31 AM Subject: Request for release of payment for auditorium work at AAI, Vasant Kunj site To: "S P. Yadav" <[email protected]> Cc: Ajinder Singh Ahuja <[email protected]>, C G Raveendran <[email protected]>, H S Suresh <[email protected]>, "A K. Bansal"
<[email protected]>,"[email protected]"<[email protected] >, [email protected] (Ex.PW1/7) RESPECTED SIR, Thanks for the courtesy extended during our visit to your office on 09.11.2017 and time devoted to resolve the payment issue with M/s C & C Construction.
It was confirmed that C & C was misleading the facts that they have made the payments and they accepted the same. M/s C & C agreed and committed in your office in presence of Mr. A. K Bansal and Mr. Prem Khandelwal to make the payment by 15.11.2017.
M/s C &C accepted that they have not made any payment for last two months despite getting payment from AAl three times in this duration against Auditorium work done by us.
M/s C & C is not responding from 13.11.2017 despite various calls and avoiding to meet at site. They maintained their record to breach their commitments as they did always.
Sir, we have already expressed our inability to work with C & C but on your assurance we have invested all our resources to complete the work on time.Case No. CS(COMM)/73/2021 Page No. 25 of 61
Despite making so much efforts and requests to C & C, we have not received any payment for last two months.
The payment is delayed beyond reasonable time and our vendors and workers are not paid even at very crucial festive time of Diwali We request you to please make our payment directly urgently as assured by you since C & C is behaving mischievously and we can not trust them.
We hope you will understand our situation with Empathy and help us.
Thanks & Warm Regards Davinder Sarin ibs-Intelligent Building Solutions B-53a, first floor, Moti Nagar, New Delhi-110015 Davinder Sarin <[email protected]> Mon, Jan 8, 2018 at 1:04 PM To: "S.P. Yadav" <[email protected]>, "A K. Bansal" <akb@aaiaero>, Ajinder Singh Ahuja <[email protected]>, [email protected], [email protected], Ashish Dabur <[email protected]>, "[email protected] <[email protected]>,, [email protected] Written and verbal Assurance by KHANDELWAL Ji for payment by 20.10.2017Fwd: request for your confirmations Kamal Kataria <[email protected]> Wed, Jan 10, 2018 at 3:18 PM To:DavinderSarin<[email protected]>, "[email protected]" <[email protected]> Cc:"[email protected]"<[email protected]>, "[email protected]"<[email protected]>, "[email protected]" <[email protected]>, Diwan Raturi<[email protected]>, Ajinder Singh Ahuja <[email protected]>, "saurabh. [email protected]"
<saurabh. [email protected]> (Ex.PW1/8) Sir(s), M/s iBs-Intelligent, M/s SnS Engineering Pvt. Ltd. & M/s SG Construction AAl again assure you for your balance payments which is supposed to be paid by M/s C&C Construction Ltd. to you against your work done & future works also.
If C&C Construction Ltd. will fails to pay you as per settlement of accounts and terms & conditions with M/s C&C Construction Ltd., AAl undertakes to reimburse you such payments on behalf of M/s C&C Construction Ltd.
Case No. CS(COMM)/73/2021 Page No. 26 of 61You will also complete the all balance works at site upto 20th Jan2018 positively.
Thxs & Regards Kamal Kataria Asst. General Manager (Engg. Elect.), Airports Authority of India, CHQ, IAA Project, Rangpuri, Operational Offices New Delhi-110037 Mobile: +91-9540801999 Invoice submitted to C&C for stage Light equipments Davinder Sarin ,[email protected]> Thu,Oct.25,2018 5:20 PM To: Kamal Kataria, Prem Khandelwal CC: H.S.Suresh, Ashish Dabur BCC: Kamal Kant (Ex.PW1/11) Dear Sir, As discussed, PFA the invoice submitted to C&C. The electrical items are shown separately in the invoice.
WE have not received any payment for electrical items although the same has been accounted in your RA bill and paid to C&C. The BOQ items with approved measurement are already submitted to you. The due bill with approved measurement is also attached herewith. Sir, please confirm release of payment as we have been waiting for more than one year since work completion.
Thanks & War regards Davinder Satrin ibs- Intelligent Building Solutions 4 attachments INV 022 AAI VASANT KUNJ.pdf 52k electricalworkmeasurementapproval.zip 14390K IBS PI as per measurements for stage Light equipment.pdf 52K PI as per msmt. For eletrical work in AAI auditorium.pdf 29K From: Davinder Sarin <[email protected]> Sent: Monday, January 8, 2018 1:02 PM To:[email protected];KamalKataria; [email protected] <[email protected]>,,[email protected]; [email protected] <[email protected]>,, [email protected]; SP. Yadav, A K. Bansal, Ajinder Singh Ahuja; Ashish Dabur Request for release of due payments DavinderSarin <[email protected]>Sun,Dec20,2020 at 12:19 PM Case No. CS(COMM)/73/2021 Page No. 27 of 61 To:HSSuresh<[email protected]>,PremKhandelwal<prem_8855@yah oo.co.in>, Kamal Kataria <[email protected]>, "A K. Bansal"
<[email protected]>, Ajinder Singh Ahuja <[email protected]>"SPYadav"
<[email protected]> (Ex.PW1/19) Dear Sirs, We had sent a legal notice for release of our due payment which your department had promised to pay in case of default by M/s C & C construction Ltd.
No one appeared on behalf of the department in the court during the pre- litigation mediation.
Now, we request you to release our due payment as per the notice dated 20.02.2020 already served upon you, within 7 days of receipt of this email and as promised vide your emails dated 13.09.2017 and 10.01.2018.
If we do not receive our due payment within 7 days from now, we have instructed our lawyer to proceed with filing the case against you without further communication from our end.
Thanks & Warm Regards Davinder Sarin ibs-Intelligent Building Solutions Tel: 011-97114 10051/8178254813"
10.8 In support of the aforementioned emails, the plaintiff has filed the relevant certificate u/s 65B of Indian Evidence Act, thus, as far as authenticity of contents of these email is concerned, the same cannot be doubted unless something contrary is brought on record by D2.
10.9 In the present case, the plaintiff has claimed recovery of the balance amount of the work done by him in the project, from defendant no.2, on the basis of the promises stated to have been made by their officers/Officers to the plaintiff. It is clear from the pleadings and claim and contentions of both the parties (Plaintiff and D2) that neither it is the case of the plaintiff nor D2 that there was any privity of Case No. CS(COMM)/73/2021 Page No. 28 of 61 contract between them. As far as the main contract for construction of the Aviation Academy and Hostel Block is concerned, it is admitted position of fact that the contract for construction of the same was awarded by D2 to D1. Plaintiff has categorically and clearly averred in the plaint that he was given a sub contract by D1 for Acoustical work of the auditorium. Thus, it is clear that plaintiff has also claimed himself to be a sub contractor of D1 for part of the work of the main project. Thus, it is clear that as far as the contractual relations between the parties are concerned, initially there did not exist any direct contractual relationship between the plaintiff and D2. It is also clear that the plaintiff has not raised his claim against D2 on the basis of any contractual relationship but in view of the subsequent developments stated to have taken place between him and D2 on the issue of payment of the balance work to be carried out by plaintiff qua that part of project which was assigned to him. Thus, it is held that as far as awarding of the sub contract by D1 to plaintiff qua the Acoustical work of auditorium is concerned, there was no contractual relation (privity of contract) between plaintiff and defendant no.2(AAI).
10.10 Though, there is no privity of contract between the parties to the present suit, yet plaintiff has claimed his due amount from D2 on the basis of the promise allegedly made by the officers/Officers of D2. Thus, plaintiff has filed his claim on the basis of "Doctrine of Principle of Promissory Case No. CS(COMM)/73/2021 Page No. 29 of 61 Estoppel". But prior to reaching to a conclusion whether in the present case, the aforesaid principle applies or not, it is to be firstly seen, if, in fact, such a promise was made by the officers/Officers of D2.
WHETHER D2 MADE THE PROMISE TO MAKE THE DIRECT PAYMENT TO PLAINTIFF IF DEFAULTED BY D1.
11.1 The entire case/claim of the plaintiff is based upon his assertion that he completed the remaining work of the project only due to the promises of payment made by D2 to him through several emails. The details of those emails have been specified by the plaintiff in para no.4 to 8 of the plaint. It is clear from the contents of corresponding paras of WS that D2 has not denied the factum of exchange of emails between plaintiff and the Officers of D2, however, by taking a vague plea, D2 endeavoured to deny these emails by claiming that the emails relied upon by the plaintiff are incomplete or distorted versions. As already discussed that plaintiff has filed a certificate U/s 65B of Indian Evidence Act (Ex.PW1/20) in support of all these emails and it is also clear from his cross- examination that D2 did not deny the factum of exchange of these emails between them and simultaneously, D2 has also not assailed either authenticity of these emails or contents thereof during cross examination of DW1. Thus, under these circumstances, it is clear that plaintiff has proved these emails by his positive evidence and also for the reasons that the Case No. CS(COMM)/73/2021 Page No. 30 of 61 authenticity of these emails remained completely unrebutted during his cross-examination. D2 has made an endeavour to deny these emails only on the ground that these emails are incomplete and the distorted version of communications took place between the parties. Thus, under these circumstances, certainly, the onus was on D2 to place on record the complete record of these emails to show the real words of exchange between the parties and to show that the emails produced by the plaintiff are actually incomplete or distorted versions. However, it is clear that D2 has simply taken this plea and did not produce the alleged complete record of these emails. Thus, under these circumstances, the contents of these emails are considered to be the true and complete version of communication that took place between both the parties and therefore, these emails can be taken into consideration and can be relied upon to analyze if D2 had made a promise to the plaintiff for making direct payment in case of default of payment by D1.
11.2 It is clear that firstly, plaintiff wrote three emails Ex.PW1/4 (colly.) (May 3, 2017, July 1 & 14, 2017) as despite assurance by D2 and despite release of substantial payment by D2 to D1 for the work of plaintiff, the D1 had not released the complete payment of plaintiff, therefore, plaintiff requested D2 for release of his payment. Due to non-payment of the complete amount, the work of project was also getting delayed, thus, it is clear from email Ex.PW1/5 dated Case No. CS(COMM)/73/2021 Page No. 31 of 61 13.09.2017 which was written by Sh. Prem Khandelwal, (the Sr.Officer of D2) to the plaintiff that he requested the plaintiff to complete the work as the inauguration of the building was finalized for 21.09.2017. The aforesaid officer of D2 also promised the plaintiff in very clear words that in case D1 fails to pay the due amount, D2 will directly pay the amount of the work to be done by the plaintiff that too on the basis of same terms and conditions as settled between plaintiff and D1. It is further clear that the issue of payment was not yet resolved, therefore, plaintiff again wrote an email (Ex.PW1/7) to the concerned official of D2 and the copy of the same was sent to all the other officers/official concerned. D2 was also informed by plaintiff that he has invested all his resources to complete the work on time only because of the assurance given by D2 and plaintiff requested the D2 for making direct payment to him by specifically mentioning that he is unable to trust the D1 as D1 is behaving mischievously. In response to aforesaid email of plaintiff, the official concerned of D2 through an email dated 10.01.2018 Ex.PW1/8, reassured the plaintiff that they on behalf of D1 will make the payment of his balance amount to him and they further requested the plaintiff to complete the work by 20.01.2018. It is further clear that during cross-examination after going through the contents of the email Ex.PW1/8, DW1 stated that as per this email D2 has assured the plaintiff that D2 will make the payment to the plaintiff on behalf of D1. Thus, it is clear from these discussions that the official concerned of D2 has made the Case No. CS(COMM)/73/2021 Page No. 32 of 61 promise of direct payment to the plaintiff in very very clear words and it is clear that they have made such a promise not only once but clearly on two occasions which also confirms and reaffirms the claim of the plaintiff that initially when he met with the Executive Director of D2 on 06.02.2019, he had assured him that D2 will make his payment if D1 fails to make the same. Since before completion of the pending work and before making further investment of his resources, plaintiff wanted to have a written confirmation about the promise orally made by the said higher authority of D2, he wrote the aforesaid emails specifically seeking a written confirmation of the said promise of direct payment and it is clear that accordingly promise of direct payment was made by the officers of D2 through their two emails. Thus, in view of these discussions, it is held that the Officers concerned of D2 had in clear words promised the direct payment to the plaintiff.
WHETHER THE Officers OF D2 HAD AUTHORITY TO PROMISE DIRECT PAYMENT 12.1 It is to be further seen whether the officers of D2 to whom the plaintiff sent the emails and also the officers of D2 who in response to the emails of the plaintiff made promises of direct payment, were the Officers concerned of D2. The aforesaid emails were exchanged between plaintiff and the following Officers of the D2. Either plaintiff had directly written the emails to some of the following Officers Case No. CS(COMM)/73/2021 Page No. 33 of 61 of D2 or had sent copies of those emails to the other Officers of D2. Likewise, some of the Officers of D2 had directly written the emails to the plaintiff or had sent copies of the same to the other Officers of D-2. The names of the Officers which are found mentioned in these emails are:-
1. Sh. Kamal Kataria (Astt. General Manager-Engg.)
2. Sh. P.C.Khandelwal (Sr. Manager - Engg.)
3. Sh. A.K.Bansal (Joint General Manager -Engg.)
4. Sh. S.P.Yadav, (General Manager-Engg.)
5. Sh. H.S.Suresh (Executive Director-Engg.)
6. Sh. Ajinder Singh Ahuja
7. Sh. C.G.Ravinderan 12.2 It is undisputed that the aforesaid persons were the Officers of D2 and also that some of them were directly associated with the project and they were also directly in touch with plaintiff and communicating with the plaintiff for ensuring completion of the project. They were also communicating/corresponding with the plaintiff on the issue of non-receipt of his dues. As already discussed in detail that the officers namely Sh. P.C.Khandelwal (Sr. Manager -Engg.) and Sh. Kamal Kataria (Astt. General Manager -Engg.) made clear promises to the plaintiff of the direct payment by D2 in case of default in payment by D1. As far as the question of their authority is concerned, it is clear that admittedly, these officers were associated with the project and were engineers Incharge of this project for civil and electrical work and they were directly dealing with the plaintiff in regard to the subject project. Though, it has not been the defence of the D2 that the Case No. CS(COMM)/73/2021 Page No. 34 of 61 aforesaid officers were not authorized to make any commitment of direct payment and as per WS, defendant's endeavour has mainly been to deny the correctness of the contents of these emails through which the promises were made. Besides that D2 further endeavored to contend that their officers concerned had assured the payment, in case, the plaintiff completes the balance work by 20.01.2018. However, it is clear from the cross examination of PW1 that D2 came with a new plea that the officers concerned were not authorized to make any commitment of payment to the plaintiff. Thus, it is clear that the aforesaid plea taken by D2 during cross examination of PW1 is clearly an afterthought and especially because it is contrary to their own aforementioned defence. Even otherwise, there is sufficient material available on record which makes it clear that the aforesaid officers were fully empowered to ensure the plaintiff about his payment. There are several other reasons on the basis of which it can be held as well as presumed that these officers were duly empowered for making the aforesaid promises to the plaintiff.
12.3 It is clear from the contents of two letters (Ex.PW1/D1 dated 08.11.2017 and Ex.PW1/D2 dated 17.11.2017) placed on record by D2 that due to non-payment of dues by D1, the sub vendors had been approaching D2 with the issue of non-payment and simultaneously, D1 was not adhering to the timelines of completion of the project, thus, D2 Case No. CS(COMM)/73/2021 Page No. 35 of 61 wrote a letter (Ex.PW1/D1) to D1 and requested them to complete the project as per timelines and also to make the payment of vendors/sub vendors. This letter was written by Sh.
A.K. Bansal, Joint GM Engg. and copies of these letters were sent to E.D Engg. and G.M.Engg. for information. The copy of this letter was also sent to Sh. P.C. Khandelwal, who was one of the project Incharge and vide aforesaid letter, he was directed to coordinate with D1 for completion of the project and also to ensure release of payment to the vendors/sub vendors by D1. It is further clear from another letter (Ex.PW1/D2) written by Sh. S.P.Yadav -G.M. (Engg.) that the payment issue was still not resolved therefore, again D1 was requested by D2 for clearing the aforesaid payment and also for completion of the project. Copy of this letter was also sent to ED-Engg. for information and copy of this letter was also sent to Sh A.K.Bansal, Joint G.M.-Engg. Vide aforesaid letter, the G.M.-Engg. had issued specific directions for immediately getting the balance work done. Relevant contents of the said letter reads as under:-
"No.AAI/GME(C)/NER/Pakyong/2017/3196 Dated:17th Nov.2017 M/s C&C Constructions Ltd.
Plot No.70, Institutional Sector-32 Gurgaon-122001 Haryana Subject:Completion of balance works for Indian Aviation Academy, Vasant Kunj, New Delhi Sir, Case No. CS(COMM)/73/2021 Page No. 36 of 61 The subject work was supposed to be completed in all respects by November, 2014. Since, more than 36 months have already been passed beyond the stipulated date of completion and the work is still lingering on without any feasibility to be completed in the coming months also. During the function on 21.09.2017 in Auditorium of the same building, it was promised by you that the balance works will positively be completed within next 30-45 days. Almost two months have already passed and it is observed that major works at 2nd floor are still pending either for want of false celling, glass partition material, etc, etc. During the visit of the undersigned today i.e. 17.10.2017, it was noticed that the subject work is not likely to be completed within next 4-5 months. I have been told that no funds are being diverted to this project so that the materials can be procured and used at site.
Now vendors are also approaching this office for their payments and it has been informed that the payments from AAl has already been drawn for the works done for their area but the same has not been given to them. This is quite unfortunate.
M/s C & C Construction Ltd. is not representing in a professional way and has taken a very casual approach in executing this project Inspite of rigorous monitoring and past review meetings. We have been given a very unrealistic target dates which were to be achieved. Moreover, for the last three years undersigned has noticed that there is always a financial crunch created by you at this project. It may kindly be noted that a serious view is being taken by AAI Management will be forced to take actions in debarring you from issuing further tenders in AAI as well as black listing the same.
With a heavy heart I am again writing to you that you may kindly be serious in taking up all the balance Case No. CS(COMM)/73/2021 Page No. 37 of 61 works as other Stake Holders are pressuring to take over the building and operating from there with immediate effect".
Yours faithfully (S.P.Yadav) General Manager Engg-NER N.O.O. Copy to:
1. PS to Member (Planning) for kind information
2. ED Engg-SR, AAI, RG Bhawan, New Delhi for kind information.
3. Shri AK Bansal, Jt.GME(C)II - for immediate n/a in getting the balance work through call of quotations/tender at the risk and cost of M/s C&C Constructions Ltd."
12.4 Sh. A.K.Bansal marked this letter to Sh.
P.C.Khandelwal for urgent necessary action. Thus, it is clear from the contents of these two letters that since D1 was not completing the balance work of the project therefore, the G.M. Engg. of D2 issued directions to their officers concerned to get the balance work of the project completed at the risk and cost of D1. It is also clear that after the aforesaid decision was taken by D2, the officer concerned of D2 made a promise of direct payment to the plaintiff in clear words through Email Ex.PW1/8 dated 10.01.2018. It is clear from email Ex.PW1/5 that Sh. P.C.Khandelwal had also made the same promise to the plaintiff on 13.09.2017. Thus, it is clear from all these facts and circumstances that since D1 was not completing the balance work of the project despite several requests and the balance work of the project was mainly halted because of non- payment to the vendors/sub contractors concerned therefore, Case No. CS(COMM)/73/2021 Page No. 38 of 61 D2 wanted to ensure timely completion (within the time already extended) of the project therefore, under these peculiar circumstances, the higher Officers of D2 authorized their Officers concerned to give surety to the plaintiff that he should complete his part of the project and he will be reimbursed for his dues through D1 and since D2 was well aware that D1 might not make the payment, therefore, simultaneously, the Officers of D2 also promised the plaintiff that they (D2) will make payment of the dues of the plaintiff if D1 commits any default about the same. As such, it is clear from these discussions that the official concerned were fully authorized and empowered to make such a promise to the plaintiff and therefore, D2 shall be bound by the promise made by them through their own Officers.
12.5 It is also clear from the conduct of D2 that they had authorized the officers concerned to make the aforesaid promise. Plaintiff has categorically mentioned in the plaint that the Officers concerned of D2 had promised the direct payment through the aforesaid emails and plaintiff has placed on record all the relevant emails. Besides, it is also clear that the same assertions were made by the plaintiff in his legal notice which was admittedly served upon the D2. The plaintiff re-affirmed his aforesaid claim in his affidavit Ex.PW1/A, thus, it is clear that plaintiff had time and again claimed that the aforesaid Officers of D2 had made promise of direct payment and in case, these Officers would not have been authorized by D2 Case No. CS(COMM)/73/2021 Page No. 39 of 61 then D2 which is a Statutory Government Organization would have immediately taken appropriate action for the aforesaid alleged misconduct of their aforesaid Officers. It is clear from the evidence led by D2 that D2 did not bring on record any evidence to show that they have ever taken any action against the Officers who made commitment without any authority of D2. In case, these Officers would have exceeded to their authority and would have made the said promise without having any authority then D2 would have immediately taken an action against them when they had come to know about the same. It is clear from Ex.PW1/5 and Ex.PW1/8 that the aforesaid Officers had sent the copies of the relevant emails (through which they had made the aforesaid promises) to other official/officers concerned of D2. Thus, in case these Officers would not have been authorized then Sh. AK Bansal, the Joint G.M -Engg. to whom the copy of the email Ex.PW1/5 dated 13.09.2017 was sent would have immediately taken action against him and he would have also sent another email to the plaintiff for withdrawal of the aforesaid promise by clearly stating that the said Officers has unauthorizedly made the said promise. Similar is the position of email Ex.PW1/8 written by Sh. Kamal Kataria. The inaction on the part of D2 even after receipt of copies of these emails by their higher Officers clearly shows that Sh.P.C. Khandelwal and Sh. Kamal Kataria, made promises of direct payment on the basis of authority given to them and also as they were fully empowered in this behalf by their higher Officers concerned. Even if it is Case No. CS(COMM)/73/2021 Page No. 40 of 61 assumed that the higher Officers did not come to know about the said email, however, there cannot be any denial that at least after service of legal notice as well summons of the present case, they would have come to know about the said promise and it is clear that even thereafter, no action has been taken by D2 against their aforesaid Officers and all these facts and circumstances clearly goes to show that while making the aforesaid promise, the aforesaid officers acted fully within their authority.
WHETHER D2 IS BOUND BY THEIR AFORESAID PROMISE:
13.1 It is clear from Ex.PW1/1, the work order was awarded by D1 to plaintiff on 26.11.2016 and thereafter, plaintiff immediately started executing the work awarded to him by D1 and till November 2016, plaintiff had carried out the work of Rs.1.00 crore (approx.) on the project and by that time D1 had not paid even a single penny to the plaintiff, thus, D1 did not adhere to the terms of the agreement executed between them and therefore, plaintiff brought this issue to the notice of Executive Director of D2 in the meeting held between them on 06.02.2017 and the aforesaid authority of D2 had assured the plaintiff his payment and it is further clear from Email Ex.PW1/4 (colly.) that despite assurance given by D2 till 03.05.2017 the D1 did not pay even a single penny to the plaintiff against the aforesaid work carried out by the Case No. CS(COMM)/73/2021 Page No. 41 of 61 plaintiff. Thus, through several emails (dated 03.05.2017, 01.07.2017 and 14.07.2017), plaintiff time and again requested D2 to get his payment released from D1. It is also clear from the email dated 14.07.2017 that plaintiff agreed to carry out the further work on BOQ rates on the assurance of payment given by D2. Thus, vide the aforesaid email, plaintiff sought a concrete confirmation from D2 regarding release of his payment against the work done and against the material supplied by him. It is also clear that from the emails (Ex.PW1/4 colly.) that plaintiff has specifically mentioned that in the meeting held on dated 06.02.2017 the Executive Director (ED) of D2 had assured the plaintiff regarding release of his payment and D2 has not brought any document on record to show that they rebutted the aforesaid claim of plaintiff that their aforesaid authority has not given any such assurance to the plaintiff. As already discussed these emails were sent to the Officers concerned of D2 and in case, no such meeting would have taken place and the ED of D2 would not have made the aforesaid promise then definitely all these Officers to whom the emails (Ex.PW1/4) were sent would have denied the aforesaid claim of the plaintiff. However, the aforesaid claim of the plaintiff remained totally unrebutted and uncontroverted through out the entire eight months period (approx.) during which both the parties communicated with each other through several emails. Furthermore, the fact that the aforesaid promise was made by the ED of D2 is also clear Case No. CS(COMM)/73/2021 Page No. 42 of 61 from the responses given by the Officers concerned of D2 to these emails of the plaintiff.
13.2 It is also clear from the contents of the aforesaid emails that plaintiff had expressed his inability to carry out further work on the project unless his due amount is paid and D2 wanted to get the pending work of the project completed as the scheduled date for inauguration of the project was approaching and therefore, D2 through their email Ex.PW1/5 requested the plaintiff to continue with his work and D2 in very clear words assured the plaintiff that his balance payment which is to be paid by D1 will be made and in case D1 fails to pay the same, D2 undertakes to directly pay the due amount of the plaintiff for his work done that too on the same terms and conditions agreed between the plaintiff and D1. The payment issue still persisted and D1 was not making the payment as per the terms of the contract therefore, plaintiff again wrote an email (Ex.PW1/7) to D2 by virtue of which plaintiff informed D2 that D1 has not made any payment despite the payment for the work of plaintiff has been made by D2 to D1. Plaintiff clearly stated that he had expressed his inability to work with D1 but he continued to work and invested all his resources to complete the work on time, only on the assurance of D2, therefore, plaintiff by this email requested D2 for making the direct payment to him. Since even by that time the work was not completed, therefore, in order to get the work completed, D2 again wrote an email (Ex.PW1/8) to the plaintiff and Case No. CS(COMM)/73/2021 Page No. 43 of 61 assured him that D2 will make the payment of the plaintiff on behalf of D1. Thus, it is clear from these discussions that after D1 did not adhere to the payment schedule and violated the terms and conditions of the agreement then plaintiff was not willing to continue to further perform his part of the contract and was inclined to revoke the contract and part his ways but it was D2 which of its own took over the charge of the matter and not only gave directions to the plaintiff for completion of the balance work but D2 also assured the plaintiff that they will make his payment if D1 fails to pay the same and therefore, it is clear that plaintiff instead of revoking the contract continued to execute the balance work of the contract on the assurance of payment by D2 and only due to this reason, he further invested his resources in the project.
13.3 It is undisputed that the aforementioned Officers to whom the emails were sent by plaintiff or to whom the copies were sent by plaintiff or the Officers of D2 who wrote the emails to plaintiff and all the Officers to whom the said Officers of D2 sent the copies of their emails were also Officers of D2 and as per claim of the plaintiff Sh.
P.C.Khandelwal and Sh. Kamal Kataria were dealing with the plaintiff qua his part of the project and other Officers were also either associated with the project or were the supervisory authority qua the said project. It is not the case of the D2 that these Officers are no more working with D2. Even if some of them got retired yet it is not the case of D2 that these Officers Case No. CS(COMM)/73/2021 Page No. 44 of 61 are not available or traceable, thus, under these circumstances, in order to rebut the contentions of the plaintiff qua his claim of assurance of direct payment by D2 and also that he carried out further work of the project on the assurance of these Officers, the defendant no.2 ought to have examined of the Officers concerned, especially Sh. Kamal Kataria and Sh Prem Khandelwal, who were directly dealing with the plaintiff however, despite their availability, D2 did not examine any of these Officers and instead they examined their another official who had not been associated with this project in any manner. Though the plaintiff has established through his positive evidence that D2 had given assurance of direct payment and also that due to their assurance, he completed the balance work, however, in addition to this an adverse inference should be drawn against D2 that D2 did not knowingly examined the Officers concerned, who actually made the aforesaid promise to the plaintiff, to withhold the best evidence.
13.4 Thus, it is held that after D2 made a promise to the plaintiff, plaintiff further invested a considerable amount in the project and it is undisputed that D1 did not pay the balance due amount to the plaintiff, therefore, under these circumstances, now D2 is estopped by their aforesaid conduct and therefore, D2 cannot be allowed to withdraw their aforesaid promise and as such, D2 is bound to honour their promise in view of the settled legal position already discussed.
Case No. CS(COMM)/73/2021 Page No. 45 of 61WHETHER THERE WAS PRIVITY OF CONTRACT BETWEEN PLAINTIFF & D2.
14.1 It is admitted position of fact that there was no privity contract between plaintiff and defendant no.2 and initially, there was a sub contract executed between plaintiff and defendant no.1 for carrying out the acoustical work in the auditorium which was part of the main project. However, it is clear from the above discussed all the facts and circumstance and the transactions/communications took place between the parties that subsequently, during pendency of the project, certain peculiar circumstances arose which gave rise to formation of a contract between plaintiff and defendant no.2. In this regard, the provisions of Section 124 of the Contract Act related to Contract of Indemnity are required to be discussed which are reproduced as under:-
Section 124 of Contract Act.
124."Contract of indemnity" defined.--A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
14.2 It is clear from the aforesaid definition of contract of indemnity that where promisor promises to the promisee to save him from the losses caused to him either by his own conduct or by the conduct of any other person, then in that case, he shall (promisor) be liable to compensate the promisee if he has suffered any losses. In the present case also there is a Case No. CS(COMM)/73/2021 Page No. 46 of 61 similar situation as when plaintiff was not inclined to continue to carry out the balance work of his part of the project, D2 with their free will requested the plaintiff to complete the balance work and assured him that either they will get his (plaintiff) payment released from D1 or in case D1 does not pay, D2 shall directly pay his due amount. As already discussed that the aforesaid promise was made by D2 firstly, in a meeting dated 06.02.2017 and thereafter, through their two emails Ex.PW1/5 and Ex.PW1/8. It is also clear that on the aforesaid assurance of D2, plaintiff further invested his resources for completing the balance work of the project, thus, it is clear that through the aforesaid emails a contract of indemnity was executed between plaintiff and D2 and plaintiff performed his part of the contract but D2 failed to fulfill/honour their undertaking by making payment of balance amount to the plaintiff. Thus, under these facts and circumstances, D2 who stands in the category of an indemnifier/promisor is bound to indemnify the plaintiff for the amount spent by the plaintiff in completing the project.
Thus, D2 is not only liable on the basis of the Doctrine of Promissory Estoppel but also as there was a contract of indemnity between the parties.
14.3 D2 has denied the claim of the plaintiff on the ground that they never made any promise for direct payment as well as on the strength of their defence of absence of privity of contract between them. Besides, D2 has further denied their Case No. CS(COMM)/73/2021 Page No. 47 of 61 liability to the recovery sought by the plaintiff on the ground that D2 cleared the final bill of D1 on 30.09.2019 and plaintiff has filed his claim at a belated stage. Thus, D2 endeavoured to contend that since the plaintiff sent the legal notice (dated 20.02.2020) and also filed his suit after D2 cleared the bill of D1, therefore, at this stage, they are not bound to pay the amount claimed by the plaintiff. There does not seem to be any substance in this defence raised by D2 for several reasons. It is clear that within a short span of time after the plaintiff was awarded a sub contract, the issue of non-payment of the due amount cropped up between the parties and this issue was firstly brought to the notice of D2, in the meeting which took place between the parties on 06.02.2017 and since then till the time plaintiff completed his part of the project, the issue of non payment of his due amount remained pending. It is also clear from the aforesaid discussions that it was D2 who of their own made a promise of direct payment to the plaintiff and it was well within their notice that plaintiff carried out the remaining work only on their assurance. Thus,under these circumstances, once D2 had made a promise to the plaintiff, they were duty bound to ensure that the balance due amount of plaintiff is paid by D1 before they clear the final bill of D1. Since D2 was the principal agency and already made a promise then they had every right to ensure the payment of plaintiff either through them or through D1. Since it was well within their notice that D1 was not clearing the payment even despite their directions and since they had already made a promise to the plaintiff for Case No. CS(COMM)/73/2021 Page No. 48 of 61 direct payment, therefore, under these peculiar facts and circumstances, they were well within their right to withhold the requisite amount while clearing the final bill and should not have released the said amount to D1 till the time D1 clears the payment of plaintiff. In case, D1 would not have paid despite directions of D2 or despite withholding the said amount by D2 then D2 could have directly paid the said amount to the plaintiff as promised by them. However, it is clear that while clearing the bill of D1, D2 did not fulfill their legal responsibility of ensuring payment of plaintiff and D2 cleared the entire bill of D1. Neither they ensured the payment of plaintiff nor they themselves made the payment to the plaintiff directly. Thus, once the defendant no.2 had already made a promise of direct payment, then it was the legal duty of D2 to ensure his payment before clearing the final bill of D1.
14.4 D2 has sought to deny the claim of the plaintiff also on the ground of his raising the claim belatedly. Though, in view of the facts and circumstances of the present case, D2 cannot escape its liability to pay the due amount to the plaintiff, however, it is clear from the record that after the work was completed, the measurement of the work done by the plaintiff was jointly carried out on behalf of both the defendants and after this exercise, plaintiff submitted his final bill with defendant no.2 through email dated 25.10.2018 (Ex.PW1/11). It is clear that alongwith this email plaintiff had sent the final invoice alongwith the details of the balance work Case No. CS(COMM)/73/2021 Page No. 49 of 61 carried out by him which includes the approved measurement sheets which carry the initials of the concerned Officers of both the defendants. It is also clear that plaintiff had sent this email to Sh. Kamal Kataria and Sh. Prem Khandelwal and the copies of the same were also sent to the other Officers of D2. It is further clear that plaintiff had demanded the balance amount as per the invoice submitted by him with his email. Thus, it is clear that vide email Ex.PW1/11 plaintiff had raised his claim of balance payment from D2. It is clear that defendant no.2 did not controvert the authenticity of any of the documents sent by the plaintiff alongwith aforesaid email, thus, neither the correctness of the fact that the final measurement of the length of work was jointly carried out by the Officers of defendants nor the quantum of amount claimed by the plaintiff was disputed. It is clear that defendant no.2 did not take any action subsequent to receiving the said email, though, D2 was legally bound to make the payment of the amount claimed by the the plaintiff, if they did not find any issue regarding the correctness of the amount claimed. During cross examination of PW1, D2 again endeavoured to show that there is no privity of contract between them and therefore, the plaintiff has raised his final invoice against D1. Again there is no substance in this plea as it is nobody's case that there was any privity of contract between plaintiff and D2 and plaintiff has submitted his final bill with relevant documents with D2 only because D2 had already made promises for making the direct payment to him. Thus, under these circumstances, the Case No. CS(COMM)/73/2021 Page No. 50 of 61 plaintiff was well within his rights to directly raise his claim with defendant no.2. Even otherwise it is clear that plaintiff has categorically deposed in para no. 12 of his affidavit that plaintiff made lot of efforts for submitting his final bill with D1 and also for obtaining his due amount from D1, however, D1 delayed the matter on one pretext or the other and D1 accepted the bill of the plaintiff only on 02.09.2019. Thus, it is also clear that before claiming his due amount from D2, plaintiff firstly made all his efforts to have his due amount from D1 and what to talk of making the balance payment, the D1 even did not acknowledge the final bill of the plaintiff till 02.09.2019. This part of the testimony of plaintiff remained totally unrebutted, thus, assumed to be correct. Even if it is assumed that plaintiff did not raise his claim with D1, however, one thing is very clear that plaintiff had raised his demand from D2 well before the date D2 cleared the final payment of D1, thus, under these circumstances, D2 cannot come up with a plea that plaintiff had not raised his claim before they released the final payment to D1. All these facts clearly shows that though, around one year prior to D2 released the final payment to D1, plaintiff had raised his demand and it was well within the notice of D2 yet they choose to ignore the same for the best reasons known to them and they went ahead in clearing the final bill of D1. It is also clear that prior to filing of present suit, plaintiff had served both the defendants with legal notice Ex.PW1/15 and in the legal notice also plaintiff had categorically stated and denoting Case No. CS(COMM)/73/2021 Page No. 51 of 61 to D2 that they had promised to pay the due amount if D1 fails to pay the same. Plaintiff also stated that plaintiff had raised two final invoices upon D2 and the amount of the same were also mentioned, however, it is clear that despite service of the legal notice, D2 did not rebut all these claims of the plaintiff and they remained completely silent which further strengthens the case of the plaintiff that D2 had made the aforesaid promise. Therefore, an adverse inference should also be drawn against D2 that D2 did not rebut the assertions of the plaintiff as plaintiff had stated correct facts as well as raised his genuine claim through his legal notice. Furthermore, it is undisputed that D2 is a Statutory Government Body and in case, plaintiff would have made any false claim in his legal notice or would have filed any incorrect emails or incorrect versions of emails, then D2 would have surely taken appropriate legal action against the plaintiff for all his alleged misdeeds, however, it is again clear that defendant no.2 did not take any action whatsoever against the plaintiff for his allegedly making false claim against D2.
WHETHER TIME WAS THE ESSENCE OF THE CONTRACT AS CLAIMED BY D2:
15.1 D2 has denied the claim of the plaintiff on three main defences raised by them in their written statement. The first defence is that they never made any promise to the plaintiff for direct payment. The second defence is that there is Case No. CS(COMM)/73/2021 Page No. 52 of 61 no privity of contract between them and plaintiff and the third defence is that the Officers of D2 assured the plaintiff for his payment subject to his completing the balance work by 20.01.2018. The third defence raised by D2 is directly in contravention of their aforesaid two main defences. In case there was neither any privity of contract nor any promise was there then D2 cannot claim that the plaintiff was given specific time to complete the balance work i.e. upto 20.01.2018. Since, the defendant has raised this defence and also pursued this defence through their defence evidence, therefore, it is necessary to analyze whether plaintiff is not entitled to claim the suit amount as he had failed to honour the timelines settled by D2.
15.2 Before analyzing the record of the present case as well as evidence led by both the parties on this aspect, the relevant provision of Contract Act which govern this issue are required to be discussed. Thus relevant provisions of section 55 of Contract Act are reproduced as under:-
Section 55 of Contract Act "55. Effect of failure to perform at fixed time, in contract in which time is essential--When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the Case No. CS(COMM)/73/2021 Page No. 53 of 61 intention of the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential--If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that agreed upon--If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so".
15.3 Now it is to be seen from the material brought on record, especially by D2, that whether actually the time was essence of the contract. Since, the original contract was awarded by D2 to D1, therefore, firstly this aspect is to be analyzed on the basis of original agreement. The copy of original agreement has not been brought on record by D2, however, the D2 has brought on record the relevant letter dated 18.04.2013 (Ex.DW1/2) by virtue of which D2 had intimated D1 regarding awarding the contract for construction of Indian Aviation Academy and Hostel Block at Vasant Kunj, New Delhi. It is clear from this letter that D2 had given 18 months Case No. CS(COMM)/73/2021 Page No. 54 of 61 time (w.e.f 25.04.2013) to D1 to complete the entire project and it is admitted position of fact that the project was not completed within the said time frame and in case, the time would have been the real essence of the Contract then D2 would have revoked the contract after the aforesaid timelines, as admittedly, the project was not completed by that time and it was completed much later i.e. on 30.05.2018. Thus, it is clear from the record that the D2 did not revoke the contract and must have extended the time only therefore, D1 continued to execute the contract till 30.05.2018. It is further admitted position of fact that after the time for completion of the project was extended and after the project was completed by D1 on 30.05.2018, the final bill submitted by the main contractor (D1) was accepted on 30.09.2019 and the final due amount was released by D2 to D1.
15.4 The work order given by D1 to plaintiff was part of the entire project which was awarded to D1 and it is clear that the entire project was completed and handed over to D2 on 30.05.2018 which obviously includes the work carried out by the plaintiff. The timelines set out for completion of the work awarded to the plaintiff cannot be different for the plaintiff and once D1 was allowed to complete the project by 30.05.2018 then definitely plaintiff also assumed to have been allowed the same time. Furthermore, in case the time would have been the essence of the contract then neither D1 nor D2 would have jointly verified the quantum/length of work carried Case No. CS(COMM)/73/2021 Page No. 55 of 61 out by the plaintiff qua the balance work on 11.05.2018. Thus, it is amply clear from the record of the present case that time was never the essence of the contract.
15.5 It is well settled law that in case, there are clauses in the contract related to the extension procedure and imposition of liquidated damages then it cannot be said that the time was the essence of the contract. In this regard this Court is supported by the judgment of Hon'ble Supreme Court titled as Welspun Specialty Solution Ltd. vs Oil and Natural Gas Corporation Ltd reported as 2022 (2) SCC 382. The relevant paras of this judgment are reproduced as under:-
"33. This brings us to the waiver. It may be noted that ONGC waived liquidated damages twice before giving extension with pre-estimated damages. The approach of the Arbitral Tribunal was to hold that once liquidated damages were waived in the first extension, subsequent extension could not be coupled with liquidated damages unless a clear intention flowed from the contract; while this Court recognizes the autonomy of the party to engage in contractual obligation. Such obligation must be contracted in clear terms. From the aforesaid discussion, it is clear that the promisee (ONGC) waived the liquidated damages initially and the same cannot be imposed, unless such imposition was clearly accepted by parties. In this case, the interpretation of the Arbitral Tribunal could not be faulted as being perverse, for the reasons stated above.
35. This Court cannot interfere with this award, as the award is a plausible view for the following reasons:Case No. CS(COMM)/73/2021 Page No. 56 of 61
a. The Arbitral Tribunal's interpretation of contractual clauses having extension procedure and imposition of liquidated damages, are good indicators that 'time was not the essence of the contract' 15.6 Similar is the position in the present case as during cross-examination, DW1 himself admitted that a sum of Rs.2,19,17,243/- was to be recovered from D1 on account of EOT (Extension of Time). Thus, it is clear that admittedly there was a clause regarding imposition of penalty for extension of time. Therefore, this particular clause further shows that time was not the essence of the contract. Thus, D2 cannot deny the claim of the plaintiff on the ground of non-
completion of balance work by 20.01.2018.
CONCLUSION 16.1 In view of the aforesaid discussion, it is held that as far as the main contract for construction of Indian Aviation Academy and Hostel Block is concerned, there was no privity of contract between the parties. However, it is clear from the record when the issue of non-payment of the dues of plaintiff surfaced then D2 started exercising the right of a contractor qua plaintiff as directions for continuation and completion of balance work were issued besides making promise of direct payment by D2 to plaintiff. Though, the aforesaid conduct on the part of D2 can neither be termed to be the formation of an independent contract between them nor it can be said to be a novation of contract which was originally executed between Case No. CS(COMM)/73/2021 Page No. 57 of 61 plaintiff and D1 but it can be surely said that apparently D2 made a promise to plaintiff for the payment of his due amount, in case, he completes the balance work. Thus, not on the basis of privity of contract but on the basis of Doctrine of Promissory Estoppel, the D2 is liable to make the payment of the suit amount to the plaintiff.
16.2 It is also clear from the aforesaid discussions that the promise made by D2 to plaintiff also fully covered within the provisions of section 124 of Contract Act and it is clear that in the present case, the moment D2 assured the plaintiff for his payment in default of the payment by D1, a contract of indemnity got formed between the parties and it is clear from Ex.PW1/11 that plaintiff had informed D2 that D1 has not made the payment of his dues and therefore, plaintiff sought his due amount from D2. Since D2 had promised to indemnify the plaintiff, therefore, under the aforesaid circumstances, the D2 is liable to perform his part of the contract as an indemnifier.
16.3 As discussed in the preceding paras, the quantum/length of work completed by the plaintiff was jointly verified by the Officers concerned of both the defendants. Furthermore, plaintiff had also submitted the aforesaid documents related to measurement of the work as well as his final invoice with defendant no.2 through email dated 25.10.2018 (Ex.PW1/11) and D2 never disputed the Case No. CS(COMM)/73/2021 Page No. 58 of 61 correctness of these documents. Plaintiff had raised the similar claim through his legal notice Ex.PW1/15 and despite receipt of the legal notice, again D2 did not dispute the authenticity of the quantum of the amount claimed by the plaintiff. Thus, under these circumstances, it is held that as far as the correctness of the amount claimed by the plaintiff through invoice Ex.PW1/12 is concerned, D2 has never raised any dispute about the same. As far as raising of aforesaid invoice in the name of D1 is concerned, it is admitted position of fact that being a sub-contractor of D1, plaintiff was originally liable to raise his claim against D1 and D2 was liable to pay only due to promises made by them subsequent to awarding of work order to the plaintiff. It is very very clear from the contents of email dated 10.01.2018 (Ex.PW1/8) that while requesting the plaintiff for completion of remaining work, D2 had assured the plaintiff about the payment of his existing outstanding amount along with the amount of the balance work to be carried out by the plaintiff. In order to establish the quantum of due amount, the plaintiff has brought on record his ledger statement of account pertaining to all the transactions related to D1 and it is clear that besides the amount of Rs.16,83,177/- qua invoice Ex.PW1/12, a sum of Rs.8,12,495/- was also outstanding against D1 as on 01.09.2019. The D2 has simply denied this statement of account, however, D2 has not brought on record any evidence to assail the authenticity of the aforesaid ledger statement of account. Thus, it is clear that the entries of ledger statement of Case No. CS(COMM)/73/2021 Page No. 59 of 61 account remained uncontroverted. As far as raising of the invoice/invoices in the name of D1 is concerned, it is held the plaintiff has rightly raised the invoice in the name of D1 but due to aforesaid circumstances, D2 is liable to pay to the previously due amount of Rs.8,12,495/- to the plaintiff along with the amount of Rs.16,83,177/-of invoice Ex.PW1/12. In the peculiar facts and circumstances of the present case, it most respectfully observed that the case laws cited by the Ld. Counsel for D2 are not applicable to the present case because the facts and circumstances of the present case are entirely different from the case laws cited by Ld. Counsel for D2 as in the present case D2 has clearly made several promises to pay the dues of the plaintiff. In view of the aforesaid discussions, it is held that the plaintiff is entitled to the recovery of Rs.24,95,672/-from D2/AAI.
16.4 As far as claim of interest is concerned, it is clear from the aforesaid discussions that D2 neither ensured the timely payment of plaintiff through D1 nor they themselves paid the aforesaid due amount despite several promises and demand raised by the plaintiff through emails and legal notice. Thus, it is held that plaintiff was deprived of his legal dues which were supposed to be paid by 30.09.2019 when final payment was made by D2 to D1. Thus, under these circumstances, D2 is liable to compensate the plaintiff by paying the aforesaid due amount alongwith interest. Since there is no stipulation between the parties regarding payment Case No. CS(COMM)/73/2021 Page No. 60 of 61 of specific rate of interest in case of delayed payment, therefore, keeping in view of the facts and circumstance and in view of Section 3 & 4 of Interest Act and section 34 of CPC, the plaintiff is awarded 9% per annum pre-suit (w.e.f 30.09.2019), pendentelite and future interest. Both the Issue no.1&2 are decided accordingly.
RELIEF
17. In view of my issues wise findings, the suit of the plaintiff is decreed for recovery of Rs.24,95,672/- against the defendant/Airport Authority of India Ltd. Plaintiff is awarded pre-suit interest @ 9% p.a. with effect from 30.09.2019. Plaintiff is also awarded pendentelite and future interest @ 9% per annum alongwith cost of the suit. Decree sheet be prepared.
File be consigned to Record Room.
Digitally
signed by
Announced in the Open AJAY AJAY GUPTA
Date:
Court on 30.09.2024 GUPTA 2024.09.30
16:35:55
+0530
(Ajay Gupta)
District Judge (Commercial Court)-05
West, Tis Hazari Courts Extension
Block, Delhi/30.09.2024
Case No. CS(COMM)/73/2021 Page No. 61 of 61