Delhi District Court
Meena Tanwar vs South Delhi Municipal Corporation on 21 December, 2023
IN THE COURT OF Dr. KAMINI LAU: DISTRICT JUDGE
(COMMERCIAL COURT)02, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
CS (COMM.) No. 4819/2021
CNR No. DLCT010156432021
Ms. Meena Tanwar
Sole Proprietor of M/s. JBM Construction Co.
65, village Asola, New Delhi - 110074
Through Attorney Ajeet Singh Tanwar
......Plaintiff
Versus
1. Municipal Corporation of Delhi
Through Commissioner
Civic Center, Minto Road,
New Delhi - 110002
2. The Executive Engineer (MII) South Zone
Municipal Corporation of Delhi
Gulmohar Park, New Delhi
......Defendants
Date of filing of suit: 18.11.2021
Arguments concluded on : 29.11.2023
Date of Judgment: 21.12.2023
TABLE OF CONTENTS
Sr. No. Title Page No.
1 Brief facts/ Case of the petitioner 25
2 Case of the Defendant 58
3 Issues 8
4 Evidence & List of Documents 814
5 Findings & Observations 1431
6 Conclusion/ Relief 3132
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021
Judgment dated 21.12.2023 Page No. 1 of 32
Present: Ms. Shwenka Tripathi, Advocate for the plaintiff.
Sh. Mohit Sharma Advocate for the Defendants.
JUDGMENT:
(1) This is a Civil Suit filed by the plaintiff Ms. Meena Tanwar (through her attorney Sh. Ajeet Singh Tanwar seeking recovery of a sum of Rs.14,04,344/ only (i.e. Rs.10,03,103/ towards Principal and Rs.4,01,241/ towards Interest) along with pendentelite and future interest @ 12% per annum from the defendants.
BRIEF FACTS:
Case of the plaintiff:
(2) The plaintiff Ms. Meena Tanwar is the sole proprietor of M/s. JBM Construction Co. a firm duly enrolled as Municipal Contractor with the defendants and is engaged in the civil nature of work for the erstwhile South Delhi Municipal Corporation (now Municipal Corporation of Delhi). The present suit has been filed through Attorney Sh. Ajeet Singh Tanwar who has knowledge of all the facts and circumstances of the case.
The case of the plaintiff is as under:
➢ That the plaintiff being Government Contractor approached for the work order through tender which was invited by the Defendant No.2 who after the satisfaction of completion of the required conditions at the stage of prework order, awarded the Work Order Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 2 of 32 No. 530 dated 20.02.2017 for the nature of work as mentioned in the work order.
➢ That the plaintiff entered into agreement with the defendants and made necessary arrangements for execution and completion of the awarded work order and completed the same to the satisfaction of the Engineerincharge i.e. defendant no.2 and the period prescribed for defect liability also passed over without any negative remarks.
➢ That the defendant no.2 completed the final measurement of the aforesaid work and the first running bill was passed for a sum of Rs.14,71,654/ on 30.03.2018 and Rs.10,000/ were withheld.
➢ That as a precondition, the plaintiff had also deposited security money deposit of Rs.1,66,271/ including the earnest money of Rs.25,093/ earnest money and hence the total amount including the amount of passed bill and security/ earnest money is Rs.16,74,925/. ➢ That the defendants released a sum of Rs.6,44,822/ to the plaintiff on 31.05.2018 out of Rs.16,47,925/ but the defendants failed to release the balance amount of Rs.10,03,103/despite various requests made by the plaintiff.
➢ That despite passing of the first running bill, neither the balance payment was released to the plaintiff nor he was informed about the reason for withholding the Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 3 of 32 same.
➢ That the plaintiff made several requests for release of the remaining amount of the passed bills and the security amounts but no heed was paid to the requests of the plaintiff.
➢ That as per Clause 9 of the General Terms and Conditions of the defendants, they are liable to release the payment of the passed bill within a period of six / nine months.
➢ That since the sum of Rs.10,03,103/ has been admitted, the plaintiff also did not raise any objection, the defendants were under an obligation to release the amounts to the plaintiff within a period of six / nine months or within a reasonable time but the defendants have failed to release the remaining amount. ➢ That the plaintiff is entitled to charge interest @ 12% per annum on the remaining amount of Rs.10,03,103/ w.e.f. 31.03.2019 to 30.10.2021 which is Rs.4,01,241/ and hence, the total amount is Rs.14,04,344/. ➢ That the plaintiff got issued a legal notice dated 30.12.2020 under Sections 477/478 of DMC Act through his counsel thereby calling upon the defendants to release a sum of Rs.10,01,241/ along with the interest @ 12% per annum within 60 days from the receipt of the said notice.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 4 of 32 ➢ That the defendants neither replied the said notice nor made the payment of the outstanding amount to the plaintiff and hence, the present suit has been filed.
Case of the defendants:
(3) The defendants have filed a joint written statement.
The case of the defendants is as under:
➢ That the plaintiff has not approached this court with clean hands and has concealed material facts from this court.
➢ That the present suit is not maintainable and is bad in law for nonjoinder of necessary parties. ➢ That the present form in its present form is premature and the plaintiff has no cause of action to file the present case against the defendants. ➢ That as per recommendations of MLA (AC48) vide No. 38/1617/MLALAD dated 17.08.2016 an estimate for execution of work "providing & laying of RMC from Baba Sweet C Block to near culvert dustbin C Block, Dakshin Puri in Ambedkar Nagar" duly approved by competent authority of SDMC was forwarded to District Magistrate/ Chairman - DUDA (South) for sanction and providing budget.
➢ That Delhi Urban Development Authority (DUDA) provided 50% budget of the estimated amount and accordingly an NIT No. EE(MSZIII)/SZ/ TC/2016 17/13 dated 23.12.2016 was issued for execution of the Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 5 of 32 above work.
➢ That the plaintiff submitted its bid and deposited the requisite earnest money amounting to Rs.35,100/. ➢ That the recommendation of the MLA was made to the District Magistrate, South Delhi, MB Road, Saket and a copy thereof was forwarded to EE(M)III/SZ, South DMC.
➢ That first running bill was passed on 30.03.2018 for Rs.16,52,713/ which bill was agreed upon by the plaintiff, details of which bill are as under:
Gross amount of bill Rs.16,62,713/ Security amount after adjusting Rs.1,31,178/ earnest money deposited by the plaintiff Income Tax Rs.16,000/ Labour Cess Rs.8,000/ Net Payable Rs.15,07,535/ ➢ That as per the recommendations of the MLA (AC48) under the Head of Account: XLVIIIS (MLALAD) which is fully funded by concerned authorities of GNCT of Delhi i.e. DUDA.
➢ That only Rs.8,00,000/ has been released by the concerned authorities of GNCT of Delhi i.e. DUDA which amount has been received by the South DMC in the form of cheque issued under the signatures of SDM (HQ) Distt. (South), GNCT of Delhi and accordingly the payment of plaintiff has been made.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 6 of 32 ➢ That the withheld amount and security will be released and the payment therefore would be made to the plaintiff as and when the fund is received from DUDA and the details of balance funds to be received from the concerned authorities of GNCT of Delhi i.e. DUDA are as under:
Contractual amount of Work Rs.16,52,713/ Fund already released by authorities Rs.8,00,000/ of GNCT of Delhi Balance fund to be received from the Rs.8,52,713/ authorities of GNCT of Delhi ➢ That the work executing agency i.e. EE(M)I/South Zone has made regular pursuance with authorities of GNCT of Delhi vide letters dated 06.09.2018, 05.01.2022 and 17.01.2022 but no fund has been received from the concerned authorities of GNCT of Delhi.
➢ That the present suit of the plaintiff in respect of her claim is not maintainable in view of Circular No. D/EE(P)III/27/200607 dated 19.05.2006 for Clause 7, Clause 9 and 9A regarding payment of bills to the contractor wherein it is clearly mentioned that the payment of passed bills will depend on availability of funds in particular head of account from time to time. ➢ That the above condition was also mentioned in the tender and the said condition has been duly agreed upon by the plaintiff.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 7 of 32 ➢ That as and when the balance fund is received from concerned authorities i.e. District Magistrate/ Chairman - DUDA (South), the balance payment, security and withheld amount would be released accordingly.
(4) On merits, the defendants have denied all the allegations made by the plaintiff in the plaint.
ISSUES:
(5) The plaintiff has not filed any replication to the written statement filed by the defendant.
(6) On the basis of pleadings of the parties, vide order dated 05.09.2023 this Court settled the following issues:
i. Whether the present suit is bad for misjoinder of necessary party i.e. Delhi Urban Development Authority (DUDA)? (OPD) ii. Whether the plaintiff is entitled to recovery of Rs.14,04,344/ as asked for in the plaint? (OPP) iii. In case if the issue no.2 is decided in favour of the plaintiff, whether the plaintiff is entitled to the interest and at what rate? (OPP) iv. Relief.
EVIDENCE & LIST OF DOCUMENTS:
(7) Here, I may note that vide order dated 16.09.2023 this Court had appointed a Court Commissioner for recording the Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 8 of 32 evidence of the parties, pursuant to which the attorney of the plaintiff namely Ajeet Singh Tanwar has examined himself as his sole witness as PW1 whereas the Assistant Engineer (MII) Sh. Ajay Kumar Choudhary has examined himself as DW1. (8) Before coming to the testimonies of the witnesses examined by both the parties, the documents relied upon by them are hereby put in a tabulated form as under:
List of documents:
Sr. Exhibit No. Details of document Proved by No. Documents of the plaintiff
1. Ex.PW1/1 Registration Certificate dated Ajeet Singh 07.10.2019 Tanwar
2. Ex.PW1/2 General Power of Attorney dated (PW1) 12.11.2021
3. Ex.PW1/3 Copy of Work Order No. 530 dated 20.02.2017
4. Ex.PW1/4 Letter of Final Bill dated 03.12.2019
5. Ex.PW1/5 Copy of passed bill dated 30.03.2018
6. Ex.PW1/6 Copy of Clause 9 of General Conditions of Contract
7. Ex.PW1/7 Legal notice dated 30.12.2020 along with postal receipt and proof of dispatch Documents of the defendants:
8. Mark D/A Copy of guidelines for MLA Local Area Ajay Kumar Development Scheme 2012 Choudhary
9. Mark D/B Copy of guidelines of permissible work (DW1)
10. Ex.DW1/1 Copy of request letter from MLA dated 17.08.2016
11. Ex.DW1/2 Copy of NIT dated 23.12.2016 Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 9 of 32
12. Mark D/C Copy of circular No. D/EE(P III/27/200607) by MCD dated 19.05.2006
13. Ex.DW1/3 First running bill for a sum of Rs.16,52,713/ dated 03.03.2018
14. Mark D/D Minutes of meeting dated 24.02.2016
15. Ex.DW1/4 Copy of office letter dated 06.09.2018, (Colly) 05.01.2022 and 17.01.2022 (9) Now coming to the testimonies of the witnesses examined by the parties, for the sake of convenience their testimonies are put in a tabulated form as under:
S. Details of the Deposition
No. Witness
1 Ajeet Singh PW1 Ajeet Singh Tanwar is the Attorney of the
Tanwar plaintiff who in his examinationinchief by way of
(PW1) affidavit Ex.PW1/A has corroborated what has been
earlier stated in the main plaint. He has placed his reliance upon the following documents:
1. Registration Certificate dated 07.10.2019 which is Ex.PW1/1.
2. General Power of Attorney dated 12.11.2021 which is Ex.PW1/2.
3. Copy of Work Order No. 530 dated 20.02.2017 which is Ex.PW1/3.
4. Letter of Final Bill dated 03.12.2019 which is Ex.PW1/4.
5. Copy of passed bill dated 30.03.2018 which is Ex.PW1/5.
6. Copy of Clause 9 of General Conditions of Contract which is Ex.PW1/6.
7. Legal notice dated 30.12.2020 along with postal receipt and proof of dispatch which is Ex.PW1/7 (colly).
In his cross examination by the Ld. Counsel for the defendants, the witness has deposed under under:
➢ That the tender was floated on 23.12.2016.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 10 of 32 ➢ That the work was awarded to him on 20.02.2017 vide order no. 530.
➢ That he had read the terms and conditions which were written in detail in the Notice Inviting Tender dated 23.12.2016.
➢ That he had read the complete work order when it was awarded to me.
➢ That his wife is the proprietor of JBM Construction Co. and he is the Attorney Holder of the company and look after day to day affairs.
➢ That he has filed GPA dated 12.11.2021 to show that he was managing day to day affairs of JBM construction.
➢ That he cannot show in the above GPA Ex.PW1/2 that he was authorized to manage the day to day affairs of the said company. ➢ That there is no company letter authorizing him to appear on behalf of JBM Construction Co. in the present case and the above GPA Ex.PW1/2 is given on estamp paper and not on letter head.
➢ That the said GPA finds no mention of the details like GST No. pertaining to JBM Construction Co. but all required documents have been submitted to SDMC office after which the department had issued the registration number as Ex.PW1/1.
➢ That he is enrolled with MCD since about 15 years.
➢ That the registration certificate is valid w.e.f. 13.11.2018 since in every five years MCD renews the registration and the Contractor deposit the previous original certificate with the MCD.
➢ That only after depositing the original certificate, the department issues new renewal registration certificate and hence, this registration certificate Ex.PW1/1 appears to be valid from 13.11.2018.
➢ That while applying the tender he was aware of the terms and conditions that MLA funds Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 11 of 32 will be utilized for this Work Order.
➢ That the work was awarded by the MCD after which agreement was signed with them to execute the work and the work was executed in the presence of concerned JE & AE of MCD.
➢ That after completion of work, higher officers checked the work and found satisfactory and then passed the bill but when he asked for the payment from MCD, they refused to make payment and hence, he approached the Court.
➢ That the plaintiff had signed the agreement and had read the terms and contents of the agreement.
➢ That he was aware that MCD will release the funds only after DUDA release the fund at their end but it was the duty of MCD officers to bring the money from DUDA.
➢ That their agreement was signed with MCD and hence,it was their duty to bring the money from DUDA/ MLA Fund.
➢ That he cannot show in Ex.PW1/7 (page no.27) that the legal notice was delivered to MCD.
➢ That it is wrong that the legal notice was never served upon the MCD.
➢ That it is wrong that he does not have the authorization to represent JBM Construction Co. or that he never submitted authorization for day to day affairs of JBM Construction Co. to MCD department.
Defendant's Evidence
2. Sh. Ajay DW1 Sh. Ajay Kumar Choudhary is the Assistant Kumar Engineer (MIII) who in his affidavit of evidence Choudhary Ex.DW1/A has corroborated what has been earlier (DW1) stated in the written statement. He has placed his reliance upon the following documents:
1. Copy of guidelines for MLA Local Area Development Scheme 2012 which is Mark D/A. Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 12 of 32
2. Copy of guidelines of permissible work which is Mark D/B.
3. Copy of request letter from MLA dated 17.08.2016 which is Ex.DW1/1.
4. Copy of NIT dated 23.12.2016 which is Ex.DW1/2.
5. Copy of circular No. D/EE(PIII/27/2006
07) by MCD dated 19.05.2006 which is Mark D/C.
6. First running bill for a sum of Rs.16,52,713/ dated 03.03.2018 which is Ex.DW1/3.
7. Minutes of meeting dated 24.02.2016 which is Mark D/D.
8. Copy of office letter dated 06.09.2018, 05.01.2022 and 17.01.2022 which is Ex.PW1/4 (Colly).
In his cross examination by the Ld. Counsel of the plaintiff, the witness has deposed on the following aspects:
➢ That as per record, the present case has been filed in respect of Work Order No. 530 dated 20.02.2017.
➢ That an agreement was executed between the plaintiff and the MCD.
➢ That the work executed by the plaintiff was entered in the Measurement Book by JE/AE.
➢ That the contractor accepted the
measurement which was in the
measurement book.
➢ That after the checks of AE/ EE MII (SZ) the bill was passed by the concerned officers.
➢ That the contractor had accepted the bill passed by the department.
➢ That the department make the payment to the contractor according to the measurement book as well as according to the bill passed by the department.
➢ That he is not aware of the Clause 9 of GCC.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 13 of 32 ➢ That it is wrong that the department/ defendant has not released the bill amount as per Clause 9 of GCC.
➢ That it is wrong that the plaintiff is entitled to interest for the delayed payment of the passed bill as per Clause 9 of GCC.
➢ That there is no labour complaint in respect of the work order no. 530 till passing of the bill.
➢ That the defect liability is one year from the date of completion of work and has voluntarily explained that the defect liability period if 5 years (RMC) from completion of work.
➢ That as per the contract, there is no relation between DUDA and the Contractor.
FINDINGS AND OBSERVATIONS:
(10) I have heard the arguments advanced before me by the Ld. Counsels for the parties and considered the written memorandum of arguments filed by them. My findings on the various issues are as under:
Issue No.1: Whether the present suit is bad for misjoinder of necessary party i.e. Delhi Urban Development Authority (DUDA)? (OPD) (11) Onus of proving the above issue was upon the defendants who in their written statement have raised an objection that the present suit is bad for misjoinder of necessary party i.e. Delhi Urban Development Authority (DUDA). The case of the defendants is that as per recommendations of MLA (AC48) vide No. 38/1617/MLALAD dated 17.08.2016 an Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 14 of 32 estimate for execution of work "providing & laying of RMC from Baba Sweet C Block to near culvert dustbin C Block, Dakshin Puri in Ambedkar Nagar" duly approved by competent authority of SDMC was forwarded to District Magistrate/ Chairman - DUDA (South) for sanction and providing budget and the Delhi Urban Development Authority (DUDA) provided 50% budget of the estimated amount and accordingly an NIT No. EE(MSZIII)/SZ/ TC/201617/13 dated 23.12.2016 was issued for execution of the above work. According to the defendants, the plaintiff submitted its bid and deposited the requisite earnest money amounting to Rs.35,100/ and the recommendations of the MLA was made to the District Magistrate, South Delhi, MB Road, Saket and a copy thereof was forwarded to EE(M)III/SZ, South DMC. It is also the case of the defendants that the first running bill was passed on 30.03.2018 for Rs.16,52,713/ which bill was agreed upon by the plaintiff and only Rs.8,00,000/ has been released by the concerned authorities of GNCT of Delhi i.e. DUDA which part payment was released to the plaintiff and the remaining amount shall be paid to the plaintiff as and when the same is sanctioned and released by DUDA. According to the defendants, the present suit is bad for misjoinder of Delhi Urban Development Authority (DUDA).
(12) In this regard, I may note that a perusal of the record shows that the agreement in question has been entered into between the plaintiff and the defendants MCD. There is no privity of contract between the plaintiff and the Delhi Urban Development Authority. During the course of trial, on Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 15 of 32 05.09.2023 the concerned Executive Engineer namely Sh. A.K. Meena had appeared before this Court and was unable to point out any document whereby the Contractor/ Plaintiff had consented to enter into any agreement with Delhi Urban Development Authority (DUDA) or consented to any understanding between the MCD and Delhi Urban Development Authority (DUDA). It has been observed that this Court that there is no document on the file to reflect any kind of understanding/ MOU between the MCD and Delhi Urban Development Authority (DUDA) in so far as the work order in question. The relevant portion of the orders dated 05.09.2023 passed by this Court is reproduced as under:
"........ The original file relating to transaction in the present case has been produced by the AE Hasruddin Khan which I have duly perused. It is evident from the same that the First Running Bill for Rs.14,71,654/ was passed on 30.03.2018 and the work in question is covered under the Annual Action Plan of the MCD for the year in question.
On the one hand the case of the defendant South Delhi Municipal Corporation is that Delhi Urban Development Authority (DUDA) has not been made a party in the present case whereas on the other hand it is pleaded by the plaintiff that the only privity of contract is with the defendant i.e. South Delhi Municipal Corporation and she has nothing to do with the Delhi Urban Development Authority (DUDA).
I may note that vide order dated 02.08.2023, this Court had directed the appearance of competent officer of the MCD not less than the rank of Executive Engineer, despite which the Executive Engineer has not appeared and only the Assistant Engineer is present.
On request of the Ld. Counsels for the defendants, be listed in the post lunch sessions for appearance of the concerned Executive Engineer for arguments on the aspect of privity of contract between the plaintiff and Delhi Urban Development Authority (DUDA) Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 16 of 32 and also on the aspect of privity of contract between the defendant MCD and Delhi Urban Development Authority (DUDA) as well as the role of MCD....
........ The Executive Engineer Sh. A.K. Meena has not been able to point out any document from the record whereby the Contractor has consented to enter into any agreement with Delhi Urban Development Authority (DUDA) or consented to any understanding between the MCD and Delhi Urban Development Authority (DUDA). Rather, there is no document on the file to reflect any kind of understanding/ MOU between the MCD and Delhi Urban Development Authority (DUDA) in so far as the work order in question. Ld. Counsels for the defendant submit that they may be granted time to place on record the relevant d On the one hand the case of the defendant South Delhi Municipal Corporation is that Delhi Urban Development Authority (DUDA) has not been made a party in the present case whereas on the other hand it is pleaded by the plaintiff that the only privity of contract is with the defendant i.e. South Delhi Municipal Corporation and she has nothing to do with the Delhi Urban Development Authority (DUDA).ocuments in this regard, to which the Ld. Counsel for the plaintiff has no objection. The defendant is permitted to place on record the additional documents, within a period of one week from today....."
(13) It was only thereafter that the defendants filed an application under Order XI Rule 10 CPC for placing on record the additional documents i.e. Minutes of Meeting held on 24.02.2016 for execution of work under Delhi Urban Development Authority (DUDA); Guidelines of works under MLALAD Scheme and guidelines of work under MLALAD Scheme 2012. The said application was allowed by this Court vide order dated 16.09.2023 and the above documents relating to involvement of Delhi Urban Development Authority (DUDA) were taken on record. However, in so far as the plaintiff/ Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 17 of 32 Contractor is concerned, the witness of the defendant namely Ajay Kumar Choudhary (DW1) has specifically admitted that as per the contract, there is no relation between Delhi Urban Development Authority (DUDA) and the Contractor. (14) This being the background, the agreement/ contract in respect of the work order in question being executed between the plaintiff and the defendants MCD and there being no privity of contract between the plaintiff and the Delhi Urban Development Authority (DUDA), the entire burden cannot be shifted upon the plaintiff. I hereby hold that Delhi Urban Development Authority (DUDA) is not a necessary party to the suit. (15) Issue is accordingly decided in favour of the plaintiff and against the defendants.
Issue No.2: Whether the plaintiff is entitled to recovery of Rs.14,04,344/ as asked for in the plaint? (OPP) Issue No.3: Issue No.3: In case if the issue no.2 is decided in favour of the plaintiff, whether the plaintiff is entitled to the interest and at what rate? (OPP) (16) Both the issues are clubbed together for the sake of convenience involving common discussion. Onus of proving both the issues was upon the plaintiff. (17) The case of the plaintiff Ms. Meena Tanwar (through her Attorney/ husband Sh. Ajeet Singh Tanwar) is that pursuant to the tender invited by the Defendant No.2 she was awarded the Work Order No. 530 dated 20.02.2017 after which he entered Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 18 of 32 into agreement with the defendants and made necessary arrangements for execution and completion of the awarded work order and completed the same to the satisfaction of the Engineer incharge i.e. defendant no.2 and the period prescribed for defect liability also passed over without any negative remarks. According to the plaintiff, the defendant no.2 completed the final measurement of the aforesaid work and the first running bill was passed for a sum of Rs.14,71,654/ on 30.03.2018 and Rs.10,000/ were withheld and as a precondition, she had also deposited security money deposit of Rs.1,66,271/ including the earnest money of Rs.25,093/ earnest money and hence the total amount including the amount of passed bill and security/ earnest money is Rs.16,74,925/. The case of the plaintiff is that the defendants released a sum of Rs.6,44,822/ to the plaintiff on 31.05.2018 out of Rs.16,47,925/ but they failed to release the balance amount of Rs.10,03,103/ despite various requests made by the plaintiff. According to the plaintiff, she is also entitled to interest @ 12% per annum on the remaining amount of Rs.10,03,103/ w.e.f. 31.03.2019 to 30.10.2021 which is Rs.4,01,241/ and hence, the total amount is Rs.14,04,344/ which the defendants are not paying despite receipt of legal notice dated 30.12.2020 under Sections 477/478 of DMC Act. (18) On the other hand, the case of the defendants is that there is no cause of action in favour of the plaintiff and against the defendants since the work order in question was executed as per the recommendations of the MLA (AC48) under the Head of Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 19 of 32 Account: XLVIIIS (MLALAD) which is fully funded by concerned authorities of GNCT of Delhi i.e. DUDA. According to the defendants, only Rs.8,00,000/ has been released by the concerned authorities of GNCT of Delhi i.e. DUDA which amount has been received by the defendants to the plaintiff and the withheld amount and security will be released to the plaintiff as and when the fund is received from DUDA. (19) In order to prove his case the attorney of the plaintiff namely Ajeet Singh Tanwar has examined himself as his sole witness as PW1 whereas on the other hand the Assistant Engineer (MIII) namely Ajay Kumar Choudhary has examined himself as DW1.
(20) I have considered the rival contentions and the testimonies of the witnesses examined by the parties. (21) At the very Outset, I may observe that the plaintiff has filed the present suit against the defendants for recovery of Rs.14,04,344/ along with pendentelite and future interest on the ground that he had completed the Work Order awarded by the defendants despite which the defendants have not made the payments to him. Here, I may note that the provisions of Section 2 (1) (c) (vi) of Commercial Courts Act, 2015 are very clear and read as under:
(c) "commercial dispute" means a dispute arising out of
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 20 of 32
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and reinsurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
(22) The provisions of Section 2 (1) (c) (vi) of Commercial Courts Act as above are very much clear and provides that construction and infrastructure contracts, including tenders do come within the jurisdiction of Commercial Courts Act. Therefore, the facts which alleged in the plaint fall under the commercial dispute.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 21 of 32 (23) Secondly, on the issue as to whether this Court has the pecuniary jurisdiction to adjudicate the matter which is in dispute, the provisions of Section 3 of Commercial Courts Act, 2015 provides that:
Section 3: Constitution of Commercial Courts:
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] (24) Admittedly, the Commercial Court Act was amended on 03.05.2018 and by virtue of the amendment and by virtue of the notification, the pecuniary value of the Commercial Courts Act shall not be less than Rs.3,00,000/. In the present case, the specified value/ claim amount as reflected in the plaint is of Rs.14,04,344/ and hence, this Court has the pecuniary jurisdiction to adjudicate the matter which is in dispute.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 22 of 32 (25) Thirdly, this Court has the Territorial Jurisdiction to try the present suit since as per the record the office of the defendant no.1 Municipal Corporation of Delhi is situated at Civic Center, Minto Road, Delhi110002 which falls within the jurisdiction of this Court.
(26) Fourthly, in so far as the aspect of Limitation is concerned, it is evident from the record the Work Order No. 530 was awarded to the plaintiff on 20.02.2017 and the first running bill which is Ex.PW1/7 was passed on 30.03.2018 whereas the present suit was filed on 18.11.2021. Here, I may note that the Hon'ble Supreme Court in Suo Moto Writ Petition No. 3 of 2020 vide orders dated 23.03.2020, 06.05.2020, 08.06.2020, 06.07.2020, 10.06.2020, 03.03.2021, 04.03.2021, 08.03.2021, 23.09.2021 and 10.01.2022 extended the period of limitation from 15.03.2020 till 28.02.2022. Therefore, the present suit having been filed on 25.01.2022 i.e. within the Moratorium Period, is within the period of limitation. (27) Fifthly, a perusal of the record shows that before filing the present suit, the preinstitution mediation proceedings were initiated by the plaintiff on 06.03.2021 and the NonStarter Report dated 24.08.2021 shows that notice was issued to the defendants for 08.04.2021 & 30.07.2021. As per the Non Starter Report, the notices were delivered but the defendants did not appear give any response despite the service of notices and hence, the matter was referred as Non Starter.
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 23 of 32 (28) Sixthly, it is borne out from the testimony of Ajeet Singh Tanwar (PW1) that he has placed his reliance upon the Registration Certificate dated 07.10.2019 which is Ex.PW1/1; General Power of Attorney dated 12.11.2021 which is Ex.PW1/2; Copy of Work Order No. 530 dated 20.02.2017 which is Ex.PW1/3; Letter of Final Bill dated 03.12.2019 which is Ex.PW1/4; Copy of passed bill dated 30.03.2018 which is Ex.PW1/5; Copy of Clause 9 of General Conditions of Contract which is Ex.PW1/6 and Legal notice dated 30.12.2020 along with postal receipt and proof of dispatch which is Ex.PW1/7 (colly). In his crossexamination, the witness Ajeet Singh Tanwar (PW1) has categorically deposed that his wife is the Proprietor of M/s. JBM Construction Co. and he is the attorney holder of the company. He has further testified that work was awarded by MCD, after that agreement was signed with them to execute the above said work. According to him, the execution of work was done in the presence of concerned JE and AE of MCD and after completion of the work, higher officers checked the work and found satisfactory and then passed his bill but when he asked for the payment from MCD they refused to make payment to him and therefore, he approached the Court. (29) Seventhly, it is evident from the crossexamination of witness of the defendants namely Ajay Kumar Choudhary (DW1) that the work executed by the plaintiff was entered in the measurement book by JE/ AE which measurements were accepted by the Contractor. He has further explained that after Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 24 of 32 the checks of AE/ EE (MII)(SZ) the bill was passed by the concerned officers and the contractor accepted the bill passed by the department. He has admitted that the department make the payment to the Contractor according to the measurement book and also as per the bill passed by the department. The witness has further admitted that there is no Labour Complaint in respect of the Work Order No. 530 till passing of the bill. The relevant portion of the crossexamination of witness Ajay Kumar Choudhary (DW1) conducted before the Ld. Court Commissioner, is reproduced as under:
".......Q.3 Is this work complete as per work order?
A3. Yes, work was complete as per work order by the plaintiff.
Q.4 Was there any measurement of the work executed by the plaintiff in the measurement book?
A.4 Yes, the work executed by plaintiff was entered in the measurement book by JE/ AE. Q.5 Did the contractor accepted the measurement recorded in the measurement book?
A.5 Yes, the contractor accepted the measurement which was in measurement book. Q.6 On what basis was the first running bill passed by the department?
A.6 After the checks of AE/ EE M II (SZ) the bill was passed by the concerned officers. Q.7 Did the contractor accepted the bill? A.7 Yes, the contractor has accepted the bill passed by the department.
Q.8 Do you make the payment to the contractor according to the measurement book as well as per the bill passed by department.
A.8 Yes, we make the payment to the contractor according to the measurement book as well as Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 25 of 32 per the bill passed by the department..... .....Q.10 Is there any labour complaint as per record of department in respect of the work order no. 530?
A10. No, after seeing the record, there is no labour complaint in respect of work order no. 530 till passing of the bill.
Q11. What is the defect liability period of the work order?
A11. It is 1 year from date of completion of work. (Voluntary) as per my knowledge the defect liability period is 5 years (RMC) from completion of work.
Q12. Is there any relation between DUDA and contractor as per contract?
A12. No, there is no relation between DUDA and contractor as per contract...."
(30) It is evident from the above that the defendants have prepared the bill in respect of the work order in question on the basis of measurements recorded in the measurement book which measurements were duly accepted by the plaintiff. Further, it is evident that the defendants have already passed the bill which bill has also been duly admitted by the plaintiff. (31) Eighthly, the evidence on record confirms that the First Running Bill Ex.PW1/5 has already been passed by the defendants which is for a sum of Rs.14,74,838/ (wrongly mentioned as Rs.14,71,654/ in the plaint). It also confirmed that a sum of Rs.10,000/ was withheld and hence, the total principal amount comes to Rs.14,84,838/. According to the plaintiff, out of the above principal amount of Rs.14,84,838/, a sum of Rs.6,44,822/ has already been released to her on 31.05.2018 Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 26 of 32 whereas accordingly to the defendants they have released a sum of Rs.8,00,000/ to the plaintiff. In this regard, I note that both the parties have not placed on record any document showing the exact amount already released to the plaintiff. However, there is no reason to disbelieve the plaintiff in this regard. Accordingly, the balance amount which remains is Rs.8,40,016/ (i.e. Rs.14,84,383/ minus Rs.6,44,822/). It is clarified that since there is no clarity on the amount already released to the plaintiff, therefore, the above principal amount of Rs.8,40,016/ shall be subject to due adjustment if any amount has been released to the plaintiff in addition to Rs.6,44,822/. (32) Ninethly, in so far as the Security and Earnest Money to the tune of Rs.1,66,637/ (i.e. Rs.1,31,544 towards Security Deposit and Rs.35,093/ towards Earnest Money Deposit) in respect of the Work Order in question is concerned, the witness of the defendants namely Ajay Kumar Choudhary (DW1) has specifically admitted that per record of the defendant, no labour complaint is pending in respect of the work orders in question. This being the background, I hold that the plaintiff is entitled to the recovery of Rs.10,06,653/ (i.e. Rs.8,40,016/ towards remaining principal amount + Rs.1,66,637/ towards Earnest Money/ Security Deposit) from the defendants. (33) Lastly, in so far as the Interest Aspect is concerned, Ld. Counsel for the plaintiff has placed his reliance upon Clause 9 of the General Terms and Conditions of the agreement and has argued that the defendants having withheld the payment of Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 27 of 32 the passed bills beyond reasonable time i.e. six/ nine months, the defendants are liable to pay interest @ 12% per annum to the plaintiff. In this regard, Ld. Counsel for the plaintiff has placed his reliance upon the judgment in the case of East Delhi Municipal Corporation Vs. Raj Kumar Jain, RFA No. 397/2017 & CM APPL. 14985/2017 decided on 22.03.2018. On the other hand, Ld. Counsel for defendant has argued that the plaintiff is not entitled to any interest. (34) I have considered the arguments advanced before me and have also gone through the various judgments relied upon by the Ld. Counsels. I may note that in the case of East Delhi Municipal Corporation Vs. Raj Kumar Jain, RFA No. 397/2017 & CM APPL. 14985/2017 decided on 22.03.2018, the Delhi High Court had an occasion to deal with the similar issues i.e. Whether payment of the principal amount can be delayed in view of Clause 7 and Clause 9 of the General Conditions of Contract read with the amendments? (ii) Whether the refund of earnest money/security deposit can be delayed in view of Clauses 17 and 45 of the General Conditions of Contract? (iii) Whether interest is payable on delayed payments/refunds and if so, for which period?
(35) Hon'ble Ms. Justice Pratibha M. Singh in the case of East Delhi Municipal Corporation Vs. Raj Kumar Jain (Supra) had elaborately discussed the General Conditions of Contract of MCD and the relevant law on the subject and concluded as under:
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 28 of 32 ".......Conclusions and Findings
71. The General Conditions of Contract i.e., clauses 7 and 9 which are admittedly part of the work orders issued by both the NrDMC and the EDMC are being tested in these batch of cases. A contract which stipulates that the consideration would be paid in an unforeseen time in the future based on certain factors which are indeterminable, would in effect be a contract without consideration. Even if the contract is held to be a valid contract, then the concept of `reasonableness' has to be read into the same.
Section 46 of the Contract Act and the explanation thereto is clear that "what is a reasonable time is a question of fact in each case." A Corporation which gets works executed cannot therefore include terms in the contract which are per se unconscionable and unreasonable as
a) There is no fixed time period as to when the funds would be available;
b) There is also no fixed mechanism to determine as to when and in what manner the head of account is to be determined and as to how the Contractor would acquire knowledge of these two facts;
c) There is also no certainty as to how many persons are in the queue prior to the Contractor and for what amounts;
d) There is enormous ambiguity in the receipt under the particular heads of accounts.
72. These clauses in effect say that the Contractor is left with no remedy if the Corporation does not pay for the work that has been executed. Such a Clause would be illegal and contrary to law. Such clauses, even in commercial contracts, would be contrary to Section 25 read with Section 46 of the Contract Act.
73. The clauses do not specify an outer time limit for payment. The expression reasonable time has to be 'a time'. The concept of time itself is ensconced with specificity and precision. Clause 9 is the opposite of being precise. It is as vague and ambiguous as it could be because it depends on factors which are totally extraneous to the contract, namely ➢ Allotment of funds to the Corporation by the Government;
➢ Allotment of funds in a particular head;
Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 29 of 32 ➢ Allotment of funds for payments who are in queue prior to the contractor;
74. Thus, these factors, which are beyond the control of the Contractor and which would govern the payment of consideration, make the said clauses of the contract completely unreasonable. The clauses have to thus, be read or interpreted in a manner so as to instill reasonableness in them.
74. By applying the above said principles, in respect of final bills raised by Contractors for works executed, that have been approved by the EngineerinCharge, the Clauses have to be read in the following manner:
a) Reasonable time for making of payments of final bills in respect of work orders up to Rs.5 lakhs shall be 6 months and work orders exceeding Rs.5 lakhs shall be 9 months from the date when the bill is passed by the Engineerin Charge.
b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded, while applying the queue system.
c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any nonpayment would attract payment of interest for the delayed periods.
d) A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7.
Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
e) To the extent that queue basis is applied only for clearing of payments which do not extend beyond the Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 30 of 32 period of 6 months and 9 months period, it is reasonable. However, if the queue basis is applied in order to make Contractors wait for indefinite periods for receiving payments, then the same would be unreasonable and would have to therefore be read down.
f) The Security amount/Earnest money deposited would be refundable upon the fulfilment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments...."
(36) This being the background and in the light of the conclusions of the Hon'ble Delhi High Court in the case of East Delhi Municipal Corporation Vs. Raj Kumar Jain (Supra), I hold that the plaintiff is entitled to the Simple Interest @ 6% per annum on the sum of Rs.10,06,653/ from the date of filing of the suit till realization.
(37) Both the issues are accordingly disposed off.
CONCLUSIONS & RELIEF:
(38) In view of my above discussion on the above issues, I hereby hold that the plaintiff is entitled to the following reliefs:
A) That the plaintiff is entitled to recovery of remaining principal amount to the tune of Rs.8,40,016/ from the defendants. It is clarified that since there is no clarity on the amount already released to the plaintiff, therefore, the above principal amount of Rs.8,40,016/ shall be subject to due adjustment if any amount has been released to the plaintiff in addition to Rs.6,44,822/ Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 31 of 32 B) That the plaintiff is entitled to the recovery of Security/ Earnest Money Deposit to the tune of Rs.1,66,637/ from the defendants.
C) That the plaintiff is entitled to the recovery of Simple Interest @ 6% per annum on the sum of Rs.10,06,653/ from the date of filing of the suit till realization from the defendants.
(39) Suit of the plaintiff is accordingly Decreed. Parties to bear their own costs. Decree Sheet be prepared accordingly. (40) File be consigned to Record Room.
Announced in the open court (Dr. KAMINI LAU) Dated: 21.12.2023 District Judge (Commercial Court)02, Central District, Tis Hazari Courts, Delhi Meena Tanwar Vs. MCD & Anr, CS (Comm.) No. 4819/2021 Judgment dated 21.12.2023 Page No. 32 of 32