Delhi District Court
M/S Gaur Constructions vs Delhi Development Authority on 10 July, 2020
IN THE COURT OF MS. VANDANA JAIN, ADJ-07, SOUTH EAST DISTRICT, SAKET COURTS, NEW DELHI (MORE THAN SEVEN YEARS OLD) CS NO.210074/16 M/s Gaur Constructions Vs Delhi Development Authority (Final arguments heard through CISCO Webex) in the matter of M/s Gaur Construction (Through its Partner Sh. Vikas Gaur) Office at A-4/43, Sector -18 Rohini, Delhi -110085 cn ccenucccecccscccnnl LHIMCHE | Versus 1. Delhi Development Authority Vikas Sadan, INA, New Delhi (Through its Vice Chairman) 2. The Executive Engineer, South Extension Division-8, Delhi Development Authority Office at Pocket-A-14, Kalkaji Extension, New Delhi -110019 ete cvcccencesscercee, Defendants Authority Page i Date of institution : 14.12.2012 Date of reserving of judgment : 20.06.2020 Date of Judgment : 10.07.2020 JUDGMENT
1. This is suit for recovery of amount of Rs.25,78,299/- alongwith interest.
2. The plaintiff is a registered partnership firm consisting of two partners namely Sh. Vikas Gaur and Sh. Parveen Kumar. The suit has been filed through its vartner Sh. Vikas Gaur. The plaintiff is doing the construction work in the government _ department and had submitted a tender application against the : 'tender published by the defendant for execution of work "Construction of Community Hall cum Reading Room"
OR' Pocket -9, Lajpat Nagar-IV near National Park, New | hi. The work was awarded vide work order dated 24.07.2009 for a total contractual amount of Rs.55,81,090/-. The 'agreement between the parties ic. the plaintiff and defendant no. 2 was executed on 27.07.2009. As per the M/s Gaur Constructions VS Delhi Development Authority agreement, date of start of work was 03.08.2009 and date of completion of 02.03.2010 whereas the work was only completed on 14.07.2011. The extension of time was granted and approved by the defendant department on 14.07.2011 without levy of penalty and subject to the following work to be done at the time of allotment.
(a) Final coat of painting, plastic emulsion and water proofing, cement paint.
(b) Fixing of CP fitting, door fitting if any other required
(c) Minor repair where required.
(d) Fixing of glass pans in window and doors The Superintending Engineer of the defendant department has issued completion certificate on | 07.201 1 and no notice of defect was ever issued to the laintiff firm during the maintenance period.
The completion of the work was recorded by the defendant no. ~ 2.0n 14.07.2011 in MB no. 009460 at page no. 85. The plaintiff submitted a letter dated 28.09.2011 in the office of defendant M/s Gaur Constructions VS Delhi Development Authority 'ame RN enna RUNNIN TELL T LNT TLS, LILLE LCC LOT TTTTTIIAOT NN, tts eee maTTANDDNSOSssSbSScCNN Page 3 Vo no. 2 requesting to take over the completed site and surplus material within three days and to finalise the contract for giving the arrears of claims. The said letter was issued after compliance of all the directions given in the completion certificate. The release of security amount was also demanded but no reply was given. However, the surplus material was taken and the possession of the completed building was also taken without giving nothing in writing. Another letter dated 14.12.2011 was submitted requesting for finalisation of the bill and release of dues to which areply dated 26.12.2011 was sent by the defendant no. 2, thereby, pointing out certain defects in order to counter the claim of the plaintiff. Plaintiff gave a reply of this letter to the defendant company through a letter dated | 04.01.20 12. Again, a letter dated 17.03.2012 was sent by the tiff to the defendant no. 2 requesting to provide the copy the agreement and third running bill and that again on
-- 09.04.2012. Defendant no. 2 had written a letter dated 02.04.2012 to the plaintiff for acceptance of bill. Plaintiff sent a reply to this letter on 11.04.2012 making a request to give a M/s Gaur Constructions VS Delhi Development Authority aA NAAT TTT CTO OCC EL AA ALALLA " Page 4 he copy of third and final bill and the record entry and agreement in order to verify the same. Instead of supplying copy, defendant no. 2 again sent a letter dated 02.05.2012 for acceptance of the final bill to which a reply dated 03.05.2012 and 09.05.2012 were given by the plaintiff. Plaintiff also made allegation about the illegal acts of A-E. Tej Ram Bhadana and raised objection about the wrong entry in the measurement book and less payment of the items. Plaintiff has written another letter dated 08.06.2012 to defendant no. 2. Defendant no. 2 wrote a letter dated 02.07.2012 asking the plaintiff to
-- collect the documents. The plaintiff collected the documents and sent one representation on 12.07.2012 to defendant no. 2 and Superintendent Engineer stating that the copy of record y of. second and final bill was not given. Letter dated 012, 29.07.2012, 28.08.2012 were also sent but dant no. 2 prepared the final bill in August 2012 and illegally withheld amount in the running and final bill and only paid Rs.2,30,936/-. Plaintiff is entitled to the following amount.
M/s Gaur Constructions VS Delhi Development Authority Claim Particular Amount (in Rs) no.
i Withheld amount (a) F. Bill=67,163 in running and (b) 3' Running final bill Bill=35,240 Total=1,02,403 2 Disposal of Malba Rs. 1,46,479 3 Loss of Profit Rs. 31,834 4 Prolongation of Rs. 19,85,273 Contract 3 Security Amount Rs. 2,79,055 6 | Interest @18% on Rs, 33,255 final bill Rs.
2,30,936/- wef 14.10.11 to 03.08.2012 7 | Interest @ 18% on claim no. 1,2& 5 from due date from the period of pendelite and future.
Total Rs. 25,78,299/-
erefore, legal notice dated 01.10.2012 was issued by the f demanding the aforesaid amount to which a reply 10.2012 was sent by the defendant. The defendant also | ent another letter dated 27.09.2012 which was received _M/s Gaur Constructions VS Delhi Development Authority by the plaintiff on 05.10.2012 to which a reply dated 12.10.2012 was also sent.
. Defendant has not given the final bill because no objection certificate from the Electricity Department has not been submitted by the plaintiff. It is stated that plaintiff has submitted various letter claiming losses occurred due to hindrances and therefore, plaintiff is entitled to loss of profit and damages on account of prolongation of contract. It is stated ihat only Rs. 3519 was paid towards cost of removing malba from the site but the plaintiff has claimed Rs. 1,50,000/-. It is prayed that a decree for a sum of Rs.25,78,299/- was passed _ alongwith interest alongwith 18% per annum.
Vritten statement was filed jointly by the defendants wherein it is stated that plaintiff failed to ensure compliance of the ~ terms of the agreement and failed to secure the completion of the contract within time. It is further stated that the completion certificate. was granted subject to rectification of the work highlighted under the said certificate but they were not complied with and the non-compliance was brought to the knowledge of the plaintiff by the defendant on several occasions. Despite that plaintiff failed to make necessary rectification due to which defendant had to incur heavy losses for non-receipt of booking/allotment charges. It is further stated that no cause of action subsist against the defendant as all the payments which were due and payable were duly released in favour of the plaintiff vide cheque number 708584 dated 03.08.2012 for a sum of Rs. 2,30,936/-. It was stated that
- defendant paid 4% and the final bill and plaintiff accepted the said cheque without any demur and protest.
oe the defect liability period, but no rectification was done. Notice _of the plaintiff dated 14.12.2011 was duly replied by the defendant vide this order dated 26.12.2011. M/s Gaur Constructions VS Delhi Development Authority g. Vide letter dated 02.05.2012, defendant requested the plaintilt to meet the defendant for acceptance of the final bill but plaintiff avoided the same. Defendant had no option but to finalise the bill and to release the payment of the amount which were due and payable, after withholding the amount on account of rectification of work not done by the plaintiff. As regards, the surplus material, it is stated that defendant had taken the surplus material which was only steel and it has also taken the possession of the Community Hall. Only cement and steel were issued from the DDA Stores. The entire cement was consumed and hence, actual surplus material which remained was steel which was taken back and duly accounted for. It is denied that defendant failed to furnish copy of 3 and final bill. Defendant again sent a letter dated 02.07.2012 to the plaintiff to collect the documents and to submit the final bill which was not responded to. Defendant intimated the plaintiff about its obligation under the agreement to submit the detailed measurement of the work executed. But plaintiff failed to M/s Gaur Constructions VS Delhi Development Authority submit such measurement and the representative of pl aintitt who had attended the office for finalisation of the bill also refuted the measurements which were recorded by the herein as under:-
Field Staff of the defendant. Neither plaintiff nor its representatives attended the office of defendant for acccptance of the final bill. The defendant had categorically denied the claim raised by the plaintiff by giving specify reply to all these claims which were Claim | Particular Amount (in Rs.) Reply of the department HO.
Z Withheld (a) F. Bill Rs.| The claim is denied as amount int 67,163.00 | wrong. It is submitted that running and\| (b) 3 R Bill Rs. | that amount withheld is final bill 35,240.00 | primarily on account of (ce) Total:- failure to execute/rectify 102403.00 | the works adequately stated in the provisional completion certificate.
Withheld amount shall be released afier execution of works/rectification of defects as pointed out in the completion certificate which has already been acknowledged by the plaintiff.
Disposal of | Rs. 146479.00 | Malba The instant claims ts denied as wrong and false as bring an afterthought and baseless, It is submitted that the | _ M/s Gaur Constructions VS Delhi Development Authority ee RR APRA AAA RARER defendant had paid Rs.
3513.52 for the purposes of disposal of malba as an extra item no, 2/5 in 4" and final bill as per actual work done at site by the plaintiff.
Rs. 31834.00 The present claim is wrong and baseless and thus, denied. It is submitted that the losses, if any, as alleged is solely on account of failure on the part of the plaintiff to execute /rectify the work on several occasions. It is also pertinent to note that no claim as alleged is tenable in light of the undertaking furnished by the plaintiff vide letter dated 14.07.2011 wherein the plaintiff expressly undertook not to claim any amount on account of extension of time.
3 Loss of profit
4. _-| Prolongation of contract Rs, 19,835,273 The present claim is wrong and baseless and thus denied. It is pertinent to note that no claim as alleged is tenable in light of the undertaking furnished by the plaintiff vide letter dated 14.07.2011 wherein the plaintiff expressly undertook not to claim any amount on account of sanction of time.
Moreover, no details of this claim have been given.
There is no explanation as | M/s Gaur Constructions VS Delhi Development Authority Page 11 ;
to how this figure has been arrived at, The claim is a mere afterthought without any basis.
J. Security Amount Rs. 279055.00 The present claim is wrong and thus denied. If is submitted that the security amount is intended to ensue due completion and execution of contracted work in accordance with agreement, In the absence, proper completion/execution | in accordance with contractual terms, and in light of rectifications required under certificate dated 14.07.2011, any such claim for security amount is highly untenable. Security amount shall be released only after due execution of works, and rectification of defects as pointed out.
6 .-. | Interest 18% on | bill | 2,30,936 w.e.f 14.
to 3.8.12 @ final 00 10.11 Rs. 33,255.00 The present claim is denied for reasons adequately stated above. However, at the cost of repetition, it is submitted that the final bill was ready but the plaintiff failed /refused to attend the office of the defendant to accept the said bill. Also, the plaintiff further failed frefused to submit the measurement /bill as per clause 7 and 8 of the Agreement. Consequently, the defendant had no option but to pass the 4"
M/s Gaur Constructions V5 Delhi Development Authority and final bill for gross of Rs.31969.0 and net amount of Rs.230936.00 and therefore, the present claim is baseless, without substance and untenable and an afterthought. The claim of interest is also denied because no money can be stated to be due from the defendant to the plaintiff.
7. Interest © 18% on claiml, 2 & 5 from due date for the period of pendelite and future The said claim of the claimant is denied as being beyond the purview and scope of the agreed terms of the agreement. The claim is further denied in light of the undertaking furnished by the plaintiff vide letter dated 14.07.2011 as adequately stated in the preceding paragraphs, and also because no money can be stated to be due from the defendant to the plaintiff.
Total 23,78,299.00 Mis Gaur Constructions VS Dethi Development Authority Se on * 7 ea «sted that legal notice of plaintiff was duly replied to and 1 entitled to any claim. The defendant is not in y of the conditions under the contract. The ding /delay , if any, was wholly on account of failure of the plaintiff to secure the completion of the work in an We Page 13 agreed manner and thereafter, had failed to make necessary rectifications. It was duly intimated to the plaintiff that its progress of work was slow but plaintiff failed to bring necessary machinery i.e. hopper mixer, vibrator etc leading to unnecessary delay. It is further stated that the plaintiff had given an undertaking dated 14.07.2011 making it clear that it shall not claim any amount on account of sanction of extension of time granted, thereby rendering the claim of the plaintiff arbitrary and baseless. It is stated that suit of the plaintiff is liable to be dismissed.
10. Replication was not filed. Perusal of the record shows that copy of the replication has been supplied to the opposite party pite piving specific direction, the same was not filed.
ssion and denial of documents was conducted vide lated 03.01.2014 wherein plaintiff admitted some of the defendants admitted some documents of plaintll which are Ex. P1 to Ex, P34,
12. After completion of pleadings, follawing issues were framed vide order dated 98.02.2014.
{i} Whether the suit is without any cause of action? OPD.
(ii Whether the plaintiff fs entitled to suit amount? OPP
(iii) Whether the plaintiff is entitled to interest? If so, at what rate? OPP {iv) Relief.
13. During plaintiffs evidence, plaintiff examined Sh. Vikas Gaur as PW1 and during defendant's evidence, defendant examined Sh. O.P. Verma as DWI.
Written submissions were filed by both the parties. { have arguments on behalf of both the parties through
15. Issue no. Li
(i) Whether the suit is without any cause of action? OPD.
ARGUMENTS:-
16. Ld. Counsel for plaintiff has argued that the plaintiff had completed the work on 14.07.2011 and had issued the notice under section 53-B of Delhi Development Authority Act on 01.10.2012 and thereafter, filed the present suit in December 2011 claiming the legal dues which have not been paid by the defendant despite completing the work and therefore, plaintiff has cause of action against the defendant.
On the other hand, Ld counsel for defendants has argued that since amount due and payable to the plaintiff was _ already paid vide cheque number 708584 dated 03.08.2012 for M/s Gaur Constructions VS Delhi Development Authority
17. FINDINGS:-
The plaintiff has categorically stated that some payments have been illegally withheld by the defendant despite completion of work and issuance of completion certificate and even after expiry of detect liability period. The supporting documents have already been filed by the plaintiff therefore, 1t cannot be said that the suit is without any cause of action. This issue is decided in favour of plaintiff and against the defendants.
18. Issue no. 2 _ Whether the plaintiff is entitled to suit amount? OPP.
In. the suit, separate claims have been raised.
hey shall be taken separately ind claim no. 5 being inter-related are taken Development Authority _ Ld. Counsel for plaintiff has argued that he has claimed Rs.1,02,403/- as claim no. 1. He has argued that defendant has withheld Rs.67,163/- in final bill and Rs.35,240/- in the 3 RA Bill. He has argued that as per clause 8-A of the condition of contract Ex. PWI/D1, it is the duty of the defendant to record the measurement only after giving reasonable notice to the Contractor and the contractor has a right to raise objections within a week regarding the variation in measurement but no such letter was issued. He has also argued that as per clause no. 14 of the Condition of Contract, _if any work is not done by the plaintiff as per the agreed terms of the defendant, the defendant would notify the same to the plaintiff with direction to rectify the defect and in case of the _ failure of the plaintiff to rectify the same, the defendant shall same rectified through some other contractor and its recovered from the plaintiff or deducted from the ever, in the present case, the defendant has not a leged defects rectified, therefore, there can be no deduction on this account.
M/s Gaur r Constructions NS Delhi Development Authority ENS Ld counsel for defendant has refuted the claim of the plaintiff and has argued that the plaintiff did not rectify any of the defect and plaintiff was entitled to the withheld amount only after rectification of the defects pointed out in the completion certificate. She has further argued that the plaintiif had accepted the final bill without any protest and therefore, no amount can be claimed on this account after accepting final bill.
With respect to claim no. 5, it is argued by Ld. Counsel for plaintiff that period of maintenance is over and plaintiff is entitled to the said deposit amount whereas Ld counsel for defendant has argued that the plaintiff has not rectified the defects, and therefore, security amount cannot be released till the time defects are rectified.
. ae Ld. Counsel for the plaintiffin rebuttal has argued that ompletion certificate itself, it was clearly mentioned apparent defects have heen noticed". However, @ Engineer shall ensure that all the defects as pointed "by the OC (Quality Control) Cell during their inspection have "M/s Gaur Constructions VS Delhi Development Authority So , f Page 19 é been attended to or reduction in rate have been made wherever the wark cannot be redone but can be accepted at reduced rate"
20, He has further argued that nowhere in the entire pleadings of the defendant, it is mentioned that as to when the Quality Control inspection was done and defects were pointed out and who reetified the alleged defects. He has further argued that in he absence of any proof, plaintiff is entitled to get the security amount back.
21. FINDINGS:-
The plaintiff has claimed that the amount of Rs. 67,173 was _ withheld i in the final bill and Rs. 35,240/- in the third running || making it a total of Rs. 1,02,403/-. It was argued that giving the completion certificate, the armount was fully withheld and the plaintiff is entille d to the same.
'The defendant's w witness during his cross examination has ee ws Gaur Constructions Vs Delhi Development Authority admitted that amount of Rs. 67,163/- and Rs. 35,240/- was withheld by the defendant's department. Therefore, there is no controversy over the payment withheld. It is only to be seen whether plaintiff is entitled to this amount or not. The corresponding para of the written statement to the claim no. | and 5 of the plaintiff is very relevant. It is mentioned therein "amount withheld is primarily on account of failure to execute/rectify the works adequately stated in the provisional completion certificate". Therefore, this is the very reason for withholding the payment under cluim no. | by DDA. It is clearly mentioned in the completion certificate Ex, P-3 that work has been physically completed on 14.07.2011 and no defects are apparent and the Contractor has removed from the premises, scaffolding, wooden work, surplus material and "rubbish. Tt is further recorded therein that it is subject to en being recorded and the quality being checked by tent authority and further subject to the following be done at the time of allotment.
M/s Gaur Constructions VS Delhi Development Authority ws (1) Final coat of painting, plastic emulsion and water proofing, cement paint.
(2) Fixing of CP fitting, door fitting if any other required (3) Minor repair where required.
(4) Fixing of glass pans in window and doors.
22. In this completion certificate, it was clearly recorded that there were no apparent defects found by the defendant's officials. It is further mentioned that work has been completed satisfactorily and no apparent defect has been noted, however, Executive Engineer (E.E) shall ensure that all the defects have pointed out by the Quality Cell (Q.C.) during their inspection. It is pertinent to mention here that there is not even a single do ument on record which shows that after issuance of this letion certificate by the Superintending Engineer, any tion was carried out in the premises or any notice ection was served upon the plaintiff. This is not even ase of the defendant that any such inspection was carried M/s Gaur Constructions VS Delhi Development Authority out. On demanding the bill and the payment by the plaintiff vide its letter dated 28.09.2011 and 14.12.2011, defendant wrote a letter dated 26.12.2011 Ex. P-7 to the plaintiff and asked the plaintiff to rectify the following defects.
1. Final coat of painting work i.e. enemal and water proof paint etc. is to be done.
2. Replace the defective/substandard Chinaware with ISf and approved brand. a
3. Rectify, the defects as identified by the AE {C).
4, Slop of the terrace and toilets to be rectified.
5. Submit the NOC from the BSES or No dues certificate as a temporary electric connection was their during execution of work.
| 23. It is difficult to understand that in the completion certificate, clearly mentioned that there were no apparent defect was required. Similarly, in item no.3 of the same letter, it is M/s Gaur Constructions VS Delhi Development Authority mentioned "rectify the defect as identify by the A.EACY'. It is not mentioned anywhere that how A.E. (C) identified any defect and when".
24. The letter of the defendant Ex. P-7 was replied by the plaintiff vide its reply dated 04.01.2012 which is Ex. P-8. The receipt of the said letter was admitted by the defendant. This letter was written in Hindi and the English Translation of the said letter is already on record. This reply is relevant and therefore, is reproduced here-in-under for the purpose of convenience.
A-4/36, Sector-18 Rohini, Delhi-110089 Mob:- 9212583082 Fax:- 011-27892181 Email [email protected] 04.01.2012 ). Ge/CH/13 Engineer Name of work:- C/o Community hall cum reading room at Lajpat Nagar, Ph-IV .
Sir, With reference to your letter no. 2265- 67 of 26.12.11, | would like to inform you that the above said work has been completed on 44.07.2011 and completion certificate is recorded in your MB no. 009460 page 85 and thereafter on 15.07.2011 S.E./CCI after due inspection has declared the work completed as satisfactory. | have written letter dated 28.09.2011 addressed to your good-self thereby demanding my due payments which has not been replied till date thereafter, | have written second letter dated 14.12.2011 for release of my due payment then you surprisingly pointed out the defect after six months. Have you ever given me any defect list before or written any letter to that effect. When you have declared the work as 'satisfactory complete then why am I being harassed for 1 ayment your staff has been harassing me and Uctions VS Delhi Development Authority NE (2) (3) (4) (5) | had used the same brand of products which you demanded and if you had any objection to that you should have told me at that time only and how you declare the work as complete and have also made the payment for the same.
There were no defects at site when you took the possession of the building.
The flooring work was done almost 8 to 9 months back thereafter, you had done the measurement and also released the payment and till that time you were not aware about the slope and today you are saying that the slope is not correct and we have carried out the entire work at the instructions of the concerned J.E. and A.E. We have cleared all cur dues with BSES and has also submitted the final bill alongwith payment receipt.
| have already suffered losses because of the carelessness of the department which can be assessed from your records.
ou have till date not conducted the measurement f: my executed work and nor have you passed my xtra items inspite the work being complete why As per Section 29 CPWDE Work Manual 2007, the final bill has to be paid within three months of the completion which has not been done in this case and the department should conduct an enquiry to find out as to who is responsible for non payment of final bill.
You are requested to kindly provide me the copy of 3° RA Bill and copy of the agreement executed between the parties and the balance payment due with the department with 18% interest.
Thanking You Sd/-
(Vikas Gaur) 25, Perusal of the record shows that no reply to this letter was given by the defendant and none of the contents of the said reply were objected to the defendant. The sum and substance 1 reply dated 04.01.2012 is that there were no defect when on was taken and all the work was done under the official were used, how there can be any variation /discrepancy M/s Gaur Constructions VS Delhi Development Authority nanan relerred by the defendant. For the first time, in the reply to the legal notice, this letter dated 31.12.2011 has been disclased which indicates that this is a manufactured document and has been slipped in the file so at to improve its case by the defendant. No correspondence was made by the defendant asking the defendant to rectify the defect in terms of list given alongwith the letter dated 31.12.2011 after alleged issuance of the same. Therefore, this letter cannot be relied upon which is basis of the defence of the defendant.
27. Besides the abovesaid observations, it is seen that the clause 14 of the condition of the Contract provides the procedure in ~ ease some defect is found in the work executed by the 5 .. Contractor or it is found that work is done with imperfect and vorkmanship. The demand of rectifying the defects made within six months of the completion of the work ase the contractor fails to rectify the same, the Department/Engineer Incharge may get the defects rectified a from the other Contractor at the cost and expenses of the ~ Mjs Gaur Constructions VS Delhi Development Authority woe after such a long time. The contents of this reply dated 04.01.2012 have not been disputed anywhere.
26. The defendant in its written statement has also relied upon a letter dated 31.12.2011 which is Ex. DW1/3 calling upon the plaintiff to rectify the defects and this letter was accompanied with the list of defects. During cross examination of the defendant's witness, he was asked to bring the dispatch register showing that this letter was sent to the plaintiff but the witness failed to bring the register. The photocopy of the dispatch register and postal receipts have been filed but none of the originals were produced. The plaintiff has specifically denied : having received such letter. The defendant failed to prove that : etter was sent by the defendant to the plaintiff vide diary 9 on 02.01.2012. It is also worthwhile to mention this letter is of 31.12.2011, however, int none of the ations: between the plaintiff and defendant from
01. 2012 til 15. 10. 2012 (when the defendant had sent the | Ot oe "reply 1 to the legal notice of the plaintiff), this letter was ever M/s Gaur Constructions V5 Delhi Development Authority Contractor however, in this case no such plea has been raised by the defendant, During the cross examination of the DWI, he has clearly stated that no record of statement of expenses has been filed on record to show that the defects were ever rectified by the defendant. In fact, he has clearly mentioned that as per the record, the defect have not been rectified till May 2017. It is pertinent to mention here that the defect liability period is only six months which was upto 14.01.2012, therefore, the plaintiff is entitled to claim this amount of Rs.
1,02,403/- from the defendant which was withheld on account of non-rectification of defects.
28. In view of the discussions made above, since defect liability eriod is already over, the defendant cannot retain the security is also liable to return the same to the plaintiff.
and 5 are allowed.
a9, Claim no.2 M/s Gaur Constructions V Ee. Ss S Delhi Development Authority.
SRR aR aE eee ms ARGUMENTS:-
Ld. Counsel for the plaintiff has argued that he has filed the present suit for recovery for claiming different amount under the different heads. He has argued that he has claimed the amount of Rs. 1,46,479/- on account of disposal of the malba, out of which Rs.3519/- had only been paid against the claim of Rs. 1,50,000/- of the plaintiff. The plaintiff had claimed this amount vide its letter dated 09.04.2012 and has also informed that the A.E. of defendant department namely Sh. Tej Ram Bhadana had deliberately reduced the quantity of the items and amount with ulterior motive. The plaintiff has also requested for a copy of agreement and previous bill and
- _ record entries. These facts were reiterated in the letter dated | | 09.05.2012 but of no avail. The defendant has not replied to these two letters and also did not inform about any action taken . On the other hand, Ld, counsel for defendant has "argued that the work done towards disposal of the malba has
-.. M/s Gaur Constructions VS Delhi Development Authority , teeny already been paid for and no extra work has been done by the plaintiff and therefore, plaintiff is not entitled to any such amount.
FINDINGS:-
30. Plaintiff had admittedly completed the work on 14.07.201 I and the completion certificate was issued in this regard on 15.07.2011 which is Ex. P3 as well as Ex. D1. Both parties admitted the said documents. The Superintendent Engineer (Civil) Circle, DDA had also recorded the completion, vide document Ex. P4 which is exhibited as Ex. D2. The relevant _ extract of which is concerning this claim is reproduced here-
work was being executed all scaffolding, wood work, surplus materials and rubbish M/s Gaur Constructions VS Delhi Development Authority | : s Page 32 and has cleared the dirt from all floors, windows, walls, doors and other part of site in or upon or about which the work has to the executed or of which he had possession for the purpose of execution x XXXXXX.
31. From the careful reading of the said extract, it is clear that the Contractor i.e. plaintiff had removed the surplus material from the site before the completion on 14.07.2011.
32. From the perusal of the written statement of the defendant, 'it is found that the defendant had made payment of Rs.3519/-
- towards. the disposal of the surplus material whereas the iff d claimed Rs. 1,50,000/- towards the same. It would ual to imagine or observe that averment of a that a meagre amount of Rs. 3519/- only was spent | he plaintiff for removing the surplus material from the site 'and excavating a site for construction of a community hall, ~ M/s Gaur Constructions VS Delhi Development Authority does not inspire confidence. The plaintiff and the defendant had filed several letters on record which has been written by them to each other to show the demands made by the plaintiff and the response of defendant to such demands. The letter dated 28.09.2011 (Ex. P5) written by the plaintiff to the defendant shows that he had demanded the final bill and have specifically stated that he has not received the money for the excavation and disposal of surplus material and had demanded the amount on account of the same. There is no reply to the said letter. Another letter Ex. P6 dated 14.12.2011 was written by the plaintiff to the defendant asking for the finalization of the bill and the balance payment. This letter was responded to by the defendant vide its letter dated 26.12.2011 Ex. P-7 which has already been reproduced in the preceding paragraphs.
letter shows that the defendant had not replied to he demands raised by the plaintiff on account of the disposal of the malba. In the letter dated 28.09.2011, demand was made
- M/s Gaur Constructions V5 Delhi Development Authority Rt Pg ae 8 De ete la eg hl aa SDI Ly tve eet Sly inate to provide final bill which is repeated in the letter dated 14.12.2011. The plaintiff had claimed the amount of Rs. 1,50,000/- towards disposal of the malba in its letter dated 09.05.2012 which is Ex. P-16 however, the record shows that no reply to the said letter has been given.
34, In the said letter, plaintiff has clearly mentioned that payment of Rs. 3519/- towards disposal of the malba/surplus material is wrong and he had made allegation against the Assistant Engineer (A.E.) concerned at that point of time. It has already come in the cross examination of the DW1 that no action was ever taken against the concerned A.E. Tejram Bhadana despite the complaints made by the plaintiff against him. The grievance of the plaintiff was never addressed even bs - denying the allegations made by plaintiff against the said said letter Ex. P16, it is specifically mentioned that it Engineer (A.E.) was furnishing wrong information "and. this letter was addressed to Executive Engineer (E.E.) SS S.E.D-8, DDA. In these circumstances, the DDA could do the M/s Gaur Constructions VS Dethi Development Authority x 4 Page 35 least by providing the record entries to the plaintiff so that he could verify the same. It is nowhere stated by defendant that the record entries were ever supplied at the asking of plaintiff. In these circumstances, when letters of contemporary period are on record, there is no reason to disbelieve the claim no, 2 of the plaintiff which is on account of non-reimbursement of the amount sought towards disposal of the surplus. Hence, plaintiff is entitled to claim no. 2 for a sum of Rs.1,46,479.
35, Claim no. 3:-
ARGUMENTS:-
Ld counsel for plaintiff has argued that the claim no. 3 is on account of loss of profit. The plaintiff has suffered due to lapses of the defendant. The plaintiff has relied upon ""DSIIDC Vs. Rama Const. Co.' SLP n0.35154/2014 (3) 116 (Delhi) DB".
'the other hand, Ld counsel for defendant has rat plaintiff had given an undertaking vide its letter ue dated 14.07.2011 that he will not be claiming any amount on
- M/s Gaur Constructions VS Delhi Development Authority SORRENTO cn atte cream cone cee NN ta ae ARRAN wy account of extension of time and afier this undertaking, no loss of profit can be claimed. She has further argued that even otherwise, it is not a case where some work was not got executed by the DDA and the work done is within the prescribed deviation limits therefore, no amount towards loss of profit is payable.
FINDINGS:-
36. The plaintiff has claimed loss of profit of Rs. 31,834/-
and has relied upon "DSIIDC Vs. Rama Const. Co.' SLP no.35154/2014 (3) Arb. LR 116 (Delhi) DB" in support of his claim for loss of profit. The perusal of the record show that this judgment is not applicable. In this judgment, the loss of
- profit has been sought for the unexecuted amount of the con ract which i is not the case herein. In the present case, work mpleted and the completion certificate was granted and r fore, there is no question for payment of loss of profit for "unexecuted amount of contract, therefore, this judgment is not M/s Gaur Constructions VS Delhi Development Authority applicable and the claim of plaintiff for loss of profit is not at all tenable and hence, denied.
37. Claim no. 4:-
ARGUMENTS:-
Ld. Counsel for plaintiff has argued that he has also claimed Rs. 19,85,273/- towards prolongation of contract which occurred due to the lapse of the defendant, therefore, this amount be also granted. He has relied upon "DDA Vs Jagat Ram Trehan & Sons MCDermott International INC Vs Burn Standard Co, Ltd & Ors".
On the other hand, Ld counsel for defendant has _ argued that in view of undertaking dated 14.07.2011, no such vis payable and even otherwise the plaintiff has not ecord any evidence to prove this claim.
Ld. Counsel for plaintiff in rebuttal has argued : ndertaking given by the plaintiff dated 14.07.2011 was not freely given, so it cannot be considered. He has relied upon M/s Gaur Constructions VS Delhi Development Authority "R.L.Kalathia & co. Vs State of Gujarat, AIR 2011 (SC) 754", in support of his averments.
38. FINDINGS:-
| The plaintiff has claimed damages on account of prolongation of contract stating that he had suffered damages due to delay caused by the defendant. The defence raised by the counsel for the defendant is to be dealt with first before going into the merits as to whether the plaintiff is entitled to damages on account of prolongation of contract. The basic defence is that since the plaintiff has given undertaking dated 14.07.2011 to the defendant which is Ex. D24 wherein he has undertaken not to claim any amount on account of extension of time given to the plaintiff, now it is debarred from claiming yunt on account of damages for prolongation of far as, this defence is concerned, the judgment ia & co. Vs State of Gujarat, AIR 2011 (SC) uarely applicable to the case in hand wherein the
---Hon'ble Supreme Court observed that "Mf Gaur Constructions VS Delhi Development Authority "6. Before going into the factual metrix on this aspect, it is useful to refer the decisions of this Court relied on by Mr. Altaf Ahmed. In the case of Chairman and MD, NTPC Ltd. V. Reshmi Constructions, Builders and Contractors MANU/SE/0003/2004: 2 SCC 663, which relates to termination of a contract one of the questions that arose for consideration was "Whether after the contract comes to an end by completion of the contract work and acceptance of the final bill in full and final satisfaction and after _ issuance a "No Due Certificate' by the contractor, can any party to the contract e any dispute for reference to itration? While answering the said issue this Court held:
- M/s Gaur Constructions VS Delhi Development Authority iY Page 40 unless a "No Demand Certificate" is signed. Each case, therefore, is required to be considered on its own facts.
28. Further, necessitas non habet legem is an age old maxim which means necessity knows no law. A person may sometimes have to succumb to the pressure of the other party to the bargain who is in a stronger position.
39. The Hon'ble Supreme Court had appreciated the vulnerable position of the Contractor wherein he had no option but to agree to the demand of the Government Department and therefore, this undertaking Ex. D24 is of no consequence for determining whether the plaintiff is entitled to damages on 'prolongation of contract or not.
oe | M/s Gaur Constructions VS Delhi Development Authority ~ 7 ee es 0
27. Even when rights and "obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and thus, the arbitration agreement can be invoked. Although, it may not be strictly in place but we cannot hut our eyes to the ground reality that in a case where a contractor had made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include S discharge of his liability towards the banks, cial institutions and other persons. In situation, the public sector rtakings would have an upper hand.
- They would not ordinary release the money
- M/s Gaur Constructions VS Delhi Development Authority a
- Pape 41 5 ve g dQ. The legal proposition on assessing and awarding damages have to be looked into, besides ascertaining as to who was responsible for causing delay in completion of contract.
41. It would be expedient to fix as to who was responsible for delay before discussion on damages.
42, The plaintiff has filed several letters on record to show the hindrances faced by plaintiff and due to which work was delayed. It is pertinent to mention here that date of start of contract was 03.08.2009 and date of completion of contract | was 02.03.2010. The plaintiff has filed a letter dated 25 08.2009 Ex, P27 asking for the drawings from the fendant and stating that it could not work without drawings arly stated there is jungle and heap of malba on the site ch is a hindrance and may be noted. It is also stated that abour is sitting idle and plaintiff has suffered losses. No reply ue ~ to this letter was ever given. Thereafier, there is a letter dated M/s Gaur Constructions VS Dalhi Development Authorit 09.12.2009 which is Ex. P28 which is for non-availability of design work. It is also stated that till this date work has not started, it is reiterated that his labour is sitting idle and plaintiff is incurring losses. Thereafter, there is another letter dated 28.06.2010 which is Ex. P-29 wherein it is stated that since start of work, plaintiff is facing many problems and now the work is stopped due to electricity work and plaintiff is suffering loss of Rs. 8,000/- per day and it is paying shuttering rent regularly. In this regard, another letter dated 23.05 .2010 is also referred to. similarly, again the letter dated 07.07.2010 Ex P-30 and 27. 10.2010 Ex, P31, 09.08.2010 Ex. P32, 31.01.2011 Ex. P33 have been filed on record setting out the hindrances. | None of | these letters have been responded by the defendant.
he letters are of contemporary period and there is no reason cerlain observations have been made by the Executive Engineer which are reproduced herein under, East amount & 57,52,986=00 Now. Construction of Tender amount & 55,81,090=00 Community Hall cum reading room in Pit-9, Lajpat Nagar-Vi Work start-03.08.2009 APPLICATION FOR EXTENSION OF TIME-PART-2 To be filled in by the Sub-Divisional Officer
1. Date of receipt of application form Contractor For the work of in the Sub --Division Office.
2. Acknowledgment issued by 5.0.0 vide his No. Date AgNo2/EE/SER-8/DDA/2009-10 3, Recommendation of $.$.0 as ta whether reason given by the contractor and what extension, if any is 'recommendation by him, if he does not
-recommended the extension reasons for rejection uid be given.
said work was awarded with stipulated date of
-3,8.2009, but due to various hindrances given in e table below the work actually completed on 44.07.2011. The structural days made available 45.02.2010 etc. the total period of justified hindrance js Gaur Constructions VS Delhi Development Authority eee roe aan aan sa Sea aea eee comes out to 517 etc. whereas the required hindrance upto 14.07.11 i.e. actual date of completion in 499 days, since the justified hindrances is more than the actual period of hindrances the EOT is recommended for approval without levy of completion pl. Sd/-14/7/11 Dated Signature of Divisional Officer Sd/- 4/7/11 Stamp of Executive Engineer
44. In the cross examination of DWI, he admitted that delay occurred due to the lapse of the defendant which strengthens, the case of the plaintiff. Besides this, it is also to be seen that extension was granted without any levy of compensation as provided in clause 2 of the condition of contract, therefore, it 'is crystal clear that delay occurred in completion of the . contract due to the lapse on the part of the defendant and not plaintiff.
ow coming to the damages part. In the judgment 'Punj Lloyd Ltd V. Gail India Ltd. CS (OS) no. 1605/2007 M/s Gaur Constructions VS Delhi Development Authority a a ~ Page 46 (28.04.2016), 2016 DRJ 521", the Hon'ble High Court of Delhi has observed that "The law with respect to grant of monetary damages in cases of breach of contract is contained in Section 73 and 74 of the Indian Contract Act, 1872. While Section 73 deals with grant of unliquidated of damages, Section 74 deals with grant of liquidated damages. In cases failing both under Section 73 or Section 74, two aspects are mandatory for the plaintiff for succeeding in claiming damages. The first aspect is that the "defendant must be found to be guilty of breach/breaches of the contract and the cond aspect is that the monetary loss has been caused to the plaintiff on account of | -breach/breaches by the defendant of the ee contract. The language of Section 73 of the ~ M/s Gaur Constructions VS Dethi Development Authority y a Page 47 a Indian Contract Act itself makes it clear that this provision is applicable when loss is suffered by the plaintiff and though a similar expression is not found in Section 74, but is now settled law that Section 74 also will come into play only if losses are actually caused vide Fateh Chand VS Balkishan Dass, AIR 1963 SC 1405. The difference between the grant of damages under Sections 73 and 74 of the Indian Contract Act besides Section 73 dealing with unliquidated damages and Section 74 dealing with the liquidated damages, is that Section 74 provides the upper limit of damages which can be granted ct to the condition that the liquidated ; specified are not in the nature of M/s Gaur Constructions VS Delhi Development Authority i Pages
46. In the judgment of ONGC Ltd Vs. Saw Pipes Ltd (2003) 5 SCC 705, the scope of Section 73 & 74 of Contract Act was discussed and it was held:-
a : : . . ) From the aforesaid discussions, it ean be held that:
(i) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the party claiming damages I's entitled to the same.
(2) If the terms are clear and unambiguous stipulating the Iiquidated damages in case of the breach of the contract unless 1t 1s held that such estimate of damages/compensation 5 unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what fs provided in Section #3 of the Contract Act.
QD). Section 74 Is to be read along with Section 3 and, therefore, In every case of breach of ontract, the person aggrieved by the breach Is required to prove actual Joss or damage suffered by him before he can claim a decree.
The court is competent to award reasonable compensation in ease of breach even If no actual M/s Gaur Constructions VS Delhi Development Authority Page 49 damage Is proved to have been suffered in consequence of the breach of a contract.
(4) In some contracts, it would be impossible for the court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, the court can award the same if ft Is genuine pre- estimate hy the parties as the measure of reasonable compensation, ~
47. With this background of law, let us proceed to apply it to the facts of this case. Plaintiff has claimed amount of
-Rs.19,85,273 as damages under this claim. Ld. Counsel for plaintiff has relied upon DDA Vs Jagat Ram Trehan & Sons and MCDermott International INC Vs Burn Standard Co.
Ltd & Ors".
ae In Jagat Ram Trehan (supra), the damages for the _ prolongation of the contract were granted for the overhead S by the Ld. Arbitrator. In the very same judgment, the o recent judgment of the Division Bench of Hon' ble High Court of a | Delhi ie, DDA VS J.S.Chaudhary, pronounced on M/s Gaur Constructions VS Delhi Development Authority ia 30.01.2011, REA (OS) 55/2011 was referred and the observations made therein are under :-
36. Loss of a Contractor's profit as a head of damage in a terminated contract requires to be distinguished from a quite different claim which contractors may be able to establish in cases where an owner's breach can be shown to have had the effect of delaying completion by the contractor. In a delayed contract the basis of the contractor's loss is the postponement of the time when the contractor's organization, viewed as a profit-
--. earning entity, is free to move on and earn sewhere in the market, the combined profit ecessary contribution to fixed overheads / hich it is reasonably capable. A ruction contractor's enterprise as a M/s Gaur Constructions VS Delhi Development Authority RAAT ARRRI TN NEED E NE NEN Det Cena eens renee whole will incur a range of off-site expenditure which by its nature will not vary or be affected by the delay in performance of an individual contract, or the degree to which that contract may have been delayed, as a result of owner's breach of contract. This class of expenditure is commonly referred as "fixed overhead" expenses. A contractor pricing an individual project, therefore, after providing for the estimated total "prime-cost" of all kinds which will be required to carry out the contract itself must then additionally estimate for a combined operating margin hich will not only produce his required net or " profit, but will also serve to make an ppropriate contribution, together with that as from his other projects, to the fixed overheads "M/s Gaur Constructions VS Delhi Development Authority of the enterprise as a whole. In case of a delayed contract, where the concern is to ascertain the "profit" which the contractor might have expected to earn elsewhere in the market on other contracts, it is this necessary combined operating margin of profit and fixed overhead, which is appropriate market conditions, the contractor's enterprise will have lost as a consequence of the period of owner-caused delay on the individual project, and to which he will be entitled as damages. However, in this regards, a distinction needs to be drawn, on the one hand, smail contractors: having few (and_ indeed £ times no) overheads other than those of bsite" itself , and on the other, large IC ors will centralized offices, transport systems, yards and depots; and while again some main contractors may operate as little more than employers of sub contractors, with virtually no overheads of their own.
37. Delay in performance of contract due to owner's breach may also, of course, increase the contractor's prime costs or his site overhead costs. The contractor's various items of prime-cost for a project will themselves break dawn into some or all of the four prime-cost components of materials, | plant labour and salaries (including 2 supervisory and other staff) and sub contracts. Some items of cost will be obviously referable to individual parts of the contracted cost, which as the prime-cost elements of plant, labour and materials or sub contracts for constructed concrete or brickwork, and so relatively easily applied to any additional permanent work directly necessitated by a ; breach of contract. Others, however, usually referred to as "site overheads", may not be conveniently referable ta any particular part of the permanent work (for example, supervision, access roads, site huts or tower cranes etc), but will themselves contain some or all of the four elements.
38. From the aforesaid, it is clear that in case of a delayed contract caused due to owner's breach the contractor can claim damages under following heads:- (1) loss of profits; (ii) Contribution ta fixed overheads
- (iii) increase in prime cost which includes components of materials, plant, labour and M/s Gaur Constructions VS Delhi Development Authority re Sen salaries and sub-contracts and (iv) increase in off-site and on-site overheads caused due to delay in performance of contract.
The careful reading of these paragraphs would show that the damages for the delayed contract can be granted under the aforesaid four heads. It is clarified that the head no. 1 Le.
: - loss of profit is granted in case of a terminated contract and i.e. the reason why claim no. 3 has already been denied.
48. In order to assess whether claim no. 4 fits into other three heads enumerated in Hudson Formula, the evidence led in this case has to be looked into. We have already discussed the several correspondence done by plaintiff on record to see that £ ssh was on the part of defendant.
RRR RRR RRR RR RRR RE SERRA SAT NER filed to show that labour was hired. Even otherwise, when the structural damages were not received by DDA, it does not seem to be probable that plaintiff would have hired the labour and let it sit idle. This situation arises when the work is in progress and due to some hindrance, it suddenly stops, leaving the machinery and labour to remain idle.
50. As far as fixed overheads are concerned, there is neither any pleading nor evidence to show that any such overhead expenses were incurred either by hiring the equipment's or the equipment's owned by plaintiff were put there and they were lying idle. It is also not pleaded that they could have been used at any other ongoing site of plaintiff which resulted in losses.
1, letters Ex. P29 dated 28.06.2010 , Ex. P30, Ex. P31, paying shuttering rent regularly. Though, no further evidence has been led in this regard but at the same time, these letters were neither responded to nor the receipt of these letters have been denied. Therefore, plaintiff is entitled to damages on this account which falls under head 4 of Hudson Formula as discussed above as at that time, it can be contemplated that the labour and machinery of plaintiff was left to remain idle.
52. Plaintiff has claimed amount of Rs.19,85,273/- as damages under this claim. The work was awarded for a sum of Rs.55,81,090/-, out of which, odd amount of Rs.20,00,000/- has been claimed as compensation which is equal to approximately 35% of the amount of the total contract. In any manner whatsoever, this amount cannot be said to be a
- reasonable amount towards compensation for prolongation of . contract.
hi Development Authority M/s Gaur Constructions VS Del ra
3. Therefore, in my considered opinion, 5% of the contractual amount which comes to Rs.2.8 lacs would meet the ends of justice.
54, The claims under issue no. 2 are awarded as under:-
S.No | Claims Amount granted 1 Withheld amount in/ Rs. 1,02,403/-
running and final bill 2 Disposal of malba Rs. 1,46,479/-
3 Loss of profit Denied 4 Prolongation of | Rs. 2.8 lacs contract 5 Security amount Rs, 2,79,055/-
Total Rs, 8,07,937/-
Issue no. 2 is decided accordingly.
Issue no. 3:-
Whether the plaintiff is entitled to interest? If
--. go, at what rate? OPP M/s Gaur Canstructions VS Delhi Development Authority ARGUMENTS:-
Ld counsel for the plaintiff has argued that since the payment has not been made on time by the defendant, plaintiff is not entitled to interest @ 18% on the delayed payment of final bill which comes to Rs. 33,255/- and is further entitled to pendelite and future interest. In this regard, he has relied upon "M/s Hyder Consulting (UK) Lid Vs. Governor, State of Orissa, AIR 2015 SC 856".
Ld. Counsel for defendant, on the other hand has argued that claim of plaintiff is beyond the scope of the agreement and since, no amount is payable, there is no question of payment of interest. Suit of the plaintiff is liable to be dismissed.
FINDINGS:-
Plaintiff is entitled to simple interest @ 12% p.a. on : the aforesaid amount of Rs. 8,07,937/-as decided in issue no.
> wef, 01.01.2012 till 31.12.2019. Keeping in view the M/s Gaur Constructions VS Delhi Development Authority nee pandemic (COVID 19) simple interest @ 7 % p.a. is granted from 01.01.2020 till realisation.
56. Relief:-
Suit of the plaintiff is decreed against defendant no.1/DDA for a sum of Rs. 8,07,937/- alongwith simple interest @ 12% p.a. w.e.f. 01.01.2012 till 31.12.2019 and simple interest @ 7 % p.a. is granted from 01.01.2020 till realisation. Parties are left to bear their own costs.
57. Decree sheet be prepared. File be consigned to record room after due compliance.
Announced through CISCO Webex on 10.07.2020 ) = (VANDANA JAIN) ADJ-07/SE/SAKET COURTS/ NEW DELHI/10.07.2020 © M/s Gaur Constructions VS Dethi Development Authority 'Aa OLE SSLLELE TTL ELEN SAAR ISSO TTT RITE ICONIC . , Page 61