Delhi District Court
Rajesh Kumar Gupta Proprietor Of M/S ... vs Municipal Corporation Of Delhithrough ... on 28 March, 2025
IN THE COURT OF SH MUKESH KUMAR GUPTA
DISTRICT JUDGE(COMMERCIAL)-07(CENTRAL)
TIS HAZARI COURTS: DELHI
CS (Comm.) No. 1125/2023
CNR No. DLCT010095342023
DLCT010095342023
SH. RAJESH KUMAR GUPTA ,
Proprietor of M/s Balaji & Associates,
D-11/51, Sector-8, Rohini,
Delhi-110085
Phone No.9311040159, 9310737272
Email: [email protected]
......Plaintiff.
Vs
1. MUNICIPAL CORPORATION OF DELHI .
Through: its Commissioner,
4th Floor, Civic Centre, Minto Road,
New Delhi-110001.
2. The Executive Engineer (M-II)KPZ,
Municipal Corporation of Delhi,
Shakti Nagar Extn.,
New Delhi-110052.
...... Defendants.
SUIT FOR RECOVERY OF RS. 8,40,255/-
Date of institution of suit : 17.07.2023
First Date before this court : 01.04.2024
Digitally signed Date of hearing of final argument : 25.03.2025
MUKESH by MUKESH
KUMAR GUPTA
KUMAR Date: Date of Judgment : 28.03.2025
GUPTA 2025.03.28
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CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 1 of 23
Appearance(s) : Mr. Mohit Singhal, Adv. Ld. Counsel for plaintiff.
Shri Vijesh Vohra alongwith Shri Sahil Aeron Advs.,
Ld. Counsels for the defendant.
JUDGMENT
(A) PRELUDE:
1. By way of present judgment, I shall conscientiously adjudicate upon suit of the plaintiff for Recovery of Rs. 8,40,255/- alongwith interest @ 12% per annum w.e.f. 01.06.2023 till its realisation against the defendants. The plaintiff has also prayed for costs of the suit.
(B) CASE OF THE PLAINTIFF:-
2. Eschewing prolix reference to the pleadings crystallizing the same the plaintiff has averred in the plaint that:-
2.1) The plaintiff is the proprietor of proprietorship firm namely M/s Balaji & Associates which is duly enrolled as a Municipal Contractor with the defendant no.1 corporation. The plaintiff firm has been carrying on different works for the Municipal Corporation of Delhi since long and is engaged in the civil nature of work for the defendant no.1 corporation.
2.2) Plaintiff was awarded work order No. 495 dated 05.03.2019 for the execution of the work as mentioned in the work orders No. EE(M-
II)KPZ/SYS/2018-2019/495 dated 05.03.2019 ( in short "WO-495") by the defendant no.1.The plaintiff has also deposited the security/earnest money and entered into an agreement with the defendant no.1 as a pre- Digitally signed condition of the award. The work was completed by the plaintiff within MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
2025.03.28 GUPTA 17:49:11 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 2 of 23 the stipulated period to the satisfaction of Engineer-in-Charge/Defendant No.2.
2.3) The defendant no.2 completed the final measurement of the aforesaid works and bills pertaining to the aforesaid work were passed and recorded in the measurement books. The defendant no.2 passed the bill in respect of WO 495 of Rs.5,32,699/- on 26.12.2019. The plaintiff has also deposited the security/earnest money of Rs.62,545/- towards work order No.495.
2.4) Despite passing of the bill, the defendants have neither released the payment nor informed the plaintiff and the amounts were withheld for which the plaintiff has made several request to the defendants for release of the amount of passed bill as also for the security amount but to no avail. According to the clause 9 of the General Terms and conditions of the agreement, the defendants are liable to release the same within a period of 6/9 months. The plaintiff, considering the transaction being the nature of commercial transaction, has claimed an interest of Rs.2,45,011/- @ 12% per annum as simple interest upon the principal amount of Rs.5,95,244/- from the date of passing of the bill i.e. from 26.12.2019 till 31.05.2023 for 1252 days which the defendant has not paid to the plaintiff.
2.5) As per the plaintiff, the defendants have tried to evade the payment on one pretext or the other compelling the plaintiff to issue a legal notice dated 02.03.2021 u/s 477/478 of the MCD Act, calling upon the defendants to pay the suit amount with interest @ 12% per annum, Digitally signed by MUKESH which was also not replied to by the defendants.
MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:49:19 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 3 of 23 2.6) The plaintiff has claimed that the cause of action arose on the date when the defendants awarded the works order to the plaintiff on 05.03.2019, when bill in respect of WO No.495 dated 05.03.2019 was passed, the date legal notice dated 02.03.2021 was issued which was not responded to and finally the steps for pre-institution mediation were taken under Section 12-A of Commercial Courts Act, 2015.
2.7) Hence the present suit for recovery of Rs.8,40,255/-
alongwith interests and costs.
(C) DEFENDANT'S RESPONSE:-
3. On receipt of summons for settlement of issues, the defendant though appeared regularly before the court through counsel but has failed to file its Written Statement within the statutory period resulting into the right to file the same being forfeited vide order dated 11.01.2024 of the Ld. Predecessor of this court. The defendants, however, duly cross- examined the plaintiff's witness to the extent of the right available to it under the law.
(D) CRYTALIZING THE DISPUTE
4. Since the defendants have defended the suit without filing a Written Statement the following notional issues in terms of order XIV Rule 1 (4) and Order XIV Rule 2 (2) were framed:
ISSUES:
(1) Whether the plaintiff is entitled to any interest on the principal amount of Rs,.5,32, 679/- which the Digitally signed by MUKESH plaintiff has already received on 12.07.2024? OPP MUKESH KUMAR KUMAR GUPTA GUPTA Date:
2025.03.28 17:49:36 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 4 of 23 (2) Whether the plaintiff is entitled to recovery of security deposit of Rs.62,545/- against the defendant as claimed in the suit ? OPP (3) Whether the plaintiff is entitled to any interest on such amount, if so, at what rate and for what period? OPP (4) Relief.
(E) EVIDENCE LED.
5. Plaintiff, in support of his case, got examined himself as PW1 and Shri Sanjay Kumar, AE (Civil), EEM-II, KPZ, MCD as PW2. PW1, the plaintiff has himself reiterated the contents of the plaint on oath in his affidavit Ex.PW1/A. He got exhibited the plaint of the case as Ex.PW1/B, Copy of the work order No. 495 dated 05.03.2019 as Ex.
PW1/1, copy of the passed bill Ex.PW1/2, copy of Legal Notice dated 02.03.2021 with postal proofs as Ex.PW1/3 (colly), copy of Postal Receipts as Ex.PW1/4 (colly), Non-Starter Report as Ex.PW1/5, copy of Pre-institution Mediation Application As Ex.PW1/6. He has further been deposed that the suit is correct and the defendant is liable to pay the suit amount alongwith interest and costs.
6. During a detailed cross-examination, Ld. Counsel for defendants has tried to puncture the testimony of PW1 on the point of existence of any agreement regarding interest @ 12% per annum between him and the defendant no.1, filing of labour clearance certificate and other aspects. PW1 during cross-examination has admitted that there is no Digitally signed MUKESH agreement between the plaintiff and the defendant regarding 12% by MUKESH KUMAR GUPTA KUMAR Date:
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voluntarily adding that the same is on the basis of the general loan rate obtained from banking institution. He has deposed that he has not filed any document in support of the aforesaid contention and that he has suffered comprehensive losses in terms of interest/labour charges, non- availability liquidated capital resulting into obstruction in new works etc. He has further deposed that he is still doing the work of the defendant no.1 despite non-payment of the suit amount by the MCD and he shall continue to do so as the same is a matter of his livelihood. He has further deposed that he did not maintain any labour register but voluntarily added that the same is not required. He has admitted that the bills to MCD were required to submit in letter head. He has further deposed the bill was provided to the concerned JE who has not given any receiving for the same and the same has been given to the concerned officials as and when the same becomes due almost on regular basis.
7. PW2 Shri Sanjay Kumar, AE(Civil) EEM-II, KPZ, MCD, who is a summoned witness got exhibited the documents on record viz. First passed bill as Ex.PW2/1, 2nd passed bill as Ex.PW2/2, Measurement Book as Ex.PW2/3, Work Order as Ex.PW2/4, Agreement of work as Ex.PW2/5 and details of payments made by the MCD as Ex.PW2/6.
8. The witness was cross-examined and he has deposed that as per record, plaintiff has not filed any bill and there is no labour certificate MUKESH by Digitally signed MUKESH KUMAR GUPTA submitted by the plaintiff.
KUMAR Date:
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9. No other witness was examined by the plaintiff and the evidence of the plaintiff was closed on 07.10.2024 vide statement of the Ld. Counsel for the plaintiff firm. Ld. Counsel for plaintiff has also submitted that the plaintiff has already received a sum of Rs.5,32,679/- vide Ex.2/6 towards the principal amount of the bill and now the suit of the plaintiff may be restricted to recover the security amount of Rs.62,545/- and the interest component.
(G) ARGUMENTS ADDRESSED:-
ARGUMENTS OF PLAINTIFF.
10. Ld. counsel for the plaintiff Shri Mohit Singhal has vehemently argued that the plaintiff has successfully executed the awarded Work Order No. 495 dated 05.03.2019 Ex.PW2/4 to the satisfaction of the defendants within time and as per the guidelines of the GCC. It has been argued that the defendant no.1 has already paid the principal amount of the bill in respect of the Work Order No.495 Ex.PW2/4 but the defendant no.1 has failed to pay the security deposit amount of Rs.62,545/- which the plaintiff has deposited at the time of awarding of the work order and the defendant no.1 is also liable to pay the interest component on both the amounts i.e. on principal amount as well as on the security amount. He has prayed that the suit be decreed to the extent of security amount and the interest component thereon as well as on principal amount paid by the defendant no.1 later on besides costs of the case against the defendants.
Digitally signedMUKESH by MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:49:55 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 7 of 23 ARGUMENTS OF DEFENDANT:
11. Ld. counsel for the defendants Shri Sahil Aeron on the other hand, has admitted that the principal amount qua the Work Order No. 495 has already been paid to the plaintiff. He has vehemently opposed the arguments of the Ld. Counsel for the plaintiff on the point of interest and has stated that the plaintiff has not submitted the bills qua the Work Order No. 495 and therefore not complied with the terms and conditions of the GCC which he himself is relying upon and as such the suit of the plaintiff is pre-mature and misconceived. Ld. Counsel for defendants while making specific reference to clause 7 and 9 of GCC has vehemently argued that the submission of the bills is a pre-condition on which a cause of action can arise. Ld. Counsel for the defendants has further argued that there is no veracity in the deposition of the PW1 as on the one hand, PW1 has admitted that the bills are required to be submitted on letter head but nothing has been placed on record and the bill exhibited as Ex.PW1/2 on record. On the aspect of refund of security deposit, Ld. Counsel has again referred to clause 17 and 45 of GCC to state that it was on account of plaintiff failure to complete the formalities, the same was not released as no occasion has arisen for the defendants to release the same. Ld. Counsel Shri Sahil Aeron has also referred to the Judgment of Hon'ble High Court in New Delhi Municipal Corporation & Ors. Vs. Sanjeev Kumar RFA No. 430/17 (DOD 22.03.2018). Finally, he has argued that the plaintiff has failed to comply with the provisions of MCD Act in as much as notice u/s 478 of the Act has issued to the defendant corporation was defective and the MUKESH by Digitally signed MUKESH KUMAR GUPTA plaintiff is not entitled to the interest on the outstanding amount. He KUMAR Date:
2025.03.28 GUPTA 17:50:03 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 8 of 23 has further stated that the suit is liable to be dismissed with exemplary costs.
(H) ANALYSIS & DETERMINATION:-
12. I have heard the arguments addressed by the Ld. Counsels for the parties, perused the entire record including the oral and documentary evidence. I have given a thoughtful consideration to the same. My issue-
wise determination is as under:-
Issue no.2. "Whether the plaintiff is entitled to recovery of security deposit of Rs. 62,545/- against the defendant as claimed in the suit ?OPP"
13. For the sake of convenience, the court shall take up this issue first. The onus of proving this issue was held upon the plaintiff who has examined himself as PW1 and filed his affidavit by way of evidence as Ex.PW1/A. There is no dispute regarding the award of contract Ex.PW2/5, completion of work within stipulated time, labour complaint or any other issue regarding the satisfactory work being completed except the alleged non-filing of bills and resultant non-compliance of GCC. The defendants have taken only one stand in defence and argued that since the plaintiff has not submitted the bills, which he was contractually required to submit, he is not entitled to the amount of Work Order and as per specific clause 7 and 9 of the GCC and clause 4 of the work order Ex.PW2/4, the contractor shall not be entitled for any payment, if he does not submit the certificate of completion and further plaintiff was required to submit final bill within one month of the date of Digitally signed MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
the final certificate of completion furnished by the Engineer-in-charge or GUPTA 2025.03.28 17:50:12 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 9 of 23 within three months of physical completion of the work.
14. Per Contra, Ld. counsel for the plaintiff has stated that the defendant had already passed the bills which have been exhibited as Ex.PW-1/2 (colly) a copy of which was also provided to the plaintiff which he had accepted after counter signing the same and hence, there was due compliance of the clause 7 and 9 of the GCC and as such, the plaintiff is entitled for the amount of the bills alongwith interest as claimed which the defendant is withholding without any justifiable reason. He has relied upon the decisions of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Barahi Construction RFA (COMM) 6/2021AIR OLINE 2021 DEL. 645 (Neutral citation:
2021/DHC/958-D) and the judgment of Hon'ble Division Bench of High Court of Delhi in North Delhi Municipal Corporation Vs. Vipin Gupta MANU/DE/8273/2018 to support his point. He has further relied upon the judgment of Mr. Rajnish Yadav proprietor of M/s. Bharat Construction Company Vs. North Delhi Municipal Corporation, RFA (OS) (COMM) 1/2021 (Neutral citation:
2023/DHC/000174) to argue that once the defendant had accepted the execution of the work by the plaintiff as also after submission of the measurement duly entered in the Measurement Book even processed the bills pertaining to the work orders without any dispute whatsoever and therefore, the defendant was under the liability to pay the contractual Digitally signed by work amount to the plaintiff.
MUKESH
MUKESH KUMAR
KUMAR GUPTA
Date:
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15. It would be apposite to reproduce the Clause 4,7 and 9 of the GCC which has been referred to by both the parties:-
Clause 4 of Work order:
"It should be noted - (a) that as and when orders are given for execution of any extra/substitute item prior orders from the competent Authority to be obtained before execution of the same to avoid any further complications; (b) that contractor has to submit his RA/Final bill with measurement otherwise nothing will be consider due on account of work execution".
Clause 7 GCC:
"No payment shall be made for work estimated to cost Rs. Twenty thousand or less till after the whole of the work shall have been completed and certificate of completion given. For works estimated to cost over Rs. Twenty thousand, the interim or running account bills shall be submitted by the contractor for work executed on the basis of such recorded measurement on the format of the department in the triplicate on or before the date of every month of the fixed for the same by the Engineer-in-Charge. The contractor shall not be entitled to be paid any such interim payment if the gross work done together with the note payment/adjustment of advances of material collected., if any, since the last such payment is less then the amount specified in Schedule 'F' in which case the interim bill shall be prepared on the appointed date of month after the requisite progress is achieved. Engineer-in Charge shall arrange to have the bill verified by taking or causing to be taken, where necessary, the requisite measurement of the work. In the even of the failure of the contractor to submit the bills progress is achieved. Engineer-in-charge shall prepare or cause to be prepared such bills in which event no claims whatsoever due to delays on payment including that of interest shall be payable to the contract. Payment on account of admissible shall be made by the Engineer-in-charge certifying the sum to which the contractor is considered entitled by way of interim payment at such rates as decided by the Engineer-in- charge of his Asstt. Engineer together with the account of the material as issued by the department, or dismantled materials, if any. The payment of passed bills will be subject MUKESH Digitally by MUKESH signed to availability of funds in particular head of account from KUMAR KUMAR GUPTA GUPTA Date: 2025.03.28 17:50:27 +0530 time to time in MCD. Payment of bills shall be made strictly CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 11 of 23 on Queue basis i.e. first and past liabilities will be cleared and after that the release of payment for passed bills be in order of the demand received at HQ under particular head of accounts. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of the MCD."
Section 9 of GCC "The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer- in-charge whichever is earlier. Nor further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payment of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer-in-charge, will, as far as possible be made after the period specified here-in-under the period being reckoned from the date of receipt of bill by the Engineer-in-charge or his authorized Asstt. Engineer, complete with account of material issued by the department and dismantled. The payment of passed bills will depend on availability of funds in particular head of account from time to time in MCD. Payment of bills shall be made strictly on Queue basis i.e. first the past liability will be cleared and after that the release of payment for passed bills will be in order of the demand received at the HQ and the particular head of account. No interest shall be payable to the contractor in case of delay in payment on account of non-availability of fund in the particular head of account of MCD.
(i) If the tendered value of work is upto Rs.5 lacs : 6 months.
(ii) If the tendered value of work exceeds Rs.5 lacs :9 months."
16. On harmonious constructions of these provisions, it is clear that :
"a. for payments of bills regarding the works, the Engineer-in-Chief is required to certify the payments. b. the payments of the passed bills shall be made subject to availability of the funds in specific head from time MUKESH by Digitally signed MUKESH KUMAR GUPTA to time with the MCD.
KUMAR Date:
GUPTA 2025.03.28 c. the payments of the bills shall be strictly made on 17:50:37 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 12 of 23 queue basis, and d. the interest shall not be payable by MCD for delayed payment on account of non-availability of funds".
17. Hon'ble High Court of Delhi had the occasion of examining the aforesaid clauses where it has been observed that a corporation which gets the work done to the satisfaction cannot be allowed to include a term in a contract which is per se unconscionable and unreasonable in so far as the availability of the funds are concerned as there is no fixed period or mechanism to determine as and when these funds shall be made available in a particular head of account that too without any knowledge of the aforesaid two factors to the plaintiff. Reliance placed on Sanjeev Kumar (supra). The Hon'ble High Court after examining the entire issue has even passed guidelines in the batch of appeals on 22.03.2018 where the bills after submission was required to be scrutinized by the Engineer in- chief and the work should be recorded in the measurement book and the bills should be passed. The Hon'ble High Court has been categoric that payment of 6 months and 9 months should be strictly adhered to and any delay in payment thereof would entail interest to be paid by the defendant corporation.
18. The Hon'ble High Court has gone to the extent of directing that for refund of security deposit and earnest money deposit the contractor shall unscrupulously comply with the condition of clause 17 and 45 for which even the payment of final bills need not be awaited. The Hon'ble High Court has further passed a plethora of directions for streamlining the Digitally signed aforesaid issue which results in avoidable litigation between the MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:50:44 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 13 of 23 corporation and the contractors executing the work.
19. Adverting to the present case, it is not in dispute that the plaintiff firm was awarded WO 495 dated 05.03.2019 Ex. PW2/4 (colly) by the defendant No.1 and the said work was duly executed by the plaintiff and as a precondition earnest money was also deposited by the plaintiff. It is also not in dispute that the work was completed within time and the plaintiff has completed the necessary formalities including the measurement immediately on completion of the work leading to preparation of the bills passed by the concerned Executive Engineer mentioning not only the details of the work done, rates on which the work was done but also the actual amount due to be paid by the defendant corporation. According to the plaintiff, bills were passed on on 26.12.2019 for Rs.5,32,699/- qua WO -495.
20. The defendant on the other hand, has taken a technical objection that no bills were submitted for clearance by the defendant no.1 corporation. It is not the case of the defendant that the bill has been obtained by the contractor through illegitimate means or through back door. It is unfathomable for the court to understand as to how the defendant corporation will reach this stage of preparation, cross- verification and approval of the bills without the necessary formalities being completed by the plaintiff/contractor. Thus, taken on the yardstick of preponderance of probabilities, Ex.PW1/2(colly) cannot be merely Digitally signed by called an internal noting of the department but it is a document to which MUKESH MUKESH the plaintiff is also a party.
KUMAR
KUMAR GUPTA
Date:
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21. On the other hand, the plaintiff has pressed upon the fact that the defendants had passed the requisite bill in respect of the work done Ex.PW-2/4 a copy of which was also provided to the plaintiff which he had accepted after counter signing the same and hence, there was due compliance of the clause 7 and 9 of the GCC and as such, the plaintiff is entitled for the amount of the bill as claimed. The plaintiff has relied upon the decisions of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Barahi Construction RFA (COMM) 6/2021 (Neutral citation: 2021/DHC/958-D) and the judgment of Hon'ble Division Bench of High Court of Delhi in North Delhi Municipal Corporation Vs. Vipin Gupta RFA 160/2017 to support his point. He has further relied upon the judgment of Mr. Rajnish Yadav proprietor of M/s. Bharat Construction Company Vs. North Delhi Municipal Corporation, RFA (OS) (COMM) 1/2021 (Neutral citation:
2023/DHC/000174) to submit that once the defendants had accepted the execution of the work by the plaintiff as also after submission of the measurement duly entered in the Measurement Book even processed the bills pertaining to the work order without any dispute whatsoever and therefore, the defendants were under the liability to pay the contractual work amount to the plaintiff.
22. As already discussed the Clauses 4, 7 and 9 of the GCC are the relevant clauses which are applicable to the case and it is not in dispute that the plaintiff firm was awarded WO No. 495 dated 05.03.2019, Ex.PW1/1 by the defendant No.2 for and on behalf of Defendant no.1 MUKESH by Digitally signed MUKESH KUMAR GUPTA Corporation and the said work was duly executed by the plaintiff and as KUMAR Date:
2025.03.28 GUPTA 17:50:56 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 15 of 23 a precondition earnest money was also deposited by the plaintiff. It is also not in dispute that the work was completed within time and the plaintiff has completed the necessary formalities including the entering of work & measurement immediately in the measurement book Ex.PW2/3 on completion of the work leading to preparation of the bill Ex.PW1/2 passed by the concerned Executive Engineer mentioning not only the details of the work done, rates on which the work was done but also the actual amount due which is required to be paid by the defendant corporation. The only question which has raised by the defendant is technical non-filing of final bill by the plaintiff.
23. According to the plaintiff, bill Ex.PW1/2 was passed for Rs.5,32,699/- on 26.12.2019 qua WO No.495 and the earnest amount for the same work of Rs. 62,545/- was also deposited as precondition and compliance of the tender document which has still not been returned by the defendants. The testimony of PW1 in this regard is not only clear and categoric but has also not been breached during cross-examination.
24. The defendant on the other hand, has taken only one technical objection that no bill was ever submitted for clearance to the defendant corporation. However, the defendants have made the payment of the principal/ awarded amount of Rs.5, 32,679 to the plaintiff. The submission of the plaintiff in this regard has been recorded in the order dated 07.10.2024 and now the question is return of earnest money of Rs.62,545/- which the plaintiff has deposited with the defendant no.1 Digitally signed by MUKESH corporation at the time of awarding of work order No. 495. MUKESH KUMAR GUPTA KUMAR Date:
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25. In so far as the refund of the security deposit of Rs.62,545/- against the work order is concerned, PW-1 Shri Rajesh Kumar Gupta, the plaintiff has categorically deposed that the same was not refunded despite satisfactory completion of the work covered under work order Ex.PW1/1. On the other hand defendant has claimed non-compliance of clause 17 & 45 of GCC. However, the defendants have not proved the same on record as their right to file Written Statement has been forfeited on account of non-appearance and non-filing of the filing the Written Statement in the statutory period. Hence the deposition of PW1 remained unbreached and unchallanged. Rather the defendant has admitted his liability by paying the principal amount to the plaintiff. Therefore, when the defendant has admitted his liability, it cannot be denied to refund the earnest money which has a right of the plaintiff.
26. Perusal of clause 17 of GCC makes it clear that plaintiff cannot claim the security deposit before the expiry of 12 months after the issue of the final certificate of completion of the work or till the time final bill has been prepared and passed, whichever is later. Clause 45 of the GCC also provides that security deposit of the work will not be refunded till the contractor produces a clearance certificate from the labour office. However, it further says that if no complaint is pending on record till after three months after completion of the work and/or no communication is received from the labour officer to this effect till 6 months after the date of completion, it will be deemed to have received the clearance and Digitally signed the security deposit will be released, if otherwise due. MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:51:20 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 17 of 23
27. The claim of the defendant regarding non-compliance of contractual obligations and failure to submit the final bill as required under clause 7 and clause 9 of GCC and clause 4 of the work order besides compliance of clause 17 and clause 45 of GCC for refund of the security deposit has already been discussed in detail in the light of the judgment of Hon'ble High Court of Delhi in North Delhi Municipal Corporation Vs. Sanjeev Kumar (RFA 430/2016) has already been duly shown by the plaintiff to rebut the claim for refund of the security deposit being pre- mature and untenable.
28. The plaintiff on his part has issued a legal notice under Section 477 & 478 of DMC Act, dated 02.03.2021 Ex.PW1/3 supported with its postal receipts and Tracking reports Ex.PW1/4 (colly), the receiving of the same has not been disputed or denied by the defendants but they have merely mentioned that GCC was not complied with. The plaintiff has made request for passing of the bills and release of payment in respect of the works completed pursuant to the work order Ex.PW1/1 awarded to him. The works were completed by the plaintiff and the bills were prepared and passed by the defendant on 26.12.2019. A period of almost 5 years has expired from the date of completion of work. Admittedly, there is no complaint regarding the quality of work done by the plaintiff nor there is any complaint against the plaintiff regarding any labour dispute in respect of the aforesaid work order Ex.PW1/1 (the maximum period for which was 6 months). A considerable time has expired since the contract was completed and admittedly there is no claim made by the Digitally signed by MUKESH defendant on account of any acts of commission or omission on the part MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:51:27 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 18 of 23 of the plaintiff. The liability has been admitted by the defendant by paying the principal amount to the plaintiff. Hence, there are no grounds for the defendant to withhold the security amount of the plaintiff. Accordingly, taken on the yardstick of preponderance of probabilities and in view of oral as well as documentary evidence which has come on record, the plaintiff has been successful in discharging the onus for his entitlement of refund of security amount.
29. Pertinent to point out that during pendency of the suit, the plaintiff has received the principal sum of Rs.5,32,679/- towards the final bill from the defendant. A statement to this effect has already been recorded before the court on 07.10.2024. Accordingly, the plaintiff shall only be entitled to the earnest money of Rs.62,545/- along with proportionate interest besides pre-suit, pendentelite and future interest for which the plaintiff has been successful in establishing its entitlement on the yardstick of preponderance of probabilities. This issue is accordingly decided in favour of the plaintiff and against the defendant.
Issue no.1 and 3: Whether the plaintiff is entitled to any interest on the principal amount of Rs,.5,32, 679/- which the plaintiff has already received on 12.07.2024? OPP "Whether the plaintiff is entitled to recover any interest from the defendant, if so, at what rate and for what period ?OPP"
30. Both the issues shall be taken up together as they are inter- connected. The onus to prove these issue were on the plaintiff. The plaintiff has claimed pendentelite and future interest @ 12% per annum Digitally signed on the claimed amount of Rs.5,32,679/ and on Rs.62,545/- a pendentlite MUKESH by MUKESH KUMAR GUPTA KUMAR Date:
2025.03.28 GUPTA 17:51:33 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 19 of 23 and future interest from 01.06.2023 till its realization.
31. Ld. Counsel for the plaintiff has argued that defendant has illegally withheld the amount of bills. It is further argued that the plaintiff has suffered financial losses as defendant failed to release the payments within a period of 6/9 months as required under clause 9 of GCC and hence, the plaintiff is entitled to the interest on the delayed payment. Ld. Counsel for the defendant on the other hand, has staunchly refuted the same on the ground of non-compliance of terms and conditions of GCC.
32. The plaintiff has, however, failed to establish the basis on which the interest is being claimed @ 12% per annum by way of any clear or cogent evidence. Though there is no stipulation for interest on delayed payments, however, the Hon'ble High Court in Sanjeev Kumar's(supra) has clearly held that interest shall be levied to the defendant for delayed payment beyond 6/9 months as applicable. In NDMC & Others Vs. Shish Pal MANU/DE/1200/2018, it was observed that:-
"45. In the present case, the combined effect of the Clauses and the Circular and amendments, set out above, is that if the Corporation does not procure funds, it is not liable to even pay the Contractor any interest and the Contractor has no remedy. This by itself would mean that such a Clause could be read as leading to a contract without consideration and hence unlawful under Section 23 of the Contract Act.
The Corporation being an instrumentality of State, such a contract would also be opposed to public policy under Section 23 of the Contract Digitally signed MUKESH by MUKESH KUMAR GUPTA Act. Section 46 of the Contract Act is also clear KUMAR Date:
GUPTA 2025.03.28 17:51:40 that if no time for performance of a contract is +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 20 of 23 specified, it has to be performed within a reasonable time. Reading these provisions together, it is clear that an open ended Clause which in effect says that the payment shall be made at an undetermined time in the future, subject to availability of funds, in a particular head of accounts is wholly unreasonable and such a term would also be unfair.....
71. A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the Contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months 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.
72. In view of the question of interest having been gone into detail and non-payment having been held to be illegal by various Single Judges of this Court, in cases involving the Corporations, it is held that non-payment of interest beyond the period of 6 months and 9 months, as stipulated in Clause 9 of the General Conditions of Contract, would be contrary to law. Hence, the Contractors are entitled for payment of interest after a period MUKESH by Digitally signed MUKESH KUMAR GUPTA of 6 months - 9 months respectively."
KUMAR Date:
GUPTA 2025.03.28 17:51:45 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 21 of 23
33. However, this court is of the considered opinion that the interest of justice would be subserved if the plaintiff is awarded simple interest @ 6% per annum on the principal amount of Rs.5,32,679/- w.e.f. 25.06.2020 till 12.07.2024 i.e. the date of payment. Similarly, simple interest @ 6% per annum on the Surety Amount of Rs.62,545/- w.e.f. 25.06.2020 till the date of its realization. Reliance placed on Pt.
Munshi Ram @ Associates (P) Lt. Vs. DDA, 2010 SCC Online Delhi 2444, Rajendra Construction Co. Vs. Maharashtra Housing & Area Development Authority and others, 2005 (6) SCC 678, McDermott International Inc. Vs. Burn Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road Transport Corporation Vs. Indag Rubber Ltd., (2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. Vs. G. Harischandra, 2007 (2) SCC 720 & State of Rajasthan Vs. Ferro Concrete Construction Pvt. Ltd. (2009) 3 Arb. LR 140 (SC). This issue is, accordingly decided in favour of the plaintiff and against the defendants.
(I) CONCLUSION:-
ISSUE No.3: Relief.
34. In view of the aforesaid discussions and finding of the court on the aforesaid issues, the court is of the considered opinion that the plaintiff has been able to successfully prove its entitlement to the recovery against the defendant. The suit of the plaintiff is, accordingly decreed against the defendants for a sum of Rs.62,545/-(earnest money) with interest @ 6% per annum w.e.f. 25.06.2020 till its realization.
MUKESH by Digitally signed MUKESH KUMAR GUPTA Similarly, Simple interest @ 6% per annum is awarded on the principal KUMAR Date:
2025.03.28 GUPTA 17:51:53 +0530 CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 22 of 23 amount of Rs.5,32,679/- w.e.f. 25.06.2020 till 12.07.2024 i.e. the date of payment.
35. In the specific facts and circumstances of the case, the plaintiff shall also be entitled to the costs of the suit throughout.
36. Decree sheet be drawn accordingly.
37. File be consigned to record room after due completion.
PRONOUNCED IN OPEN COURT .
ON THIS 28th MARCH, 2025. MUKESH by Digitally signed MUKESH KUMAR GUPTA KUMAR Date:
GUPTA 2025.03.28 17:51:58 +0530 (MUKESH KUMAR GUPTA) DISTRICT JUDGE (COMM. COURT)-07 CENTRAL/DELHI CS (Comm.) No. 1125/2023 Rajesh Kumar gupta Vs. Municipal Corporation o f Delhi & Anr. Page no. 23 of 23