* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 11th July, 2017
Decided on: 18th July, 2017
+ CS(COMM) 1590/2016
DEEPALI DESIGNS & EXHIBITS PRIVATE LTD ..... Plaintiff
Represented by: Mr. Raghvendra S. Kishore and
Mr. Abhishek Gupta,
Advocates.
versus
PICO DEEPALI OVERLAYS
CONSORTIUM & ORS ..... Defendants
Represented by: Mr. Rushil Chandra, Advocate
for D-5.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
IA 25813/2015 (under Order XII R. 6 CPC-by plaintiff)
1.
Before dealing with this application, it would be appropriate to note the order dated 24th April, 2014 passed by this Court in the present suit as under:
"1. The suit is listed for framing of issues.
2. The counsel for the plaintiff as well as the counsel for the defendants no. 1 to 3 who are the only contesting defendants have handed over proposed issues which are taken on record.
3. However not finding any clarity therein, the pleadings have been perused.
4. On perusal of the pleadings, it appears that there is no dispute requiring recording of the evidence.
5. During the hearing, it has been informed that the plaintiff, defendant no. 2 and the defendant No. 3 formed the CS(COMM) 1590/2016 Page 1 of 12 defendant No. 1 Consortium for carrying out some works for the defendant no. 5 Organizing Committee for the Delhi Commonwealth Games, 2010. The said works have admittedly been carried out. However arbitration between the defendant no. 1 Consortium and defendant no. 5 Organizing Committee is pending, in which the defendant no. 1 Consortium as well as the defendant no. 5 Organizing Committee have made claims against each other.
6. The material relief claimed by the plaintiff in the suit is for recovery of ₹6,99,24,861/- jointly and severally from the defendants no. 1 to 3 together with interest thereon.
7. The counsel for the defendants no. 1 to 3 has argued that the plaintiff, till finalization of the accounts and which cannot be done till the pendency of the arbitration proceedings aforesaid, was entitled to only 20% of the payments received from the defendant no. 5 Organizing Committee and in fact from time to time has been paid on the said understanding only.
8. The contention of the counsel for the plaintiff is that the plaintiff was entitled to the entire payments received by the defendant no. 1 Consortium, less 23% and on which basis the sum of ₹6,99,24,861/- is due.
9. The counsel for the defendants no. 1 to 3 contends that the aforesaid was to be the modus for distribution at the final stage and till then the plaintiff was entitled to only 20% amount of the payments received and which has already been paid and in fact a sum of ₹2 crores approximately has been paid in excess.
10. It has been enquired from the counsels whether not the aforesaid aspect would be clearly spelt out in the Consortium Agreement.CS(COMM) 1590/2016 Page 2 of 12
11. The counsel for the defendants no. 1 to 3 states that the understanding regarding the interim payments is to be borne out from the conduct of the parties and on which evidence is required to be led and is not clearly spelt out in as many words in the agreement.
12. It has yet further been enquired whether not the said understanding also will be borne out from the communications between the parties and the sharing of the payments from time to time, as reflected in the documents and whether the said documents are admitted.
13. The answer is in the affirmative. Though the counsel for the defendants no. 1 to 3 states that the plaintiff has denied some of the communications from the defendants to the said effect, however, the said communications are stated to be of a date after the disputes had arisen between the parties.
14. Rather than framing issues, it is deemed expedient to hear the parties on the said aspect and issues shall be framed thereafter only if the need therefor arises."
2. Plaintiff filed CS (COMM) No. 1590/2016 for recovery, declaration, dissolution and rendition of accounts and mandatory injunction against the defendants and claims that defendant Nos. 1 to 3 are jointly and severely liable to rendition of accounts, mandatory injunction and recovery.
3. Plaintiff is a company incorporated under the Companies Act, 1956 having its registered office at 9, 1st Floor, Printing Press Area, Wazirpur, Delhi. Defendant No. 1 PICO Deepali Overlays Consortium (in short 'PDOC') is a compendium of the plaintiff, PICO Hong Kong Limited (in short 'PHK'), defendant No. 2 and PICO Event Marketing (India) Private Limited (in short 'PEMI') defendant No. 3.
CS(COMM) 1590/2016 Page 3 of 124. Defendant No. 2 is a company incorporated under the laws of Hong Kong having its registered office at Hong Kong whereas the defendant No.3 is a company incorporated under provisions of the Indian Companies Act, 1956 and is a subsidiary of PICO India Exhibits Contractor Pvt. Ltd. (in short 'PIEC') which is a Singapore based company.
5. A Consortium Agreement dated 19th December, 2009 was entered into between the plaintiff and defendant Nos. 2 and 3 wherein it was agreed to incorporate a joint venture company in which plaintiff and defendant Nos. 2 and 3 were to have shareholdings in the ratio of 20%, 60% and 20% respectively. As per the plaintiff it was also agreed that all profits and losses were to be shared in the said ratio only. Defendant No.1 was incorporated in terms of the compendium dated 19th December, 2009 for the purpose of bidding and execution of the overlays tenders floated by the Organizing Committee, Common Wealth Games 2010 Delhi, defendant No.5 herein. It is the case of the plaintiff that defendant No.1 was not incorporated as a company but was in the nature of an unregistered partnership firm with plaintiff, defendant No.2 and defendant No.3 as its partner for sharing the profit and loss in the ratio as mentioned above. Defendant No. 1 submitted an Expression of Interest ('EOI') with defendant No. 5 on 29th December, 2009 followed by a Request of Proposal ('ROP') on 5th February, 2010. In the first week of March, 2010 defendant No. 1 company being the lowest bidder was awarded a contract. The accounts of defendant No. 1 were maintained with Hongkong Shanghai Banking Corporation (in short 'HSBC'), Barakhamba Road, New Delhi which has been arrayed as defendant No. 4 in the suit. As per the plaintiff a further addendum to the Consortium Agreement was executed between the plaintiff, defendant No. 2 CS(COMM) 1590/2016 Page 4 of 12 and defendant No. 3 on 1st June, 2010 and it was agreed between the parties that in case of any inconsistency between the Consortium Agreement, provisions of the addendum would prevail.
6. Case of the plaintiff in the present application is that based on the admissions of defendant Nos.1 to 3, who have filed a common written statement, affidavit of Shri Chung Chee Keong admitting the documents and admissions in reply affidavit filed to the present application, the plaintiff is entitled to a judgment on admission.
7. Before noting the relevant portion of the plaint, written statement, application and the reply affidavit thereto, it would be appropriate to note the relevant clauses of addendum to the Consortium Agreement dated 1 st June, 2010 which is a document admitted by defendant Nos. 1 to 3 based on the affidavit of Shri Chung Chee Keong:
"THE PARTIES HEREBY AGREE TO THE FOLLOWING:
1. NO INCORPORATION OF SEPARATE LEGAL
ENTITY
The JV members will not incorporate a separate legal entity as envisaged under the Earlier Agreement and the JV shall undertake the project and enter into the Contracts with Delhi 2010, as an unincorporated joint venture consortium. In the recitals, the references in the Earlier Agreement to "Company" shall be replaced by references to "consortium" and the word "incorporated'' shall be replaced by "unincorporated". Recitals "D" is deleted.
2. SCOPE OF WORK
2.1 Scope of works
CS(COMM) 1590/2016 Page 5 of 12
(1) After the assignment of the works to each member, if there
are any profits and assets earned and retained in the JV, Deepali shall not be entitled to any share of such profits and assets.
(2) Each party shall participate in the works tendered to the CWGOC Delhi 2010. The scope of works are assigned to members as follows:
Deepali: Works confirmed by CWGOC Delhi 2010, listed in Appendix 2 PHK & PEMI: All other works confirmed by CWGOC Delhi 2010, listed in Appendix 3 Any changes to the scope of work assigned to Deepali per Appendix 2, except for any changes imposed by CWGOC on the consortium, must be mutually agreed by all parties.
(3) Amounts received by the JV on contracts with the CWGOC Delhi 2010 in respect of work performed by Deepali, within the scope of work described in Appendix 2 (including any variations), minus 23% shall be paid to Deepali and the remainder shall belong to PHK. The net amount after deduction of the 23% is inclusive of the 10.3% service tax but excludes any tax deducted at source. Deepali shall provide PHK on demand any tax certificates reasonably required by PHK (including but not limited to anything related to the 10.3% Service Tax).
(4) In the event there are any new contracts awarded by CWGOC Delhi 2010 to the consortium, the works in the new contract equivalent to 20% in value minus 23% to be paid to PHK shall be awarded to Deepali only after this has been mutually agreed by the parties, having regard to the capacity and capability of the respective Members to fulfil the scope of the new contracts. The net amount after CS(COMM) 1590/2016 Page 6 of 12 deduction of the 23% is inclusive of the 10.3% service tax but excludes any tax deducted at source. Deepali shall provide PHK on demand any tax certificates reasonably required by PHK (including but ort limited to anything related to the 10.3% service tax).
(5) Deepali shall expeditiously help to obtain all necessary registrations of the JV with all relevant authorities for tax and all other purposes, but without prejudice to PHK or PEMI's right to do the same. The JV shall pay all legally required registration fees.
(6) The parties intend that each Member shall carry out its own works peacefully, subject to the supervision and project management of Deepali by the Common Representative and his staff to ensure that the entire scope of works is delivered in good order to the CWGOC Delhi 2010.
(7) If any Member is made liable by the CWGOC Delhi 2010 or any other third party or government authority/ agencies for breach of the contract for execution of the Project or for violation of law or for any other injury or damages or for any other reason whatsoever in connection with the execution of the Project, such Member or the Members who are/were responsible to carry out/have carried out the works as per the assigned works shall be solely, exclusively and to the exclusion of other Members of the Consortium be liable to the other Members or such party/agency etc. and each Member hereby indemnifies and holds good against all such losses, actions, damages etc. the other Member(s) for any such claim/liability etc. 2.2. .........
2.3. .........
2.4. .........
3. AMENDMENTS TO THE EARLIER AGREEMENT CS(COMM) 1590/2016 Page 7 of 12 3.1 Article 4.1: delete "at the common expense of the JV members"
Article 5: delete "within the timeframe of five (5) calendar years after the date of signature of this Agreement"
3.2 Article 7: delete in its entirety and replace with "The risks and liabilities of each party shall be as per the scope of work to be undertaken and the participation of each party as contained in the Addendum. In the event the risks and liabilities that materialize are general in nature and cannot be determined to be attached to any individual scope of work by any party, such as a general deduction by CWGOC Delhi 2010 from the payments on the main contract with the Consortium, such deduction shall be apportion to PHK & PEMI 80%, and to Deepali 20%.
3.3 Article 8.2
(a) Amend: "The invoiced amount shall be paid to the
relevant JV member by the JV after each respective payment by Delhi 2010 and within thee (3) days after the aforementioned payment is effected by Delhi 2010. It is agreed that remuneration by Delhi 2010 shall be deemed to have been received by the JV only if it has been duly deposited with the bank account of the JV designated for this purpose" to :
"The invoiced amount shall be paid to the relevant JV member by the JV after each respective payment by Delhi 2010 and within ten (10) days after the aforementioned payment is effected by Delhi 2010 and deposited into the JV bank account."
(b) Delete:"From the amounts received by the JV, following any legal deductions, 4% out of it will remain in a reserve in order to be used in case of CS(COMM) 1590/2016 Page 8 of 12 debts of the JV as a result of poor workmanships, penalty clauses, insurance coverage and the like. This reserve, if not disposed of as aforesaid, will be distributed to the JV members pro rata to their participation percentages in the JV, after final acceptance of the Project, according to the Contract and not later than March 31, 2010."
8. In Para 24 of the plaint, the plaintiff has stated that defendant No.1 received approximately a sum of ₹94,35,74,431/- out of the total due towards defendant No. 5 of ₹180 crores. Out of the said amount of ₹94,35,74,431/- a sum of approximately ₹30,35,40,044/- has been paid to defendant No. 1 on account of the work falling within the scope and ambit of the plaintiff company which was duly completed by it.
9. In Para 25 of the plaint the plaintiff has further stated that after deducting 23%, the total amount payable to the plaintiff company would be ₹23,37,25,833/- whereas the total payment received by the plaintiff company in respect of the project of defendant No. 5 was ₹16,38,00,972/-. Therefore, as on date the admitted amount due to the plaintiff company from defendant Nos. 1, 2 and 3 was ₹6,99,24,861/-.
10. Defendant Nos. 1, 2 and 3 have filed a common written statement wherein in Para 24 though the claim of the plaintiff is disputed however receipt of ₹30,35,40,044/- from defendant No. 5 to defendant No. 1 has not been disputed.
11. Further, in Para 19 of the written statement defendant Nos. 1 to 3 admitted that all the payments noted above have been received from 14th June, 2010 to 18th October, 2010.
CS(COMM) 1590/2016 Page 9 of 1212. An affidavit of Shri Chung Chee Keong on behalf of defendant Nos. 1, 2 and 3 has been filed for admission/denial wherein the addendum dated 1st June, 2010 to the Consortium Agreement has been admitted.
13. Further, as per the affidavit, document at Serial No. 50 which is the email dated 10th March, 2011 relied upon by the plaintiff is denied for the reason that it is a correspondence exchanged by the parties during settlement and is a confidential document thus barred by Section 23 of the Indian Evidence Act, 1826.
14. Thus sending of the email dated 10th March, 2011, has not been denied and only a plea has been taken that it is inadmissible in evidence in view of the bar under Section 23 of the Indian Evidence Act, 1826.
15. In the above noted application, in Paras 13 and 14 the plaintiff/applicant has relied upon the email dated 10th March, 2011 which contradicted the stand of defendant No. 2 before this Court.
16. On 10th March, 2011 Shri Chung Chee Keong who has filed the affidavit of admission/denial on behalf of the defendant Nos. 1 to 3 has sent an email along with an attachment giving the scope of the work delivered by the plaintiff and that till stage 4 deducting 23%, the work done by the plaintiff was for a sum of ₹20,57,06,928.28/-. Therefore, there is clear admission of defendant Nos. 1 to 3 for a further liability of ₹4,19,05,956/- of the plaintiff. Even in the reply to Paras 13 and 14 of the present application, defendant Nos. 1, 2 and 3 have stated that without prejudice to the contentions, even if there is any admission it would be upon the party to demonstrate in trial that the admission was erroneous or wrongly made. It is further stated that assuming the email dated 10th March, 2011 contained any CS(COMM) 1590/2016 Page 10 of 12 admission which it does not at all, that account of deductions made due to the bad workmanship of the plaintiff had not been adjusted.
17. The legal position on admission is well settled. The Division Bench of this Court in the decision reported as 2007 (142) DLT 483 Vijaya Myne vs. Satya Bhushan Kaura noting the law laid down by the Supreme Court held:
"12. It is not necessary to burden this judgment by extracting from the aforesaid authoritative pronouncent as the learned Single Judge has accomplished this exercise with prudence and dexterity. Purpose would be served by summarizing the legal position which is that the purpose and objective in enacting the provision like Order 12 Rule 6, CPC is to enable the Court to pronounce the judgment on admission when the admissions are sufficient to entitle the plaintiff to get the decree, inasmuch as such a provision is enacted to render speedy judgments and save the parties from going through the rigmarole of a protracted trial. The admissions can be in the pleadings or otherwise, namely in documents, correspondence etc. These can be oral or in writing. The admissions can even be constructive admissions and need not be specific or expressive which can be inferred from the vague and evasive denial in the written statement while answering specific pleas raised by the plaintiff. The admissions can even be inferred from the facts and circumstances of the case. No doubt, for this purpose, the Court has to scrutinize the pleadings in their detail and has to come to the conclusion that the admissions are unequivocal, unqualified and unambiguous. In the process, the Court is also required to ignore vague, evasive and unspecific denials as well as inconsistent pleas taken in the written statement and replies. Even a contrary stand taken while arguing the matter would be required to be ignored."
18. In the light of the law laid down though this Court does not find an unequivocal and clear admission of defendant Nos. 1 to 3 for a liability of the plaintiff to the tune of ₹6,99,24,861/- however considering the fact that CS(COMM) 1590/2016 Page 11 of 12 the email dated 10th March, 2011 along with attachment is an admitted document wherein a clear admission has been made out on behalf of defendant Nos. 1, 2 and 3 to pay sum of ₹4,19,05,956/- to the plaintiff, this Court deems it fit to pass a preliminary decree in favour of the plaintiff and against the defendant Nos. 1 to 3 jointly and severely. It is ordered accordingly. Defendant Nos. 1, 2 and 3 shall jointly and severally pay a sum of ₹4,19,05,956/- to the plaintiff with an interest @9% per annum from after 10 days of receipt of the amount which in any case was on or before 18th October, 2010 till the recovery.
19. Application is disposed of. Decree sheet be prepared accordingly. CS(COMM) 1590/2016 List the suit for further proceedings on 7th March, 2018 for the remaining claims of the plaintiff including as stated in para 39A of the plaint.
(MUKTA GUPTA) JUDGE JULY 18, 2017 'vn'/ 'yogesh' CS(COMM) 1590/2016 Page 12 of 12