Delhi High Court
A.S. Sachdeva & Sons (P) Ltd. vs Delhi Development Authority on 7 August, 2009
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
CS (OS) 882 of 2004
Reserved on: 14th July 2009
Decision on: 7th August 2009
A.S. SACHDEVA AND SONS (P) LTD. ..... Plaintiff
Through Mr. Raman Kapur with
Mr. Dhiraj Sachdeva, Advocate
versus
DELHI DEVELOPMENT AUTHORITY AND ANR. .....
Defendants
Through Mr. Bhupesh Narula, Advocate.
CORAM:
HON'BLE DR. JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
JUDGMENT
07.08.2009
S. Muralidhar, J.
1. This is a suit for recovery of Rs.32,53,458/- along with pendente lite
and future interest at 12 % per annum in favour of the plaintiff together
with costs.
2. Defendant No.2, the Executive Engineer of Delhi Development
Authority (DDA), invited tenders for the construction of 59 Category-III,
and 118 Category-II SFS Houses, 148 MIG flats, 36 shops and a
community hall including stilted parking space and internal development
(Nagin Lake Apartment) near Village Peera Garhi, Pashim Vihar. The
tender of the plaintiff was accepted and the work was awarded to it by the
Defendant No.1 DDA. The date of the completion as per the agreement
was 1st December 1997. The maintenance warranty period was to expire on
the completion of six months thereafter, i.e., on 30th May 1998. According
to the plaintiff it completed the entire work to the satisfaction of the
defendants DDA on 1st December 1997 and a completion certificate was
also issued by the DDA. The final bill was prepared on 26th July 2002.
According to the plaintiffs DDA arbitrarily withheld from the amount due
to the plaintiff a sum of Rs.45,000/- on account of the alleged repairs and
Rs.2,00,000/- without assigning any reason. The plaintiff therefore first
claims that it is entitled to the refund of Rs.2,45,000/- wrongly withheld by
the DDA.
3. It is stated that although the flats were constructed by 1st December
1997, the possession thereof was given to individual flat owners over a
period of time between December 1997 and June 2000. According to the
plaintiff, the DDA also recovered a sum of Rs.25,518.80 as penal recovery
for steel enforcement and a sum of Rs.1286/- towards penal recovery of
cement. The plaintiff claims that the balance unconsumed quantity of steel
and cement was returned to the DDA. No notice was issued by the DDA
under clause 42 of the agreement to the plaintiff about any alleged loss
suffered by the DDA or on account of the excess use of these materials. It
is accordingly contended that the recovery of Rs.26,705.36 on account of
the excess use of steel or cement was unjustified. A refund is claimed of
the said amount.
4. According to the plaintiff, DDA also arbitrarily recovered various
amounts from the final bill. The total amount on this account worked out to
Rs.2,20,827/- and the break-up of the individual items forming part of this
amount has been set out in para 7of the plaint.
5. It is further claimed that the plaintiff had provided a steel glazed door of
546.20 sq. m. amounting to Rs.5,85,480/-, which the plaintiff was entitled
to in terms of clause 6.4 (d) of the agreement.
6. In terms of the agreement, the work was to be completed on 23rd
September 1995 but was ultimately completed only on 1 st October 1997.
The extension of time for completion of the work up to 1st December 1997
was granted by the DDA without levy of any compensation. It is claimed
by the plaintiff that due to the prolongation of the contract period, the
establishment comprising engineers, supervisors, chowkidars and other
staff remained idle at the site. The machinery deployed by the plaintiff also
remained idle. The plaintiff claims that it suffered losses on account of the
prolongation of the contract by twenty-six months. Accordingly, the
plaintiff claims compensation at the rate of Rs.20,000/- per month for the
delayed period of twenty-six months amounting to Rs.5,20,000/-.
7. The plaintiff had a lawyer's notice dated 28th July 2003 issued to the
DDA asking it to pay Rs.19,77,284/- together with interest at 18 % per
annum. DDA sent a reply which according to the plaintiff was frivolous.
Therefore the plaintiff was compelled to file the present suit. The summary
of the total claims made by the plaintiff is set out in para 14 of the plaint as
under:-
"i) Towards amounts illegally
and uncontractually withheld
on account of alleged repair. Rs. 45,000.00
ii) Towards amount withheld without
any reasons. Rs.2,00,000.00
iii) Towards unjustified penal recovery
for steel reinforcement. Rs. 25,518.80
iv) Towards unjustified penal
recovery for cement. Rs. 1,286.56
v) Towards unlawful reductions
and deductions and less rates
paid for extra items. Rs. 2,20,827.00
vi) Towards non payment against
item No.6.4(d) - P/F. steel
glazed doors for quantity of
546.20 Sqm. Rs.5,85,480.00
vii) Towards watch and ward from
1-12-97 to June-2000. Rs.2,40,000.00
viii) Towards compensation on
account of loss suffered on
idling of establishment, T&P,
and machinery due to prolongation
of the contract period
by 26 more months. Rs. 5,20,000.00
------------------------------
Total Rs.18,38,112.00"
------------------------------
8. In its written statement, DDA contended that the delay in the completion
of the project was due to insufficient labour and materials and lack of
supervision on the part of the plaintiff. It is submitted that although the
completion certificate was issued on 1st December 1997, nearly twenty
defects were pointed out, and this was agreed to by the plaintiff by counter-
signing the documents. However, till date, some of the defects remain to be
attended to and therefore it is contended that Rs.2,45,000/- was rightly
withheld. It is submitted that since the plaintiff accepted the bills and the
measurements on 29th December 2000, the plaintiff was estopped from
raising false claims. Since the suit was filed only on 29th May 2004
whereas the bill has been accepted on 29th December 2000, the suit was
barred by limitation. The defects pointed out in the completion certificate
had not been removed even during the subsistence of the maintenance
period, i.e., 30th May 1998. The sum of Rs.45,000/- had been withheld for
not providing slide door bolt door stopper etc. in nine vacant flats. The
plaintiff had been provided these and therefore could not claim refund of
this sum of Rs.45,000/-. Similarly, the sum of Rs.2,00,000/- withheld for
not repairing the plaster or providing whitewashing and final coat of water
proofing cement paint disentitled the plaintiff to recover this amount. It is
submitted that inasmuch as the measurement book was signed also by the
plaintiff, it was estopped from contending that any more amounts were
owing to it. As regards the penalty on account of non-return of the unused
quantities of cement and steel, in terms of clause 42 of the agreement,
DDA was entitled to recover twice the issue rates. The work done was
found defective during the quality control inspection. In terms of clause 42
such work had to be dismantled and redone by the plaintiff at its own cost.
As regards the individual items constituting the withholding of
Rs.2,20,827/-, it is submitted that the measurements showed that the
deductions were justified since the work was not up to the standard
prescribed. Since the de-rusting and steel work was not done properly, the
deduction on this score was also justified. Likewise, instead of providing
12.50 ltr capacity cisterns, the plaintiff had supplied flushing cisterns of 10
ltr capacity. On various other individual items also, the deduction of
amounts was sought to be justified by the DDA. As regards item No. 6.4 it
is contended by the DDA that there was a duplicate claim in respect of the
door since item 6.4 (d) also 6.4 (e) is one and the same. It is, therefore,
contended that the claim in terms of 6.4 (d) is for an amount which is
already paid by the DDA under item Nos. 6.4(a) and 6.4(e). It is contended
that since the plaintiff had accepted the measurements as well as the final
bill, the plaintiff was estopped from claiming a sum of Rs.5,20,000/-
towards deployment of manpower and machinery during idle time.
9. In its replication, the plaintiff reiterated that all the defects have been
removed. It is submitted that the flats were in fact handed over to the
individual allottees by the plaintiff itself and that in order to safeguard the
property it had to employ watch and ward personnel, the rates of which
were strictly in accordance with the circular already issued by the DDA.
The claim in terms of clause 6.4 (d) is also reiterated.
10. After admission and denial of documents, the following issues were
framed on 6th February 2006:
"1. Whether the plaint has not been signed and verified by the
authorized representative of the Company? OPD
2. Whether the plaint is liable to be rejected inasmuch as it is
not supported by an affidavit as required under the CPC? OPD
3. Whether the suit is barred by limitation? OPD
4. Whether the plaintiff has removed the defects pointed out to
them at the time of recording of completion certificate? OPP
5. Whether the defendant is justified in withholding the
amounts as claimed in para 3 of the plaint? OPD
6. Whether the plaintiff is entitled to the amounts as claimed in
para 14 of the plaint? OPP
7. Whether the plaintiff is entitled to interest on the aforesaid
amount and if so at what rate and for what period? OPP
8. Relief.
11. The submission of Mr. Raman Kapoor, the learned counsel for the
plaintiff and Mr. Bhupesh Narula, the learned counsel for the DDA have
been heard.
Issue Nos. 1 and 2:
12. It is seen that the plaint has both been signed and verified by the
plaintiff and is supported by the affidavit of the Managing Director of the
plaintiff. Therefore, these two issues are decided in favour of the plaintiff
and against the defendant DDA.
Issue No.3:
13. Whether the suit is barred by limitation?
It is seen that the suit was filed on 31st May 2004. The final bill admittedly
was prepared and paid only on 26th February 2002. The cause of action for
the plaintiff to claim the balance amount arose only then. The suit having
been filed within two years thereafter cannot be said to be barred by
limitation. In Pandit Construction Company v. Delhi Development
Authority 2007(3) Arb. LR 205 (Delhi), a similar contention was rejected
by this court. This issue is decided in favour of the plaintiff and against the
defendant.
Issue No.4:
Whether the plaintiff has removed the defects pointed out to them at the
time of recording of completion certificate?
14. The completion certificate was sent on 13th February 1998 by the
Executive Engineer, DDA to the Superintending Engineer. It was stated
therein that the date of the actual completion was 1st December 1997 and
that the completion was "however subject to measurements being recorded,
quality being checked by a competent authority and defects to be removed
AE, EE..........during Site Inspection." A list of twenty items has been
appended indicating the works that required to be still completed.
However, the completion certificate itself was signed on 1st December
1997.
15. The plaintiff had been asking for extension of time for completion.
What is significant is that on 4th January 2001 the measurement was taken
and the final bill was also prepared as on that date. The first two sheets of
the final bill signed by the AE and the EE has been endorsed by the
plaintiff stating that "measurement and bill accepted". However, in page 3
which gives the break-up of the amounts including the amount withheld
there is receipt by the plaintiff for receipt of the amount of Rs.1,52,440/- in
which it endorsed "received under protest". It is the case of the plaintiff
that if in fact no work remained incomplete, there was no question of the
final bill being prepared on 4th January 2001 and ultimately being paid on
27th March 2002.
16. It is submitted that the extension for completion of the work was
granted from time to time with reasons being furnished. Reference is made
to the letter dated 18th August 1998 issued by the Executive Engineer
requesting that extension of time up to the date of completion of work, i.e.,
1st December 1997 should be accorded "without levy of compensation". In
the said letter, the EE noted:
"It is also certified that due to the delayed completion of work,
the department has not suffered any financial loss. The
contractor; on the performa Petitioner-I has also given the
undertaking that due to the hindrances he has not suffered any
financial loss and his labour and T & P never remained idle. He
has also undertaken that he will not claim any liquidated
damages on this account."
A reference is also made to the Plaintiff's letters dated 10th April 1998 and
12th October 2001 informing the DDA that the defects pointed out in the
letter dated 30th March 1998 had already been removed.
17. On behalf of the defendant DDA Shri S.P. Singh, the Executive
Engineer, DDA was examined as DW1. In his cross-examination on 6th
July 2007, he admitted that no notice was issued under Clause 42 of the
agreement for levying penalty on the plaintiff. When he was asked as to
who was responsible for delay in execution of the work, he stated that the
delay was "on account of defaults on part of both the sides, i.e., contractor
as well as of the department". It was suggested to him by the counsel for
the plaintiff that the defects pointed out in the completion certificate were
required to be rectified only at the time of the allottee being granted
possession of the flat. Although he denied the suggestion, he was unable to
give details on the actual handing over the possession to the allottee of the
flat.
18. In his cross-examination on 22nd August 2007, DW1 again did not have
records to indicate whether the defects pointed out were cured when the
flat was handed over to the allottee. He, however, admitted that there was
no complaint by any allottee after taking over the possession that he had
found the fittings either incomplete or missing altogether. He was also
unable to produce any document to show what was the amount spent by
the DDA to complete the deficiencies in the flats.
19. This court concludes that DDA has been unable to bring on record any
document to show that there was any defect in any of the flats at the time
of handing over possession to the allottee. The reply given by DW1 in this
regard is significant:
"I have brought today the Allotment/Possession to allottes (sic
allottees) Register. The first flat on the suit side delivered
possession to the allottee was on 27.11.1998 as per this register.
That possession to the allottee was given by DDA official i.e.
by JE/AE. It is not recorded in the register brought by me
whether the flat was complete in all respects when its
possession was given to the allottee. I cannot say whether the
items mentioned as deficient in the flats as per the completion
certificate Ex PW1/D-18 had been provided when the
possession of the flat was given to the allottee. Fittings like
brass fittings, CP Fittings as mentioned in the completion
certificate, to my opinion, were to be provided by the
Contractor but it were not provided and I am not aware if those
fittings were there with the JE/AE DDA and were fixed by the
Contractor when the possession of flats were given to the
allottees (sic allottees). I will have to check up the record if
contractor did deliver those fitting meant for all the flats and
deposited with the JE and then those fittings were released to
the Contractor and he fixed those fittings while giving
possession of the flat to the allottee. I am not aware if any
allottee of the flat made any complaint that after taking
possession of the flat he had found fittings either incomplete or
missing. Whatever work was recorded incomplete in the
completion certificate it was got carried out by DDA either
through "impressed" or through department labour but not by
engaging any outside agency. I cannot say if there is any
document of the fact that any amount was spent by DDA to
complete those deficiencies. It is wrong to suggest that DDA
had not spent any amount to complete deficiencies in the flats
in question. It is wrong to suggest that all the works had been
completed by the Contractor or that no deficiency or incomplete
work as recorded in the completion certificate Ex PW1/D-18,
was left unattended by the Contractor."
20. On the next date 28th September 2007, DW1 brought the allotment
register pertaining to the allotment of flats. He explained:
"...after inspection of the flat, when the allottee is satisfied after
inspection, the allottee puts signature on the register. At the time of
appending signature on the register, all the work in the flat was
complete. Vol. In case, the contractor leaves the work incomplete,
then the department completes the work. In the present case, the
contractor had left the work incomplete. The remaining work was
done by the department. The said work was completed by the
department only by department labour and no outside agency was
engaged for the work".
DW1, however, admitted that "no letter or notice was issued to the plaintiff
informing him that the work would be completed at the risk and cost of the
plaintiff". Also he admitted that there was no document in the form bills
with regard to the purchase of materials for completion of the flat by the
DDA.
21. To this court, it appears that the DDA did not evolve any clear
procedure for actual handing over the flats to the allottees. There is force in
the contention of the learned counsel for the plaintiff that very often the
handing over the flats is done by the builder/contractor and not the DDA. If
indeed any of the flats remained with defects as pointed out in the
completion certificate, there is no reason why the DDA should have agreed
to extension of time for completion without charging any penalty. The
letter extending the time for completion was issued much after the
completion certificate prepared. It could have been possible for the DDA to
deny extension of time without compensation if indeed the defects
remained to be attended to. The explanation given by the witness for the
DDA about the plaintiff not being authorized to hand over possession
really does not throw much light on what was the procedure followed. It is
also plain that at the time of taking over possession, the allottee would
normally point out what the defects in the flat are. With there being not a
single complaint by any allottee about any flat handed over being
incomplete, the DDA has not been able to establish that the plaintiff did
not carry out the defects as pointed out in the completion certificate.
22. Mr. Narula sought to refer to the photographs taken by the DDA
sometime in 2006 about the status of the building. Photographs taken in
2006 may not really reflect what the position was when the individual flats
were handed over to the allottees. That is what needs to be looked at in
order to examine whether there is justification in the DDA withholding a
sum of Rs.2,45,000/-.
23. In his evidence, the witness for the plaintiff explained in detail in what
manner the defects were rectified. Further with the final bill having been
paid in 2002, it is not open to the DDA to still maintain that the defects
remained to be removed.
24. On a consideration of the evidence, it is clear that the plaintiff has been
able to prove that it was able to remove the defects pointed out at the time
of recording of the completion certificate. Issue No.4 is accordingly
answered in favour of the plaintiff and against the defendants.
Issue No.5:
Whether the defendant is justified in withholding the amounts as claimed in
para 3 of the plaint?
25. In view of the findings recorded hereinabove, the defendants were not
justified in withholding the sum of Rs.2,45,000/- from the final bill paid on
26th February 2002. The issue is accordingly answered against the
defendants and in favour of the plaintiff.
Issue No.6:
Whether the plaintiff is entitled to the amounts as claimed in para 14 of the
plaint?
26. As regards withholding of Rs.2,45,000/- this Court has already
concluded that this was not justified. Next is the question of justification
for the penal recovery for steel enforcement and cement. In the cross-
examination of DW1, he has admitted that no show cause notice was
issued in terms of Clause 42 of the agreement to the plaintiff seeking to
recover penal interest on account of non-return of unused steel and cement.
In K.R. Builders Pvt. Ltd. v. DDA 144 (2007) DLT 408, this Court
referred to the decision of the Supreme Court in Maula Bux v. Union of
India AIR 1970 SC 1955 which emphasized the importance of actually
proving the loss suffered by the DDA. In other words, there could not be
any automatic double rate recovery under Clause 42(2) without the
defendant actually proving what was the loss suffered by it.
27. As regards the withholding of the sum of Rs.2,20,827/-, the reference
may again be made to the admission by DW1 in his cross-examination that
the work was complete in all respects when flats were handed over to the
allottees.
28. As regards the sum of Rs.5,85,480/- being the claim made by the
plaintiff for fixing steel glazed door for a quantity of 546.20 sq. mts., it is
sought to be contended by Mr. Narula, the learned counsel for the DDA
that this is actually a double payment which is already included in the main
portion of 6.4 and therefore does not have to be again paid in clause 6.4(d).
29. A careful perusal of the clause 6.4 shows that the main portion does not
in fact indicate any quantity or sum. It merely states "providing and fixing
steel glazed door, windows and ventilators of standard rolled steel
sections.......". Then from sub-cause (a) to (e) the individual items are
specified. Sub-clause (a) talks of "over all portion treated as fixed" and a
certain sum is provided for. Clauses (b) (c) and (e) use the adjective
"extra" whereas clause (d) simply states "door". Against this item, the
quantity and rate are indicated, and the total sum payable calculated on that
rate and quantity is indicated. It is not possible to agree therefore with the
contention of the Mr. Narula that this is an extra payment. The payment for
the door is specified only in clause 6.4 (d) and nowhere else. The absence
of the word "extra" to qualify the word "door" shows that the claim by the
plaintiff is justified.
Watch and Ward:
30. The evidence of the plaintiff shows that it did deploy watch and ward
in the premises. This became necessary since the DDA had in fact not
taken over the site from the plaintiff formally and the entire site with the
built up flats obviously could not be left unprotected. The question posed
and the answer given by the witness DW1 in this regard are significant:
"Q Did DDA take over the site from the plaintiff after
completion of the work?
A There is no such procedure to take over the site from the
plaintiff. Vol. The plaintiff left the site.
There was no question of taking over site from the plaintiff as
the site belongs to the DDA. We did not deploy and security for
watch and ward. However, DDA staff used to remain there. It is
wrong to suggest that no DDA staff was present at the site. No
payment was made to the said staff vide bills as the said staff
was regular staff of the DDA. I do not remember how many
staff members were present at the site. It is wrong to suggest
that defendant is liable to pay watch and ward charges to the
plaintiff. It is correct that the department has recovered
Rs.25,518/- from the plaintiff towards panel rate recovery for
steel and a sum of Rs.1286/- towards panel recovery for
cement. It is correct that the rate of panel rate recoveries is
double amount of agreed rate. There was no complaint
regarding theft or pilferage from the site."
31. Counsel for the plaintiff has pointed out in the circular issued by the
DDA regarding provision of watch and ward. The letter dated 7th
December 1998 written by the plaintiff to the EE DDA requested it to
deploy watch and ward from the side of the department so that no problem
may arise in future. In the said letter it was pointed out that the plaintiff
had already withdrawn chowkidars from the entry gate. PW1 further
explicated on this aspect as under:
"There was no clause in the Agreement for me to keep a watch
and ward on the site (Vol. But since DDA did not take action
for four years in the allotment of flats, I had to take care of the
site by maintaining watch and ward). The watch and ward was
needed even when internal fittings in the flats were not fixed till
flat was occupied, protection of other material like doors,
window panes, wash basin, system, grills etc. were there. It is
true that I had written myself to DDA that I would not be
responsible for watch and ward of the site but DDA declined
my request verbally and not in writing (vol. DDA had initiated
a proposal to execute Agreement for this watch and ward but
Higher Authorities dismissed that proposal). I identify my
letter Ex P-16 & 17 which I had written to DDA on this subject
of watch and ward saying that it was the responsibility of DDA
to provide watch and ward and that I was withdrawing my
Watchman (vo. That was in the year 1998 and when DDA did
not take any steps I had to keep a watchman for twenty four
hours till allotment/possession continued). It is wrong to
suggest that there was never a proposal to execute an
Agreement for providing a Watchman on the site."
32. To this court, it appears that the provision of watch and ward by the
plaintiff became inevitable as otherwise the property would have remained
unprotected. In a similar context in K.R. Builders Pvt.Ltd., the claim of the
contractor for watch and ward charges was upheld by this Court. In light
of the above position, it appears to this court that the claim made by the
plaintiff for providing watch and ward from 1st December 1997 up to June
2007 is reasonable and should be upheld.
Idle Labour and Establishment: claim at the rate of Rs.20,000/- for a
period of 26 months:
33. According to the plaintiff, the completion of the work was delayed for
reasons not attributable to the plaintiff. Further the extensions were also
granted by DDA without charging any penalty. During the extended
period, the machinery deployed by the plaintiff and the staff, remained
idle.
34. It is seen that the plaintiff has really not produced any evidence to
justify the claim for Rs.20,000/- per month for a period of twenty-six
months. In the letter written by the DDA on 18 th August 1998 granting
extension up to 1st December 1997 it has been indicated that the contractor
had given an undertaking that due to the hindrances "he has not suffered
any financial loss and his labour and TMP never remained idle. He has also
undertaken that he will not claim any liquidated damages on this account".
This is a document marked by the plaintiff itself. It has been issued by the
defendant. The giving up of this claim by the plaintiff has been adequately
explained by the DDA. In the above circumstances, it appears to this court
that this claim by the plaintiff is not sustainable.
35. Issue No.6 accordingly stands answered.
Issue No.7:
Whether the plaintiff is entitled to interest on the aforesaid amount and if
so at what rate and for what period?
36. As regards the claim for interest, it is seen that the plaintiff has claimed
the interest @ 12 % per annum from 1st December 1997 up to the date of
filing of the suit and also future interest at 12 % per annum. This claim
seems to be reasonable. Accordingly, the plaintiff is granted interest on the
above sum at 12 % per annum simple interest pendente lite and future till
the date of recovery on the claims found due and recoverable by the
plaintiff.
Relief
37. In view of the findings as aforesaid, the plaintiff is held entitled to the
following amounts:
Claim of the plaintiff Amount
(a) The amounts withheld from the final bill Rs.2,45,000/-.
for which no adequate justification has
been provided by the defendant
(b) Towards penal recovery for steel and cement Rs. 25,518.80 +
Rs. 1,286.00
(c) Reduction, deduction and less rates paid
for extra items Rs. 2,20,827/-
(d) Non-payment against item 6.4(d) for steel
Glazed door for quantity of 546 sq. mts. Rs. 5,85,480/-
(e) Watch and ward charges. Rs. 2,40,000/-
----------------------
Total Rs. 13,16,825.80
38. A decree is passed in favour of the plaintiff and against the defendant
No.1 DDA for the sum of Rs.13,16,825.80p. along with simple interest at
12 % per annum from the date of filing of the suit till the date of recovery.
The suit stands disposed of. The decree sheet be drawn up accordingly.
S. MURALIDHAR, J.
AUGUST 7, 2009
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