M/S. Mitra Guha Builders (India) ... vs Delhi Epdp Cghs Ltd.
2010 Latest Caselaw 561 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          Arb. P.No.50/2009
                                                             February 2, 2010

M/S. MITRA GUHA BUILDERS (INDIA) CO.                               ...Petitioner

                                 Through:        Mr. Rishi Manchanda, Advocate.
              VERSUS

DELHI EPDP CGHS LTD.                                               ....Respondent

                                 Through:        Ms. Anju Bhattacharya, Advocate
                                                 with Mr. Elgin Matt John,
                                                 Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

 %                               JUDGMENT (ORAL)
VALMIKI J.MEHTA, J

1. This petition under Section 11 of the Arbitration and Conciliation

Act, 1996, demonstrates, and if I can say so, the heights of mala fides and greed

of a builder for claiming amounts for alleged disputes which are ex facie no

longer live claims. Further, reference of the disputes is being sought although

seeking reference thereof is grossly barred by limitation.

2. The undisputed facts of this case are that the petitioner as a

contractor built flats for respondent cooperative society. This work which was

allotted to the petitioner was admittedly completed by the petitioner on

Arb. P. No.50/2009 Page 1 4.9.2001. This admission is recorded in the letter dated 13.12.2004 sent by the

petitioner to the respondent. The fact that work has been completed on 4.9.2001

is also clear from para 7(vii) of the petition itself which also re-affirms the fact

that the work was completed on 4.9.2001. Another admitted fact is that the

final bill for the payment as regards work remaining unpaid for was in fact

raised by the present petitioner amounting to Rs.32,44,835/- in 2001 and the

same was thereafter approved by the consultant for a sum of Rs.28,97,771/-. As

per the respondent, from this amount of Rs.28,97,771/-, the petitioner gave a

discount of Rs.7,50,000/- and a minor deduction was to be made of Rs.25,000/-

and therefore a sum of Rs.21,22,271 became payable to the petitioner. To this

amount, the respondent added certain amounts towards escalation, services and

security amounts and thereby the amount increased from Rs.21,22,271/- to

Rs.31,57,518/-. After deducting the TDS and the advance payment of

Rs.5,00,000/-, the net amount which became payable to the petitioner came to

Rs.25,93,105/-. Admittedly, this amount of Rs.25,93,105/- has been paid to the

petitioner by the respondent by means of cheques dated 11.10.2001, 11.11.2001

and 11.12.2001 and all of which have been encashed on the respective dates.

3. It is not the case of the petitioner that at the time of encashing of

these cheques or accepting these amounts under the final bill, the petitioner

disputed these amounts in any manner whatsoever or it took up any stand that

such amount is not in satisfaction of payment of the final bill. No

contemporaneous correspondence exists with regard to any dispute or claim

Arb. P. No.50/2009 Page 2 raised by the petitioner/contractor that the amounts which have been received

by the petitioner are not in terms of the final bill or that any disputes survive

with respect to the final bill even after encashing of the cheques totalling

Rs.25,93,105/-. It is, therefore, quite clear that in this case that not only the

contract was completed way back in September, 2001 but the same received a

quietus in December, 2001 when the last cheque for Rs.7,50,000/-, being last

part of the balance amount of Rs.25,93,105/-, was encashed by the petitioner.

I therefore hold that there are no live claims of any nature

whatsoever, as regards the final bill, remaining to be adjudicated in any forum,

including arbitration, after December, 2004 (i.e. expiry of three years after

December, 2001), and much less by a petition filed in the year 2009.

4. The only other amount which remained with the respondent was

the retention amount, and which amount the respondent was entitled to withhold

for rectification of defects during the warranty period. On this aspect of the

amount payable of the retention monies of approximately Rs. 26.11 lacs and the

disputes surviving for reference to arbitration, the counsel for the petitioner has

relied upon the Minutes of the Meeting dated 26.11.2004 of the respondent

society to urge that such amount was an admitted amount. The counsel for the

petitioner, relying upon these Minutes of Meeting, therefore urged that

petitioner was entitled to receive such balance payment of Rs.26.11 lacs, which

was withheld by the respondent for rectification of the defects during the

Arb. P. No.50/2009 Page 3 warranty period. He also relied upon the said document dated 26.11.2004 to

urge that disputes survived qua the final bill also.

5. A reading of these Minutes of Meeting dated 26.11.2004, in my

opinion, does not at all refer to anything qua the final bill which was paid by

December, 2001. So far as the retention money issue being allegedly admitted is

concerned, in fact these Minutes of Meeting show, how defective/shoddy work

was done by the petitioner and consequently as defects cropped up, there were a

large number of complaints of the members of the society for rectification of

these defects. It is clear from these Minutes of Meeting that the withheld

amount was being utilized for rectification of the defective works left behind by

the petitioner. I, therefore, do not understand as to how it can be canvassed on

the basis of this document dated 26.11.2004 that any amount was payable,

either with respect to the final bill or even for the balance withheld amount of

Rs.26.11 lacs, allegedly on account of a supposed admission of liability to pay

the same.

6. The counsel for the respondent, so as to show that no dispute ever

remained qua the final bill, has drawn my attention to the petitioner's letter

dated 13.12.2004, already referred by me earlier in another context, in which the

petitioner only claimed the retention amount of Rs.26,11,604.96/- and there is

no reference therein of any issue pending qua the final bill or of any pending

payment thereunder. A reading of this letter shows that the contention of the

counsel for the respondent is correct. Of course, this letter of the petitioner,

Arb. P. No.50/2009 Page 4 which is a self-serving document, does mention some alleged settlement,

however, neither that alleged settlement is on record and nor are the terms of

that alleged settlement in any manner clear from this letter dated 13.12.04 and

further there is no date of that alleged settlement. Not only are the terms of the

alleged settlement not clear, but also in my opinion, the writing of a letter by the

petitioner on 13.12.2004 after having encashed all the cheques by December,

2001 with respect to the payments under the final bill, surely, cannot mean that

these thereby results a reopening of the issues which had received a

satisfactory quietus in December, 2001. Such an attempt to reopen settled

matters cannot be termed as anything except a mala fide, misconceived,

mischievous and most unfortunate attempt to reopen the issues which were

closed to the satisfaction of all concerned.

7. The counsel for the respondent, has further referred to a letter of

the respondent society dated 29.12.2008, copy of which has been filed by the

petitioner itself in this Court, wherein the respondent society in 2008 in

response to a letter of the petitioner once again reiterated the details of payment

of the final bill and deprecated the tendency of the petitioner to keep on building

pressure to make out a claim which does not survive. I agree.

8. In view of the above, it is quite clear that no live disputes remain so

far as any amount whatsoever for the work done i.e either for issues qua the

final bill which was cleared by December, 2001 or for retention moneys. The

Supreme Court recently in the case of National Insurance Company Vs.

Arb. P. No.50/2009 Page 5 Boghara Polyfab (P) Ltd.(2009) 1 SCC 267 . has held that once claims become

time barred, they no longer remain live claims. Para 22.2 of the said judgment

which holds so reads as under:-

"22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:

(a) Whether the claim is a dead (long-barred) claim or a live claim.

(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection".

As regards the prayer for reference of the disputes of retention

moneys to arbitration, I also hold that the petition is not filed within limitation

qua these retention moneys because this petition was filed very late in the year

2009 and retention moneys had become payable in 2004 on completion of the

warranty period.

9. While on this issue of the petition being time barred for the aspect

of the retention moneys, I would be failing in doing justice to the counsel for the

petitioner in not referring to the letter dated 14.8.07 to which attention has been

drawn of this Court for the purpose of asserting that claims both as regards final

bill and retention amount is within limitation. By relying upon this letter,

counsel for the petitioner sought to contend that since by this date reference was

sought to arbitration, running of the limitation stops thereafter. Let us examine

this argument. Even if we take the stopping of the limitation period by sending

of this letter dated 14.8.07, even then, I find that on this date the claims which

were sought to be raised on the basis of the letter dated 14.8.07, were hopelessly Arb. P. No.50/2009 Page 6 barred by limitation even on that date. This is for the reason that the work was

admittedly completed in September, 2001 and payment under the final bill was

cleared in December, 2001. If any disputes for the final bill had to be raised,

they had to be raised by December, 2004. This letter is admittedly not of

December, 2004 but of 14.8.2007 i.e. much later. Clearly, this was a desperate

attempt by the builder to extract money from the members of the respondent

cooperative society. The malafides of the builder stares us in the face. So far as

the issue, whether this letter can bring within limitation the claim of the amount

of Rs.26.11 lacs, being the amount which was withheld by the respondent

society for rectification of defects , I find that even in this regard the claim for

balance payment is ex facie barred by time as I have already held. The defect

liability period under the contract in question, as per the counsel for the

petitioner was effective from 1.10.2001 to 30.9.2002 and which was extended

upto 31.3.2003 (and for which purpose the counsel for the petitioner drew my

attention to the paras IX and X of the reply filed by the respondent) and he

accordingly contended that the limitation period therefore would commence

only from 1.4.2003. Even if, I accept this contention as correct, the limitation

period for the balance amount withheld of Rs.26.11 lacs which was retained by

the respondent for rectification of defects which are revealed during the

warranty period, then, as the period of three years will commence from 1.4.2003

the same will end on 31.3.2006, and whereas this letter which is relied upon by

Arb. P. No.50/2009 Page 7 the counsel for the petitioner is dated 14.8.2007, that is beyond the period of

three years.

10. I have already adverted to the misconceived and mala fide nature

of this petition and I have also observed that by means of entering into

correspondence and filing of this petition, an attempt is made to extract money

from the members of the respondent society. The counsel for the respondent

has vehemently opposed the petition as being a gross abuse of the process of

law and has buttressed her arguments by relying upon the contents of the

documents/letters which have already been referred to hereinabove. I may, at

this stage, note that the counsel for the respondent states that it becomes very

difficult for a society when stale claims are raised, to defend the same in a Court

of law inasmuch as many documents by long passage are lost/not traceable.

This argument in my opinion contains one of the basic principles behind the

enactment of the Limitation Act 1963, that if claims are preferred after a long

time, there is gross injustice in such claims, as the person who has to defend the

false claims, would not have evidence to substantiate its defence which is lost

on account of lapse of a long period of time. The application of this principle is

more acute in the present case, where the respondent is not an individual person

who would be having a sort of personal interest to maintain documents but it is

a society which is represented at different points of time by different office

bearers who have custody of the papers and the documents. The counsel for the

respondent has also contended that the society consists of middle class members

Arb. P. No.50/2009 Page 8 and this attempt on the part of the petitioner must be visited with appropriate

compensatory and also penal costs. I accept this contention of the counsel for

the respondent.

11. The Supreme Court in its judgment reported as Salem Advocate

Bar Association Vs. Union of India 2006(5)SCC 344, in para 37, has said that

it is now high time that actual costs should be imposed. Considering the

financial position of the petitioner, which is a rich builder, I feel that in the facts

and circumstances of this case, it will be most appropriate that not only

compensatory costs are awarded to the respondent, which I quantify and grant at

Rs.1 lac, I also feel that penal costs must be imposed on the petitioner and

which penal costs, I quantify at Rs.50,000/-.

12. Accordingly, this petition is dismissed with total costs quantified at

Rs.1,50,000/-. In case, the costs are not paid within a period of four weeks from

today, then, interest thereon shall be payable @ 18% per annum till the date of

the actual payment. It has been recently held by the Supreme Court in the case

of U.P.Coperative Federation Vs. Three Circles, 2009 10 SCC 374, that Court

is entitled to impose interest on the costs awarded. I have accordingly, in view

of the facts of this case, awarded interest on costs.

13. With the aforesaid observations, the present petition stands

disposed of.

                                                        VALMIKI J.MEHTA, J

February 2, 2010/Ne

Arb. P. No.50/2009                                                               Page 9