M/S. Ganpathi Aluminium Pvt. Ltd. vs M/S. M. V. S. Engineering Ltd. & ...
2011 Latest Caselaw 3997 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           RFA No.145/2002

%                                                   17th August, 2011

M/S. GANPATHI ALUMINIUM PVT. LTD.                             ...... Appellant
                          Through:          Mr. D.K. Rustagi, Advocate with
                                            Mr. B.S. Bagga, Advocate.

                          VERSUS


M/S. M. V. S. ENGINEERING LTD. & ANR.                    ...... Respondents

                            Through:        None.

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?

VALMIKI J. MEHTA, J (ORAL)

1. Arguments on behalf of the appellant in this case were

concluded on 26.7.2011. The matter has thereafter been adjourned on

four dates as requests were made on behalf of respondents. Today, once

again no one is present for the respondents. Enough indulgence has

been granted to the respondents. I am therefore proceeding to pass the

judgment.

2. The challenge by means of this Regular First Appeal under

Section 96 of Code of Civil Procedure, 1908 (CPC), is to the impugned

judgment and decree dated 24.9.2001 which dismissed the suit of the

appellant/plaintiff although the claim for an amount of Rs.1,93,147/- was

proved inasmuch it was held that the suit was barred by limitation.

3. The facts of the case are that an order was placed upon the

appellant/plaintiff by the respondents/defendants on 24.5.1994 for

aluminium glazing work. The appellant/plaintiff raised three running bills.

The first bill was dated 10.10.1994 for Rs.4,49,495.60/-. The second

running bill was dated 25.10.1994 and was for an amount of

Rs.39,203.75. The third bill was dated 1.12.1994 for Rs.61,686.30/-.

After 1.12.1994, the appellant/plaintiff did the further finishing work of

Rs.44,385/- and raised its final bill dated 30.12.1994 for a sum of

Rs.6,89,729.98/-. Certain payments were made by the defendant

No.1/respondent No.1 against these bills and details of these payments

are given in para 8 of the plaint as under:-

     S. No.            Amount           Cheque/Cash        Dt.
     1.                60,000/-         Cheque             2.6.94
     2.                1,00,000/-       Cheque             13.8.94




      3.            60,000/-          Cheque           25.8.94
     4.            80,000/-          Cheque           23.9.94
     5.            75,000/-          Cash             1.11.94
     Total         Rs.3,75,000/-

Since the balance dues of the appellant/plaintiff were not

paid by the respondent No.1/defendant No.1, the subject suit came to be

filed in which the following amounts were claimed:-

"Final bill dt. 30.12.94 for 6,89,729.98 Less Sale of Scraps 16,929.00 Total 6,72,800-98 Less 5% defect liability amounting to 33,640-00 Principal amount comes to 6,39,160-98 Less amount received. 3,75,000-00

Principal amount in total 2,64,160-98 Interest accrued on Principal amount @ 24% per Annum upto 1.11.97 comes to 1,84,912-00

Interest accrued on 5% defect Liability amount i.e. Rs.33,640/- @ 24% p.a. w.e.f. 1.7.95 to 1.11.97 19,511-00

Amount recoverable on Account of 5% defect Liability as per supply Order dt.24.5.94 after Expiry of 6 months 33,640-00

Total 5,02,223-00 (Rs. Five Lacs Two Thousand Two Hundred Twenty Three only)."

4. The respondent No.1/defendant No.1 contested the suit and

besides claiming that the suit was barred by time alleged that the

following payments were made by the respondent No.1/defendant No.1

and therefore nothing was due. The payments which are claimed to have

been made by the respondent No.1/defendant No.1 are as under:-

Cheque No.               Date                   Amount

438309                   02.06.1994             60,000.00

438405                   08.06.1994             21,000.00

438977                   09.08.1994             54,000.00

438989                   10.08.1994             1,00,000.00

439095                   25.08.1994             60,000.00

439147                   06.09.1994             47,208.44

499432                   23.09.1994             80,000.00

Cash Payment             01.11.1994             75,000.00

Cash Payment             22.11.1994             1,17,604.00

                         Total                  Rs.6,14,812.44

The respondent No.1/defendant No.1 also denied that the

appellant had incurred cost of finishing amount into Rs.44,385/-. Also,

it was disputed that the plaintiff submitted its final bill dated 30.12.1994

because the final bill was not certified by the Architect/defendant No.2.

Another defence taken up in the written statement was that respondent

No.1/defendant No.1 suffered losses on account of substandard material

and defect in design and fabrication of the material. The respondent

No.1/defendant No.1 finally alleged that the appellant/plaintiff did not

complete the work which had to be got done from other sources.

5. After pleadings were complete, the trial Court framed the

following issues:-

"1. Whether the plaintiff did not complete the structure work and defendant No.1 was not liable to make payment because of defective structural work and non-completion of work?

2. Whether the plaintiff was not entitled to receive the payment without certificate?

3. Whether the suit of the plaintiff was not maintainable u/o 2, rule 2 CPC as alleged in para 6 of the preliminary objection of the Written Statement?

4. Whether the suit has been signed and verified by duly authorized person?

5. Whether the suit is barred by limitation?

6. Relief?"

6. The only relevant issues which were argued before me were

issue Nos.2,5 and 6. So far as issue No.1 is concerned, the trial Court

decided the same against respondent No.1/defendant No.1 as neither

evidence was adduced of the alleged defects and nor was any counter

claim raised. On the issue as to the entitlement of the appellant/plaintiff

for monies, the trial Court held the appellant entitled to a sum of

Rs.1,93,147/- in the following terms:-

"15. PW1 D.S. Bhartiya has admitted that the total of the three running bills certified by the Architect was Rs.5,68,147.00. He has stated that defendant No.1 made a total payment of Rs.3,75,000/-. DW1 Rakesh Sharma has, on the other hand deposed that a total amount of Rs.6,44,812.44 was paid to the plaintiff.

16. The plaintiff has given the details of payment in para 8 of the plaint. Defendant No.1 has, on the other hand given the details in para 5 of the Written Statement. On comparison of the two details, I find that the following payments are disputed:-

        CHEQUE               DATED                    AMOUNT
        NO.                                           (RS.)
        438405               08.06.94                 21,000.00
        438977               09.08.94                 54,000.00
        439147               06.09.94                 47,208.44
        Cash                 22.11.94                 1,17,604.00
        Payment

17. PW1 D.S. Bhartiya has denied the cash payment of Rs.1,17,604/- on 22.11.94. He has admitted that the first mentioned three payments through cheque were received but he has explained that the said payments were made against another project at MB Road, Opposite Saket. He has produced the contract Ex.PW1/D1 to show that another job work had been assigned by defendant No.1 to the plaintiff at MB Road during the same period. This document falsifies the statement of DW1 Rakesh Sharma that no work was done by the plaintiff for defendant No.1 at MB Road. Defendant No.1 has also not produced any receipt to establish the cash payment which it alleges to have made on 22.11.94. Therefore, I am satisfied that defendant No.1 had made total payment of Rs.3,75,000/- only against the work done at E-24, East of Kailash. The total amount certified by the Architect was Rs.5,68,147. Therefore, balance amount of Rs.1,93,147/- remained unpaid."

7. On the aspect as to the entitlement of the appellant/plaintiff

for the work done, there is a clear cut admission of the respondent

No.1/defendant No.1 of its liability because in para 5 of the written

statement, the defendant No.1/respondent No.1 admits to have made

payment of Rs.6,14,812/-. The respondent No.1/defendant No.1 alleged

an excess payment of Rs.46,665/- in the aforesaid amount, however, no

counter claim for recovery of this amount was filed. Therefore by virtue

of para 5 of the written statement, it stands admitted that the

appellant/plaintiff is entitled to Rs.6,14,812.44/-. Out of the amount of

Rs.6,14,812.44/- there are four payments which are disputed and the

same are as under:-

        CHEQUE              DATED                    AMOUNT
        NO.                                          (RS.)
        438405              08.06.94                 21,000.00
        438977              09.08.94                 54,000.00
        439147              06.09.94                 47,208.44
        Cash                22.11.94                 1,17,604.00
        Payment

The appellant/plaintiff claimed that three payments said to

have been made by the cheques were in fact not for the said contract but

for another contract being a supply vide order dated 7.6.1994 and details

with respect to which are given in para 5 of the replication. The

respondent No.1/defendant No.1 has not been able to dispute this in its

evidence and therefore the appellant/plaintiff has successfully

established that the payments by means of three cheques which are

disputed were not towards the subject contract. So far as the cash

payment is concerned, no receipt was filed and this payment was

therefore not proved to the appellant/plaintiff. Accordingly, in my

opinion, the appellant/plaintiff in addition to the amount of Rs.1,93,147/-

as found to be due by the trial Court, is also entitled to an amount of

Rs.44,385/- being the cost of finishing work done after 1.12.1994 and

upto 30.12.1994 when the final bill was submitted. Merely because the

Architect/defendant No.2 refused to certify the payment would not mean

that the appellant/plaintiff will not be entitled to the amount. The

appellant/plaintiff had written a letter to the Architect dated 30.10.1995,

Ex.PW1/8, and in which reference was made to this final bill dated

30.12.1994. Therefore, the final bill dated 30.12.1994 has been proved

to be received by the defendant No.1/respondent No.1.

8. The trial Court has dismissed the suit as barred by limitation

by holding that the final bill dated 30.12.1994 has not been proved to be

received by the respondent No.1/defendant No.1. Firstly, I have already

held above that this bill was in fact duly sent to the respondent

No.1/defendant No.1 and which is confirmed vide Ex.PW1/8 dated

30.10.1995. Secondly, in case of payments under a running contract,

limitation is governed by Article 18 of the Limitation Act, 1963. As per

Article 18, limitation will commence from the date fixed for payment or

when the work is done. In the present case admittedly no date has been

fixed for payment and therefore payment becomes due from the date of

the work done. It is of course not as if on the very second that the work

is done, that limitation begins under Article 18 inasmuch as in a running

contract there can be various other conditions as to the requirement of

submitting a final bill, joint measurement and so on and it is only

whereafter can a cause of action be said to begin for the purpose of

limitation. I have had an occasion to consider this aspect in the decision

of Satender Kumar Vs. Municipal Corporation of Delhi & Anr. 168

(2010) DLT 15. Para 16 of this judgment is relevant and reproduced

herein:

"16. A summary of the conclusions on reading of the aforesaid relevant clauses of the contract in question and the judgments as dealt with above, bring out the following salient points:

(i) Limitation commences when the cause of action accrues/arises.

(ii) Accrual/arising of cause of action necessarily varies as per facts and circumstances of each case and the nature of jural relationship between the parties viz contractual or otherwise and so on.

(iii) As regards contracts for execution of building work, Article 18 comes into play in that when no specific date for

payment is fixed, limitation commences and the cause of action accrues for the purpose of limitation on the completion of work.

(iv) In its application, Article 18 will cause different dates for accrual of causes of action in building works when a time period is fixed for submitting of a bill by the contractor and to which there is no response of the owner. Where a final bill is submitted and liability under the same, even if, in part, is admitted or some payment is made then such actions extend limitation in terms of Section 18 of the Limitation Act.

(v) No fresh period of limitation can arise simply because letters and reminders are written time and again, attempting to keep the claim alive, although the claim by virtue of Article 18 of the Limitation Act, has become clearly time barred."

9. A reference to the work order Ex.PW1/3 filed in the present

case shows the payment terms as under:-

"Payment Terms:

a) 10% Mobilisation advance against Bank Guarantee which will be adjusted in running bills proportionately.

b) 80% of the cost of material brought to site will be paid after receiving the material at site, which will be adjusted along with advance in running bills.

c) 80% of rates approved on actual Quantities measured jointly will be paid after erection at site after deduction (a) & (b) above proportionately.

d) 95% of the rates after completing the total works.

e) Balance 5% will be made after the defect liability of 6 months."

It is therefore clear from the aforesaid terms that there was

requirement of measuring of quantities for claiming payment after

measuring of the quantity and thereafter some time also have to be

given for raising of the final bill. Further, reasonable time will have to be

given from the date of this final bill inasmuch as the final bill was not

payable by the respondent No.1 till the same was certified by the

Architect/defendant No.2/respondent No.2. Since the appellant/plaintiff

has done work from 1.12.1994 to 30.12.1994, work in terms of Article 18

of the Limitation Act, 1963 has continued till 30.12.1994. After this date

i.e. 30.12.1994, a reasonable time has to be given to the Architect to

certify the same and in the facts of the present case where the contract

was to be completed within a few months, a period of about 30 days can

be said to be a reasonable period for certification and if there is no

certification within this period by the Architect/defendant

No.2/respondent No.2, the appellant/plaintiff can be said to have the

cause of action for filing of the suit for recovery. I may further note that

vide Ex.PW1/10 dated 25.1.1995, and which is a letter written by the

appellant/plaintiff to the respondent No.1/defendant No.1, a final

certificate of payment was issued on 26.12.1994. Even therefore if we do

not take the commencement of limitation as one month after 1.12.1994,

since the final certificate of payment is dated 26.12.1994, the suit can

definitely be filed by 26.12.1997 and the suit in the present case was

filed on 23.12.1997. I may note that the appellant/plaintiff in para 11 of

the plaint specifically mentioned completion of finishing work only by

29.12.1994 and to which reply in the written statement was that the

appellant/plaintiff did not complete the work and the respondent

No.1/defendant No.1 had to get the same completed by some other

sources, however, this has not at all been proved during evidence.

10. In view of the above, I hold that the suit which has been filed

on 23.12.1997 was within limitation considering Article 18 of the

Limitation Act, 1963 inasmuch as the final bill is proved to have been

submitted on 30.12.1997 and the suit has been filed on 23.12.1997. In

fact, limitation would begin only by 1.2.1995 if we take the period of one

month after submission of the final bill for certification by the Architect.

Further, the final certification of payment as stated in Ex.PW1/10 is dated

26.12.1994 and once again the suit has been filed within three years of

this date. I therefore set aside the finding of the trial Court that suit is

barred by limitation and hold the suit is within limitation.

11. In view of the above discussion, the suit of the

appellant/plaintiff is decreed against respondent No.1/defendant No.1 for

a sum of Rs.2,37,532/- (Rs.1,93,147/- + Rs.44,385/-). The

appellant/plaintiff will also be entitled to pendente lite and future interest

@ 9% per annum simple. Parties are left to bear their own costs. Decree

sheet be prepared. Trial Court record be sent back.

AUGUST 17, 2011                                VALMIKI J. MEHTA, J.
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