Delhi High Court
M/S. Bindal Agro Chem. Ltd. vs M/S. V.M.J. Enterprises on 5 March, 2013
Author: S.Ravindra Bhat
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on : 19.02.2013
Decided on: 05.03.2013
+ RFA (OS) 4/2005
M/S. BINDAL AGRO CHEM. LTD. ..... Appellant
Through : Sh. Anurag Sharma, Advocate.
versus
M/S. V.M.J. ENTERPRISES ..... Respondent
Through : Sh. T.N. Tripathi, Advocate.
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA
MR. JUSTICE S. RAVINDRA BHAT
%
1. The Appellant (defendant in the suit) was sued by the plaintiff, who
claimed a decree for Rs. 32,27,102.56/- as the unpaid price of the
construction and erection services rendered by the latter.
2. The Appellant had issued a Work Order, dated 03.12.1992 to the
plaintiff; on 07.05.1993 additional work was awarded on the same terms.
The plaintiff was to supply manpower and use his own tools and tackles for
executing the work, which was fabrication of pipes (after cutting metal
plates and welding them), earthwork channels, laying and fitting the pipes
and completing finishing work for reinforcement (civil work). The plaintiff,
in its suit, alleged that it completed the works, and raised bills for
Rs.56,75,340.05/-. The plaintiff admitted in its affidavit, dated 02.05.2003
RFA (OS) 4/2005 Page 1
that it received payment of the bills to the tune of Rs.24,83,014/-. The
amount of Rs.31,92,326.05/- was allegedly outstanding. For the additional
works awarded, the plaintiff claimed a sum of Rs.34,776.51/-. It was also
alleged in the suit that the plaintiff's workmen were prevented from entering
the Appellant's site from 05.11.1993 and all its equipment could not be
retrieved. No particulars of such equipment were, however, disclosed in the
plaint nor was their value mentioned; during the hearing of the suit, the
plaintiff restricted its claim for recovery of the suit amount.
3. The Appellant, in its written statement (in the suit) admitted having
awarded the work and additional work, by letter dated 07.05.1993; it,
however, pleaded that its consultant had verified the plaintiff's bills in sum
of Rs.54.68 lakhs; 5% of the said sum amounting to Rs.2.73 lakhs was
retained in terms of the retention clause (clause 25A). Of the balance amount
of Rs.51.95 lakhs, a sum of Rs.49.94 lakhs was paid. Since some chargeable
and consumable items other than electrodes were supplied by it to the
plaintiff and payments made to other contractors on behalf of the plaintiff,
no amount was payable; on the contrary it argued that Rs.5.65 lakhs excess
amount was paid. It urged that there was a penalty clause in the agreement
and that the plaintiff did not complete the works within the stipulated period.
4. Parties went to trial; the Court framed a large number of issues. These
were later recast; the learned Single Judge recorded that the following issues
had to be decided:
(a) To what amount is the plaintiff entitled to from the defendant?
(b) Whether the defendant was entitled to adjust the amounts
indicated in the statement of account filed by the defendant; and
RFA (OS) 4/2005 Page 2
(c) If plaintiff is entitled to any amount, whether plaintiff is
entitled to interest and if so at what rate?
5. It was noticed that the plaintiff pleaded in the plaint that it received
only a sum of Rs.24,83,014/- and relied on various documents (Ex.P-6 to P-
29 vouchers sent by the defendant to the plaintiff for signatures when
payments were tendered). The total of the sum received was shown in
Annexure `L' to the replication of the plaintiff. That document recorded
that:-
"Total payments (including mobilization advance) made by
the defendant to the plaintiff: Rs.33,83,014."
6. The learned Single Judge noticed in the impugned judgment that the
plaintiff's pleadings were contrary to the evidence on record. It is also an
admitted fact that the plaintiff did not adduce any evidence in the form of
accounts maintained by it, and amounts paid to it; nor did it produce any
bank statements or ledger extracts to evidence the actual payments received
by it. In these circumstances, the impugned judgment proceeded upon an
analysis of the rival pleadings and the accounts urged by the Appellant.
Thereafter, the Court held as follows:
"29. It is accordingly held that the defendant has failed to
prove that it has paid Rs.49,94,215/- to the plaintiff.
However, since counsel for the plaintiff admitted that in
view of averments made in the replication filed by the
plaintiff and Annexure 'L' (Colly.) annexed thereto, plaintiff
has admitted receipt in sum of Rs.33,83,014/-. This
includes the mobilization advance.
30. On the issue of deduction? Defendant was not to effect
any deductions for supply items as per contract. As per
RFA (OS) 4/2005 Page 3
contract, supply items were listed. It was for the defendant
to prove that it supplied items other than the ones required
to be supplied free of cost.
XXXXXXXXX XXXXXXXXX XXXXXXXX
40. Defendant has relied upon Clause 25A of the contract to
justify retention of Rs.2.73 lacs. Clause 25(A) and (B) have
been noted in para 20 above. This amount had to be paid
back in two installments. Neither party has led evidence on
issue of contract being completed or not. I accordingly
hold that even this amount would be payable in view of the
fact that plaintiff has stated and deposed that he was
prevented from entering upon site after 5.11.1993.
41. Reframed issues 'a' and 'b' as per para 7 above are
accordingly answered by holding that plaintiff would be
entitled to a sum of Rs.54,68,631/- as per bills admitted as
payable by the defendant. Plaintiff has admitted receipt of
payment in sum of Rs.33,83,014/-. Defendant would be
entitled to adjustment of Rs.16,313/-. I accordingly hold
that plaintiff would be entitled to a sum of Rs.20,69,304/-
from the defendant. Suit is decreed in the sum of
Rs.20,69,304/- in favour of the plaintiff and against the
defendant."
7. It is argued by counsel for the appellant that in proceeding to saddle it
with liability the impugned judgment is in error of law. The plaintiff was
under a liability to prove, through credible evidence, that it was entitled to
the claims made in the suit. It hopelessly failed to discharge the burden of
proving its case. In the circumstances, the Court could not have merely
relied on the pleadings and placed the burden of proving that amounts were
paid on the defendant. The question of the onus shifting would arise only
after the plaintiff made good, through credible evidence and materials, its
RFA (OS) 4/2005 Page 4
allegations of non-payment. The Appellant's counsel also submitted that far
from producing any accounts, or ledger, or even bank statements, the
plaintiff's pleadings and evidence were at variance; even the affidavit sworn
to on its behalf made conflicting claims. Therefore, the learned Single Judge
should not have decreed the suit at all.
8. In para 15 of the impugned judgment, the Single Judge relied upon
the appellant's statement of account produced during the hearing. After
considering and analyzing it, the impugned judgment recorded as follows:
"18. To simplify for purpose of understanding, the
statement relied upon by the defendant would be as under:
i) Amount certified for payment : Rs.54,68,631.00
ii) Less 5% retention as per work order: Rs. 2,73,432.00
A. Amount Payable : Rs.51,95,199.00
Payments :
i) Mobilization advance : Rs. 2,00,000.00
ii ) Payment confirmed by party : Rs.24,83,024.00
iii) Further payment made : Rs.23,11,191.00
B. Total payment made (i+ii+iii) : Rs.49,94,215.00
Further Deductions
i) Cost of material supplied i.e. steel, cement, diesel etc.
: Rs. 26,972.00
ii) Consumable items other than electrodes:Rs.4,26,199.00
iii) Payment made to other parties on behalf of VMJ :
Rs. 87,885.00
RFA (OS) 4/2005 Page 5
iv) Equipment hire charges : Rs. 2,24,689.00
C. Total Deductions (i+ii+iii+iv) : Rs. 7,65,689.00
D. Amount to be adjusted (B+C) : Rs.57,59,904.00
E. Excess paid (D-A) : Rs. 5,64,705.00"
9. It was further held that several items were to be provided by the
plaintiff to the Appellant, free of cost. They included i) Electrodes; ii)Plates
for fabricating pipes; iii) Prefabricated pipes of NB 14" and above; iv) Pipes
and fittings up to 13" NB; v) Flanges; vi) Bolts, nuts, gaskets, half
couplings, flat and columns; vii) Valves; viii) Cement and reinforcement
steel for civil works. Further it was noticed that in terms of the Work Order
(clause 25), 95% of the payment under each bill was payable after adjusting
mobilization advance, i.e. upto 5% of the bill amount. 5% was payable at 2
stages, i.e. i) 2 ½% within 90 days of completion of work; and ii) 2 ½% on
furnishing bank guarantee towards performance guarantee.
10. At this stage, it would be useful to notice that in the plaintiff's
affidavit, dated 02-05-2003 - the relevant part of which is extracted below,
it was stated that:
"8....................But the defendant failed to provide the
necessary erection materials for the underground piping job
like many pipes, fittings, flanges etc. as per the terms of the
agreement at proper time. The deponent vide letter dated
18.12.1992 annexed as Annexure C, brought the matter to
the notice of the defendant for taking necessary steps. For
such negligence of the defendant, the plaintiff had suffered
idle labour charges and other consequential losses. Vide
letter dated 19.5.1993, annexed as Annexure D the
deponent informed the defendant that out of the total
RFA (OS) 4/2005 Page 6
contract price of Rs.70.91 lakhs Running on account Bill,
Rs.43 lakhs was raised and submitted to the office of the
defendant. The aforesaid bill for Rs.43 lakhs was duly
settled by the defendant after deducting a sum of Rs.5.19
lakhs towards costs of materials/consumable supplied by
the defendant to the deponent whereas as per the contract,
the defendant is to bear the cost of such material as per the
terms of the work order stated hereinabove. Thus, the
defendant has to refund to deponent the deducted sum of
Rs.5.49 lakhs towards the cost of material which has been
illegally recovered from the deponent.
XXXXX XXXXX XXXXX
10. That in the course of the work, under the contract, the
Plaintiff has raised as many as 11 Running on Amount Bills,
totaling to an amount of Rs.56,75,340.05 paise out of which
total sum of Rs.24,83,014.00 was paid on diverse dates as
part payment of the Running on Account Bills. Such part
payments against the Running on Account Bills were made
by the defendant only after accepting and passing the bills
to the extent of nearly Rs.51 lakhs by PDIL and BACL
(Consultant and Owners).
11. That at no material time, did the defendant raise any
objection with respect to any one of the Running on Account
Bills. Thus the defendant is liable to pay outstanding dues
against those running on account bills amounting to
Rs.31,92,326.05."
11. As is clear from the above extract, the plaintiff made different
assertions about the payments made. The first figure mentioned by it
(regarding payment made to it, by the appellant) was Rs.24,83,014/-. The
plaintiff, in its affidavit, stated that the Bill for Rs. 43 lakhs was settled by
deducting "Rs. 5.19 lakhs towards costs of materials/consumable supplied
by the defendant to the deponent whereas as per the contract, the defendant
RFA (OS) 4/2005 Page 7
is to bear the cost of such material as per the terms of the work order stated
hereinabove." A plain reading of this statement meant that the Appellant
had paid Rs. 37,81,000/- to the plaintiff. Yet, the impugned judgment
recorded - erroneously, that the amount paid was Rs.33,83,014/-. It is clear,
therefore, that the plaintiff was itself unclear as to the precise liability of the
Appellant; it had to lead evidence in the form of amounts received by it, and
shown by it in its books. No such evidence was forthcoming. The Court
would then have been justified in declining the claim. The fact, however, is
that the Court went by the defendant's pleadings, and proceeded to
determine its liability.
12. The Appellant's argument about the error in the impugned decree in
casting liability without basis appears attractive. Yet, this Court cannot set
aside the judgment only on that basis. The fact remains that the defendant -
appellant in its pleading admitted that out of the total amount of over Rs. 51
lakhs admitted liability payable to the plaintiff, Rs. 2,73,432/- was deducted
from the running bills, to adjust the initial retention price of 5% value of the
total contract. This amount was clearly payable. Of the other amounts, Rs.
7,65,689/- was payable, as it denoted the amounts deducted towards the
consumables and other articles and services that were to be provided free of
cost by the Appellant itself. The third amount was Rs. 5,19,000/- which the
plaintiff claimed was deducted, while settling its bill for Rs. 43 lakhs. This is
in all probability the sum of Rs. 5,64,705/- claimed as "excess payment" to
the plaintiff by the defendant. There is no justification for deduction of such
amount. Thus, the amount - which the Appellant was liable to pay, in terms
of its written statement, and the materials relied on by it- was a total sum of
Rs. 15,58,121/-. This Court is, therefore, of the opinion that the impugned
RFA (OS) 4/2005 Page 8
judgment and decree requires to be modified to the extent that instead of
Rs.20,69,304/-, the Appellant/defendant is liable to pay to the plaintiff the
sum of Rs. 15,58,121/-.
13. The appeal has to be allowed in part; consequently, the impugned
judgment and decree is modified. The Appellant shall pay to the plaintiff,
the sum of Rs. 15,58,121/-. The other terms of the decree, in respect of
interest and costs, are left undisturbed. The appeal is allowed to the above
extent, with no order as to the costs.
S. RAVINDRA BHAT
(JUDGE)
SUDERSHAN KUMAR MISRA
(JUDGE)
MARCH 5, 2013
RFA (OS) 4/2005 Page 9
