Shri Dinesh Bhardwaj And Another vs Shri Janardhan Singh And Others
2016 Latest Caselaw 5446 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RSA No. 31/2007

%                                                            22nd August, 2016

SHRI DINESH BHARDWAJ AND ANOTHER                 ..... Appellants
                      Through: Mr. K. Sunil, Advocate.
                                 versus

SHRI JANARDHAN SINGH AND OTHERS                                  .....Respondents

Through:

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. This Regular Second Appeal under Section 100 of the Code of Civil

Procedure, 1908 (CPC) is filed by defendant nos.1 and 2 in the suit and against

whom the courts below; the Trial Court dated 29.11.2005 and the First Appellate

Court dated 30.5.2006; have passed a money decree for a sum Rs.1,18,674/-

alongwith pendente lite and future interest @ 18% per annum simple.

2. The facts of the case are that the respondent no.1/plaintiff filed the

subject suit for recovery against four defendants. Defendant nos.1 and 2 are the

appellants before this Court and are said to be architect and contractor who sub

contracted the work of construction to the respondent no.1/plaintiff. Defendant

nos.3 and 4 were the owners of the plot bearing no.474, Patparganj Industrial

Estate, Delhi and on which plot construction was made by the respondent

no.1/plaintiff. Courts below have held that there was no privity of contract

between the respondent no.1/plaintiff and the defendant nos.3 and 4/respondent

nos.2 and 3 and that only the appellants/defendant nos.1 and 2 are liable to pay

the suit amount on account of construction work having been undertaken by the

respondent no.1/plaintiff on the plot in question as the appellants/defendant nos.1

and 2 had engaged the respondent no.1/plaintiff. Respondent no.1/plaintiff

pleaded that he was the sole proprietor of business in the name of Janardhan and

Company which was engaged in the contract of construction of buildings.

Defendant no.1/appellant no.1 is an architect carrying on business in the name of

defendant no.2/appellant no.2 and who appointed the respondent no.1/plaintiff as

a sub-contractor to work on the plot in question of the defendant nos.3 and

4/respondent nos.2 and 3. Plaintiff executed the work of the amount of

Rs.5,08,209.25/- of which the respondent no.1/plaintiff received a sum of

Rs.3,10,000/- leaving a balance of Rs.1,40,209.25/-. Respondent no.1/plaintiff

adjusted amount towards excess of shuttering material of Rs.21,535/- and thus

sought to recover the suit amount being the balance due of Rs.1,18,674/-

alongwith interest at 18% per annum.

3. The basic defence of both sets of defendants i.e the defendant nos.1

and 2/appellant nos.1 and 2 and the defendant nos.3 and 4/respondent nos.2 and 3

was that they had no privity of contract with the respondent no.1/plaintiff.

4. The courts below have held that it has been found as a matter of fact

that respondent no.1/plaintiff in fact did construction work on the plot in question.

It was also found that the respondent no.1/plaintiff had incurred the costs for

purchasing various materials. Respondent no.1/plaintiff had also proved on

record the muster roll (Ex.PW1/11) showing engagement of labour for

construction on the suit plot and respondent no.1/plaintiff also proved

plans/drawings as Ex.PW1/1 to Ex.PW1/10 and which were given to him for

construction. Most importantly, the courts below held that the

appellants/defendant nos.1 and 2 being the professionals who admitted to

maintaining books of accounts and filing of income tax returns, but in spite of

opportunities granted, appellants/ defendant nos.1 and 2 failed to file their books

of accounts and income tax returns and therefore adverse inference should be

drawn against the appellants/defendant nos.1 and 2 with respect to dues claimed

by the respondent no.1/plaintiff.

5. The following issues were framed on 14.9.1999 by the trial court:-

"1. If there is any privity of contract between the plaintiff and any of the defendant?

2. If any of the defendant is liable to pay the suit amount?

3. Relief."

6. The main issue was issue no.1 and in this regard the trial court has

rightly and exhaustively held as under:-

"ISSUE NO.1 It is the case of the plaintiff that he was appointed as a sub contractor by defendants no.1 & 2 to construct a factory over a plot owned by defendants

no.3 & 4 and it was also assured by defendants no.3 & 4 that in case the work is executed expeditiously then they are responsible for the payment.

On the contrary it is the case of defendants no.1 & 2 that they are only architect and not given any contract for the construction of the building. As per their knowledge defendants no.3 & 4 have engaged the plaintiff for the construction of the plot directly.

While it is the case of defendants no.3 & 4 that they have no privity of contract with plaintiff and he was the sub contractor under defendants no.1 &

2. Let us examine these rival contentions.

It is the admitted case of all the parties that at some point of time the plaintiff had carried out work at the suit property. Since, the presence of plaintiff has not been negated by any of the contesting defendants. Secondly, none of the parties had given the name of the person who have actually carried out the work at the site in case if the work is not done by the plaintiff.

Now D1W1 was called for cross examination and was asked to bring the books of accounts. In his examining on 20.3.02 he had deposed that "I have not brought the books of account today but I can produced the same if the same is available with me". He has admitted that he has received payment from defendant no.3. On the next date i.e on 19.5.04 when he was recalled for further cross examination he has deposed that he has not brought the statement of account. He further stated that he do not remember his account number. As far as statement of account is concerned he stated that the same is traceable. He was further asked to bring the income tax return, which he admitted that he is filing income tax return, but he could not produced the same. Now the defendant no.1 is a duly qualified professional architect, so he suppose to maintain the account books. He further used to file income tax return but did not produced the same before the court. Only one inference could be drawn that they must have been gone against him to the effect that there must be certain transaction which have reflected the payment between plaintiff and defendant.

A question was asked to PW-1 Janardhan Singh by defendants no. 1 & 2 with regard to the quotation given by defendant no.1 & 2.

In reply he has stated that "the same was corrected by Dinesh Bhardwaj again said quotation was also written by Dinesh Bhardwaj in his own hand. Again said the same was written by one Negi who is the employee of defendant no.1". As far as this Negi is concerned, D1W1 had admitted that Negi was his employee.

In these circumstances, had the plaintiff nothing to do with defendant no.1 and there was no occasion for him to know the name of this Negi who happens to be the employee of defendant no.1.

Further, it is stated by D1W1 that Ex.PW1/1 to Ex.PW1/8 is the drawings prepared by him. Now the plaintiff has also relied on these documents to state that these were given by the defendants no.1 & 2 to raise construction as per these drawings. Now the possession of these drawings with the plaintiff itself suggest that there was some connection between defendants

no. 1 & 2 vis a vis plaintiff. Now there is no such case put to PW-1 by defendants no.1 & 2 that these drawings was given by defendant no.3 to the plaintiff. So, all these shows that plaintiff was working on the instructions of defendants no.1 & 2. So there was privity of contract between the defendants no.1 & 2 and palintiff and that contract was that of sub contract to raise construction. This fact is further fortified on account of production of mark A, B & C by PW-2 i.e witness from CBI which was conducting a domestic inquiry against defendant no.4 with respect to the allegation of disproportionate assets. Now mark A & C are the receipts issued by Janardhan & Co. to one Sh. Dinesh Bhardwaj and mark C is a simple receipt. Now the production of this document from an independent agency also shows that the plaintiff was working under Dinesh Bhardwaj. This particular document is not came from the custody of plaintiff but was procured by the investigating officer from the site in continuation with the inspection of the site. So, all these shows that plaintiff was a sub contractor under defendants no.1 & 2.

As far as defendants no. 3 & 4 is concerned it is also the case of the plaintiff that he was not directly working under them but as per their assurance that the payment will be made expeditiously in case the work is done promptly. In the cross examination PW-1 has deposed that "there was no written agreement between him and defendants no. 3 & 4 regarding this fact". There is no other evidence on record which brings the liability of defendants no. 3 & 4 could not said to be liable to the amounts due towards the plaintiff. So, defendants no.3 & 4 appears to have no privity of contract with the plaintiff.

So this issue is decided in these terms." (underlining added)

7. The first appellate court has upheld the judgment of the trial court

and has given the following reasoning, and which I accept as correct and adopt:-

"Firstly, it is a fact that the land on which the factory was constructed was owned by defendant no.3. It is further a fact that Appellants/defendants no.1 and 2 were Architect of the building. It is further a proved fact that some drawings were received by the plaintiff from one employee of defendant no.1 and 2 Sh. Negi who admittedly was in the employment of defendants no.1 and 2/appellants. It is further a fact that there is no suggestion that plaintiff was employed or given contract by defendants no.3 or who is the owner of the plot. It is further a fact that defendants no.1 and 2/appellants employees used to supervise the work. It is further a fact that there was no written agreement between the parties. Agreement/contract between the parties need not to be written. It may be oral and from the consideration of the evidence it appears that there was a contract between the plaintiff and the defendants no.1 and 2 for conclusion of property alleged to be owned by defendants no.3 and 4.

XXXXX XXXXX Sixthly, DW1 in his cross examination states as follows:

"I have brought the books of accounts as those are not available. I have not brought the statement of bank account as the same is also not available. I have applied to the bank for obtaining my statement of account. I do not remember my account number. The bank has not given any intimation to me, that the statement of account is not traceable. I cannot say what has happened to my books of account as the same are not traceable. It is wrong to suggest that I have not deliberately not produce the books of account. I filed the income tax return. The income tax return of that period when the construction of the defendant no.3 and 4 was raised is not available. I do not remember since when I was filing my income tax return. I do not remember also the name of Chartered account who was filing my income tax on my behalf. I have got no cheque book or bank account copy of that period with me now. I am not having any pass book of that period. It is incorrect to suggest that I am making false statement that the bank has refused to give my statement of account."

This statement of DW1 shows that he avoided most of the relevant questions which could have brought the truth and this evasive reply definitely goes against defendants no.1 and 2/Appellants." (underlining added)

8. At the time of admission of the present second appeal on

26.11.2013, the following substantial question of law was framed:-

"As to whether the concurrent finding returned by the two courts below that the appellants are liable to pay an amount of Rs.1,18,674/- to R-1/plaintiff is suffering from any perversity as there was no privity of contract between the present appellants and R-1/plaintiff. If so, to what effect?"

9. In my opinion, the above substantial question of law needs to be

answered in favour of the respondent no.1/plaintiff and against the

appellants/defendant nos.1 and 2 inasmuch as appreciation of evidence and

findings of facts are in the realm of jurisdiction of the courts below and courts

below are entitled to arrive at a conclusion on the basis of preponderance of

probabilities. I have already reproduced above the reasoning and conclusions of

the courts below and which reasons and conclusions undoubtedly rightly show

that it is the respondent no.1/plaintiff who made construction and was thus

entitled to payment. It is also seen that admittedly Mr. Negi was an employee of

the appellant no.1/defendant no.1 and who had made corrections in the quotations

given by the respondent no.1/plaintiff. Respondent no.1/plaintiff proved muster

roll as Ex.PW1/11 and drawings given to him for construction as Ex.PW1/1 to

Ex.PW1/10. Appellant no.1 deliberately did not produce his books of accounts

and income tax returns which would have shown his having made payments to

the respondent no.1/plaintiff and thus having engaged the respondent

no.1/plaintiff for doing the construction work.

10. In addition to the aforesaid findings and conclusions of the courts

below it is noted that the respondent no.1/plaintiff had sent a Legal Notice dated

26.8.1996 Ex.PW1/12 to the appellants/defendant nos.1 and 2 but the same was

not replied to. The registered post receipts and the UPC with respect to the legal

notice have been proved and exhibited as Ex.PW1/13 and Ex.PW1/14. In this

legal notice, respondent no.1/plaintiff has clearly asked the appellants/defendant

nos.1 and 2 to make the payment of the bills as respondent no.1/plaintiff was

engaged by the appellants/defendant nos.1 and 2 as a sub-contractor. This legal

notice was not replied to by the appellants. Non reply to the legal notice by the

appellants becomes crucial in a case like this more so when the

appellants/defendant nos.1 and 2 did not file their income tax returns or their

books of accounts. Non replying to the legal notice amounts to admission of the

contents of the notice against the appellants. Of course, it is rightly argued by the

counsel for the appellants that respondent no.1/plaintiff did not file any books of

accounts or proof of payments made in cash by the appellants/defendant nos.1

and 2 to the respondent no.1/plaintiff, however, when the issue is to be decided

on preponderance of probabilities, then, the fact that the respondent no.1/plaintiff

is found to have done the work, appellants/defendant nos.1 and 2 in spite of being

professionals did not file their books of accounts and income tax returns and

finally did not reply to the Legal Notice (Ex.PW1/12) issued by the respondent

no.1 dated 26.8.1996, therefore, on preponderance of probabilities the courts

below have rightly therefore concluded that it is the respondent no.1/plaintiff who

is liable to be paid by the appellants/defendant nos.1 and 2 who engaged the

respondent no.1/plaintiff as the sub-contractor for the work.

11. There is no dispute to the principle that privity of contract has to be

proved and as argued on behalf of the appellants in terms of the judgment of a

Division Bench of this Court in the case of Paam Antibiotics Ltd Vs. Sudesh

Madhok 186 (2012) DLT 652, however, whether or not there is a privity of

contract is an issue of fact and whether or not there is a privity of contract

depends upon facts of each case, and in the present case the courts below on the

basis of preponderance of probabilities have rightly arrived at the conclusion that

there was a privity of contract between the respondent no.1/plaintiff and the

appellants/defendant nos.1 and 2 who had engaged the respondent no.1/plaintiff

as a sub-contractor for the work. Accordingly, there is no perversity in the

findings of the courts below and therefore the substantial question of law is

answered in favour of the respondent no.1/plaintiff and against the

appellants/defendant nos.1 and 2.

12. I would however at this stage seek to reduce the high rate of interest

at 18% per annum granted by the courts below in the facts of the present case and

therefore the pendente lite and future interest which would be granted in favour of

the respondent no.1/plaintiff would be at 6% per annum simple and not at 18%

per annum simple as granted by the courts below.

13. In view of the above, this Regular Second Appeal is dismissed

except to the extent that the rate of interest granted by the courts below at 18%

per annum simple will stand reduced to 6% per annum simple. Parties are left to

bear their own costs.

AUGUST 22, 2016                                       VALMIKI J. MEHTA, J
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