Delhi High Court
M/S Ashok Sehrawat And Co. vs The Commissioner, Municipal ... on 21 July, 2023
$~3 & 4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 21.07.2023
+ W.P.(C) 8169/2023
M/S ASHOK SEHRAWAT AND CO. ..... Petitioner
Through: Mr. Deepak Kumar, Mr. Nitin
Rana, Advocates.
versus
THE COMMISSIONER, MUNICIPAL CORPORATION OF
DELHI & ANR. ..... Respondents
Through: Mr. Siddhant Nath, Advocate.
+ W.P.(C) 8215/2023
MS SUNIL KUMAR SISODIYA ..... Petitioner
Through: Mr. Deepak Kumar, Mr. Nitin
Rana, Advocates.
versus
THE COMMISSIONER OF MCD & ANR. ..... Respondents
Through: Mr. Siddhant Nath, Advocate.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J. (ORAL)
%
1. The petitioners have filed these petitions under Article 226 of the
Constitution for the following reliefs;
In W.P.(C) 8169/2023:
"a) Direct the Respondent No 2 to raise the bills of the contract work
bearing W.O. No EE(M-WZ)- III(EE XV)/SYS/2017-2018/301 and
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
thereafter release payment of the Petitioner along with 24 % P.a.
interest on the said payment from its due date to the date of its actual
realization
b) Direct the Respondent no. 1 to take penal action over the
Respondent no 2 for said delay in raising of bills and payment of the
Petitioner
c) Pass any other or further order/s as this Hon'ble Court may deem fit
and proper in the facts and circumstances of the case."
In W.P.(C) 8215/2023:
"a) Direct the Respondent No 2 to raise the bills of the contract work
bearing W.O. No EE(M-WZ)-III(EE XV)/SYS/2017-2018/217 and
thereafter release payment of the Petitioner along with 24 % P.a.
interest on the said payment from its due date to the date of its actual
realization
b) Direct the Respondent no. 1 to take penal action over the
Respondent no 2 for said delay in raising of bills and payment of the
Petitioner
c) Pass any other or further order/s as this Hon'ble Court may deem fit
and proper in the facts and circumstances of the case."
2. The case of the petitioners is that they were both awarded contracts
by the respondent- Municipal Corporation of Delhi [hereinafter referred
to as "MCD"] for improvement/development of existing rooms of MCD
Store at Tilak Nagar [in WP(C) 8169/2023] and for providing and fixing
of M.S. Sign Board and CC Repair in Ajay Enclave, Meenakshi Garden,
Ashok Nagar, Guru Nanak Nagar, Prithvi Park, Santgarh, Old Shahpura
and in various blocks of Tilak Nagar [in WP(C) 8215/2023]. The terms of
the contracts required the contractors to submit their running
account/final bill with measurement, after which the MCD was required
to approve the final bills.
3. The grievance of the petitioners is that the MCD has not approved
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NAGPAL
Signing Date:25.07.2023
the final bills despite the certification of the MCD's own engineer that
work has been completed at the sites. Mr. Deepak Kumar, learned
counsel for the petitioners, draws my attention to certificates dated
25.02.20221, which so indicate.
4. Mr. Siddhant Nath, learned counsel for the MCD, raises a
preliminary objection that these are contractual disputes which cannot be
adjudicated in a writ petition. He submits that several factual issues arise
for adjudication, including as to limitation. Mr. Nath points out that,
according to the petitioners, they had completed the work within the
stipulated period of two months, i.e. in the year 2018 itself. According to
Mr. Nath, therefore, their claims would now be barred by limitation.
5. Mr. Kumar, on the other hand, submits that the MCD has itself, by
the letters dated 25.02.2022, acknowledged the completion of the work.
He further draws my attention to the judgment of a co-ordinate Bench in
Garg Construction Company vs. North Delhi Municipal Corporation2,
wherein the MCD was directed to release payments towards contractual
dues.
6. Having heard learned counsel for the parties, I am of the view that
the petitioners would have to be relegated to their civil remedies in the
present cases. Although there is no absolute bar on adjudication of
contractual disputes in a writ petition, the circumstances in which such a
writ petition can be entertained have been elucidated by the Supreme
Court in several judgments, including inter alia the following:-
In both the writ petitions.
Judgment dated 25.01.2023 in W.P.(C) 116/2021 and connected petitions.
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NAGPAL
Signing Date:25.07.2023
(a) In ABL International Limited vs. Export Credit Guarantee
Corporation of India Limited3, the Supreme Court summarised the
principles thus:
"27. From the above discussion of ours, the following legal
principles emerge as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a State or
an instrumentality of a State arising out of a contractual
obligation is maintainable.
(b) Merely because some disputed questions of fact arise for
consideration, same cannot be a ground to refuse to entertain a
writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary
claim is also maintainable.
28. However, while entertaining an objection as to the maintainability
of a writ petition under Article 226 of the Constitution of India, the
court should bear in mind the fact that the power to issue prerogative
writs under Article 226 of the Constitution is plenary in nature and is
not limited by any other provisions of the Constitution. The High Court
having regard to the facts of the case, has a discretion to entertain or
not to entertain a writ petition. The Court has imposed upon itself
certain restrictions in the exercise of this power. (See Whirlpool
Corpn. v. Registrar of Trade Marks.) And this plenary right of the
High Court to issue a prerogative writ will not normally be exercised
by the Court to the exclusion of other available remedies unless such
action of the State or its instrumentality is arbitrary and unreasonable
so as to violate the constitutional mandate of Article 14 or for other
valid and legitimate reasons, for which the Court thinks it necessary to
exercise the said jurisdiction."
(b) The judgment in ABL International4 was considered by the
Supreme Court, alongwith several other judgments, in State of
Kerala vs. M.K. Jose5, wherein the Court inter alia held that the
(2004) 3 SCC 553.
Ibid.
(2015) 9 SCC 433.
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
dispute in ABL International6 was decided in a writ petition as the
facts were "absolutely clear from the documentary evidence
brought which pertain to interpretation of certain clauses of
contract of insurance"7.
(c) In Union of India vs. Puna Hinda8 also, the Supreme Court has
crystalised relatively narrow grounds in which petitions under
Article 226 of the Constitution would be the appropriate remedy in
a contractual matter inter alia in the following terms:
"23. The High Court has based its order on the ground that after
five monsoons, the final measurements could not be ascertained. If the
final measurements could not be done at the spot, the contemporary
evidence and the measurement books prepared from time to time could
be the basis for determining the liability of the appellants. The joint
survey report is not an admitted measurement, though some officers
might have signed it. The Report prepared after the completion of
work wherein no such work done is reflected in the measurement book
prepared during execution of work is an attempt to inflate the claim
raised by the writ petitioner. The entire amount claimed by the writ
petitioner is disputed. It has been asserted that the entire payment due
as against the claim of work order had been made, as reflected from
the following table:
I Awarded cost of the work Rs. 31.87
under the contract crores
II Cost of the work already Rs 0.86 crores
executed by the department
on the same stretch before
the award of work
III Cost of the work as reduced Rs 31.01 crores
in view of prior departmental
work
IV Amended cost of work under Rs 35.03 crores
the contract
Supra (note 3).
Supra (note 5) (paragraph 18 at page No. 444).
(2021) 10 SCC 690.
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
V Contract cost in revised DPR Rs 42.27 crores
processed to Ministry of
Road, Transport and
Highways
VI Payment made to the Rs 42.27 crores
contractor/respondent herein
inclusive of Rs 3.86 crores as
per the order dated 18-5-
2017 of the Hon'ble High
Court
VII Contractor's claim as per Rs 71.76 crores
final bill dated 23-11-2015
24. Therefore, the dispute could not be raised by way of a writ petition
on the disputed questions of fact. Though, the jurisdiction of the High
Court is wide but in respect of pure contractual matters in the field of
private law, having no statutory flavour, are better adjudicated upon
by the forum agreed to by the parties. The dispute as to whether the
amount is payable or not and/or how much amount is payable are
disputed questions of facts. There is no admission on the part of the
appellants to infer that the amount stands crystallised. Therefore, in
the absence of any acceptance of joint survey report by the competent
authority, no right would accrue to the writ petitioner only because
measurements cannot be undertaken after passage of time. Maybe, the
resurvey cannot take place but the measurement books of the work
executed from time to time would form a reasonable basis for assessing
the amount due and payable to the writ petitioner, but such process
could be undertaken only by the agreed forum i.e. arbitration and not
by the writ court as it does not have the expertise in respect of
measurements or construction of roads.
25. A perusal of the matter shows that collusion of some of the officers
of the appellants with the contractor cannot be ruled out. Such
collusion seems to be the basis of the writ petition filed before the High
Court."9
7. In the present cases, I am of the view that the disputes raised by the
petitioners would have to be determined factually, including the question
of limitation, and the effect of the document dated 25.02.2022, relied
upon by the petitioners in this connection. There is little public law
Emphasis supplied.
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
flavour to the claims of the petitioner, which turn upon a factual
assessment, including with regard to approval of their bills. It may be
noted that in Puna Hinda10, the Supreme Court has specifically held that
correspondence signed by some officers of a public agency cannot be
equated with requisite contractual documentation11. Analogously, in the
present case, the communication dated 25.02.2022, relied upon by Mr.
Kumar, cannot, in my view, ipso facto have taken to be approval of the
bills submitted by the petitioners.
8. I am not persuaded to a contrary conclusion by the judgment in
Garg Construction12, relied upon by the petitioners. The relevant
observation in the said judgment are reproduced below:
"1. By way of the present batch of petitions filed under Article 226 of
the Constitution of India, the petitioners have sought release of
payments due and payable to them under the bills prepared and
approved by respective Assistant Engineer(s) and counter-signed by
Junior Engineer(s) of the erstwhile North Delhi Municipal
Corporation, East Delhi Municipal Corporation and South Delhi
Municipal Corporation (hereinafter, collectively referred to as
'Corporation') against the works executed by the petitioners. The
petitioners have also claimed interest @ 24% per annum from the date
of approval of the bills.
xxxx xxxx xxxx
5. Though the Corporation had at the first instance filed a Counter
Affidavit contesting the petitions, subsequently, Ms. Shilpa Shinde,
Additional Commissioner (Engineering), MCD appeared before this
Court on 09.09.2022 and stated that the Corporation has taken a
decision to release the payments towards principal amounts. In this
regard, a copy of policy dated 13.10.2022 approved by the
Commissioner, MCD has been placed on record alongwith an affidavit
of the aforementioned officer regarding mode and manner of
disbursement.
Supra (note 8).
In that case, joint measurement books.
Supra (note 2).
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
6. Mr. Kunal Vajani, learned Standing Counsel for the Corporation,
submitted that though a decision has been taken by the Corporation to
make payments due towards principal amounts, the same would be
released to the petitioners in a phased manner in terms of the policy
dated 13.10.2022. It was further submitted that a sum of Rs.30 crores
has been allocated to be released to the contractors on a monthly basis
in the ratio of 38:38:24 i.e. on the basis of geographical spread and
staff strength of the erstwhile North Delhi Municipal Corporation,
South Delhi Municipal Corporation and East Delhi Municipal
Corporation. Learned Standing Counsel also drew attention of the
Court to policy dated 13.10.2022 placed on record to submit that
payments would be released as per seniority of bills according to cut
out date of each erstwhile Corporation, subject to the following three
conditions:- (i) The contractor shall certify that they have not received
the payment earlier, either in part or in full, with respect to the claim
raised by them against the Corporation, (ii) The contractor shall
submit an undertaking that if any payment is erroneously made, it
would be returned to the Corporation on first demand, and (iii) An
affidavit to the above effect will be rendered to the Corporation before
disbursement of payment under this policy.
xxxx xxxx xxxx
9. Although learned counsels on both sides have cited a catena of
decisions, the same need not be gone into in view of the decision
taken by Corporation to release the payments which are due to the
petitioners towards principal amounts.
10. On a reading of the policy dated 13.10.2022, however, it is evident
that the same is in teeth of the decision of this Court in Sanjeev Kumar
(Supra), which was passed in facts and circumstances akin to the
present case. It is worthwhile to note that in the captioned case,
applicability of queue system to payments due beyond 6/9 months,
bereft of an upper time limit, was found to be unreasonable. Further, it
was opined that reasonable time for making of payments of final bills
in respect of work orders with tendered value up to Rs.5 lakhs shall be
6 months and work orders with tendered value exceeding Rs.5 lakhs
shall be 9 months from the date when the bill was passed by the
Engineer-in-Charge. In the present case, most of the bills date back to
the year 2015 and reasonable time for making payment has passed
long back.
11. It is apparent that by bringing out the policy dated 13.10.2022 in
the present case, the Corporation, has aggravated the agony of the
petitioners and other similarly situated persons, as the release of
payments has been made dependent on the availability of funds with
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NAGPAL
Signing Date:25.07.2023
the Corporation, among other extraneous factors mentioned in the
policy. Further, not only the amount allocated for disbursement is
miniscule, but also the ratio specified with regard to manner of
disbursement bears no rationale. The ratio specified by the
Corporation is arbitrary and unreasonable. This Court is also
persuaded to take note of the fact that the policy dated 13.10.2022 fails
to specify as to how many contractors are awaiting their payments
from the Corporation. Insofar as the Corporation's decision to release
payments in a phased manner is concerned, it is reiterated that the
brunt of shortage/non-availability of funds with the Corporation shall
not be borne by a contractor who has duly executed tendered works
and whose bills have been approved.
12. Moreover, the summary of outstanding dues/arrears of principal
amounts placed on record by the petitioners has not been disputed by
the Corporation, the relevant bills having been prepared and
approved by officials of the Corporation itself.
13. Accordingly, the present petitions are allowed and the
Corporation is directed to release payments due towards principal
amounts to the petitioners, against verified and approved bills, within
a period of eight weeks from the date of passing of this judgment. So
far as the petitioners' prayer for interest on delayed payments is
concerned, they may pursue their remedy by initiating appropriate
proceedings in accordance with law.
14. It is clarified that the present petitions are entertained and
disposed of in the peculiar facts and circumstances, where the
Corporation has taken a conscious decision to release the
payments."13
9. It is clear from paragraphs 1, 12 and 13 of Garg Construction14 that
the Court proceeded on the basis that the bills had already been approved
by the relevant authorities of the MCD. The aforesaid extracts further
record that the MCD had taken a policy decision in respect of such dues,
and it is this position that weighed with the Court in allowing the writ
petitions. Paragraph 14 of the judgment shows that the Court was
conscious of the peculiar facts and circumstances of the cases before it,
Emphasis supplied.
Supra (note 2).
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Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
where the MCD had itself taken a decision to release the payment.
10. These factors make the cases of the present petitioners
distinguishable from those decided in Garg Construction15, and much
closer to the facts in Puna Hinda.16 The MCD has admittedly not
approved the bills in question, and the release of amounts to the
petitioners do not fall within the policy decision taken by the MCD.
11. In view of the aforesaid, I am of the view that the present petitions
under Article 226 of the Constitution are not the appropriate remedy
available to the petitioners.
12. The petitions are, therefore, dismissed, with liberty to the
petitioners to agitate their claims by way of appropriate civil proceedings
in accordance with law. The rights and contentions of both sides in such
civil proceedings stand expressly reserved.
PRATEEK JALAN, J
JULY 21, 2023/'Bhupi'/
Ibid.
Supra (note 8).
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:25.07.2023
