CS(OS) No.1347/1998 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved On : 30.04.2010 Pronounced on: 31.01.2011 + CS (OS) 1347/1998 J.S. CHAUDHARY ..... Plaintiff Through: Mr.Sudhanshu Batra, Advocate versus THE VICE CHAIRMAN, DDA & ANR. ..... Defendants Through: Mr. Ajay Verma, Advocate for Defendants CORAM: MR. JUSTICE S. RAVINDRA BHAT 1. Whether the Reporters of local papers Yes. may be allowed to see the judgment? 2. To be referred to Reporter or not? Yes. 3. Whether the judgment should be Yes. reported in the Digest? MR. JUSTICE S.RAVINDRA BHAT % 1. The plaintiff claims a money decree, based on the sum of ` 81,54,667/-towards various heads, on account of amounts due from the Defendant (hereafter called “DDA”) in a works contract; additionally, the plaintiff claims interest, at a quantified rate, as well as pendent lite and future interest. The claim is premised on the performance of a works contract, entered into by the parties, for construction of 448 flats at Jhilmil Colony. 2. The facts, to the extent they are uncontroverted, are that the plaintiff, who describes himself as sole proprietor of a firm, successfully bid, and was awarded the contract, by the DDA. The bid was accepted on 09.9.1991; the written contract (Ex-PW-1/2) was entered into on 16.09.1991. The time for performance, agreed upon by the parties, was 15 months, from the date CS(OS) No.1347/1998 Page 2 of signing the agreement. It was however, extended. The plaintiff says that this was due to various defaults by DDA; the latter however denies that position. Eventually, the construction was completed on 12.12.1994. The completion certificate was issued on 6th July, 1995. The plaintiff relies on a document (Ex.PW-1/3) issued on 12.12.1994, evidencing the date of completion of construction. 3. The plaintiff contends that in terms of the Agreement, Ex. PW-1/2, the Final Bill had to be settled by DDA, within six months of completion. The suit claims the sum of ` 81,54,667/50 from the DDA towards various heads, which are described briefly hereafter. Claim (i) pertains to balance of final bill amount, i.e. ` 5,23,195/-. According to the plaintiff, the final bill was payable within six months from completion, i.e. 11.6.1995; DDA is alleged to have failed to pay this. The bill was submitted on 16.06.1996. The plaintiff admits to some part payment on 11.09.1996, after which it submitted a fresh bill on 10.09.1997. The sum of ` 5,23,195/- is claimed on this score. 4. Claim (ii) is for the release of bank guarantee to the extent of ` 3,00,000/-, which the plaintiff furnished in favour of DDA, for the due performance of the contract. It is alleged that in terms of the contract, the guarantee had to be released within six months after completion, yet the DDA has not done so. The plaintiff claims the sum of ` 3,00,000/- on this account. Claim (iii) relates to incidental expenses towards revalidation of bank guarantee for the period beyond the contract, after its completion; the plaintiff says that a sum of ` 50,000/- is to be paid by DDA. 5. According to the suit, the cost of work done beyond the stipulated date of competition @30% extra amounts to ` 34,43,818.00/-; the plaintiff claims this. It is contended that the work could not be completed within the stipulated period on account of the following defaults of DDA: a) delay in handing over of site for work; b) delay in issue of stipulated material; c) delay in release of payments for work done, d) delay in laying of electrical conduits by the agency appointed by the defendant. CS(OS) No.1347/1998 Page 3 e) delay in conveying of decisions to the plaintiff from time to time during/relating to the execution of work. 6. The suit says that due to the aforesaid defaults of DDA, the work could be completed only on 12.12.1994, i.e. in a period of 39 months, as against the stipulated period of 15 months contained in the agreement between the parties. During the delayed period, the price of material and labour increased in the market. It became impractical and un-economical for the plaintiff to execute the work within the accepted/ quoted rates. The plaintiff says that the rates quoted by him were in the month of May 1991; he however, was made to complete the work at the same rates even in the 1994. DDA is therefore, liable to make good the loss incurred (by the plaintiff) on this account before the completion of the work and after the originally stipulated date of completion. The plaintiff submits having indicated to the defendant, by a notice duly served upon it, that he would continue the work provided he is paid 30% over and above the contractual rates despite the escalation clause provided in the agreement. The DDA duly accepted the said condition (of the plaintiff) as no objection was raised by it and continued to get the work executed from him. The plaintiff claims the following payments, as due and payable to him by DDA on account of labor and materials due to the delay in execution of work: Cost of work done as per final bill ` 1,98,58,848.00 Less: Cost of work done upto 18.12.1992, which is the original stipulated date of completion as per agreement ` 83,79,253.00 30% of the above ` 34,43,818.00 Thus, says the plaintiff, DDA is liable to pay ` 34,43,818/- to the plaintiff on account of escalation of work. 7. The plaintiff claims refund of amounts withheld from the running bills to the tune of ` 20,000/- ; he also similarly seeks refund of payment in respect of issue of SCI pipe amounting to ` 8,025/-. It is submitted that in terms of the agreement between the parties, the DDA had to issue SCI pipes (under clause 10), amongst other items, at fixed rates to be used in the execution of work. The cost of issue of SCI pipes was deducted by DDA from the running bills. It is pertinent to mention here that the quantity stipulated for the issue was such that the mode of CS(OS) No.1347/1998 Page 4 measurement of work has to be the same. The DDA, according to the plaintiff, misconstrued and miscalculated the payment to be deducted for issue of SCI pipes as the mode of measurement adopted by it (DDA) was based on measure of individual pipes, leading to the plaintiff being over charged 7cm for each pipe length of 1.83 cm as detailed in the suit, as follows: Size Qty. issued Qty. to be charged Overcharge 100mm 655.20mm 655.20x1.76 1.83 25.20m 75mm 1547.10mm 1547.10x1.76 1.83 60.00 m Cost of 25.20 m of 10mm size @Rs.112.50 per meter ` 2835.00 Cost of 60.00 m of 75 mm size @Rs.86.50 per meter `5190.00 Total `8025.00 Thus a sum of ` 8025/- is claimed by the plaintiff on this account. 8. The plaintiff claims the following, as cost of work done and services rendered beyond the scope of agreement: a) Cost of centering and shuttering for DPC (item 2.5) amounting to ` 7,559.00 b) Cost of bitumen used in item No.2.6 amounting to ` 47,26.00 c) Cost of extra operation involved in item No.6.1 amounting to ` 38,119.00 d) Cost of while cement used in item No.7.6 amounting to ` 47,290.00 e) Cost of primer used in item No.9.7 amounting to ` 31,042.00 f) Cost of SCI collar provided in SCI stacks amounting to ` 31,781.00 g) Cost of GI Unions provided in G.I. Pipe line amounting to ` 3,748.00 h) Cost of groove provide 10064m Cost 10064 x (2.20+55.15%) ` 34,351.00 CS(OS) No.1347/1998 Page 5 i) Extra cost of plaster done above 10.00m height amounting to ` 22,871.00 J) Cost of centering and shuttering for laying of cement concrete In payments amounting to ` 2,635.00 k) Cost of welding done in manufacture of M.S. grill amounting to ` 85.652.00 l) Cost of cement concrete blocks used for fixing of M.S. railings amounting to ` 7,143.00 m) Cost of extra thickness of brick masonry and other allied items for construction of open surface drain amounting to ` 69,647.00 n) Cost of deployment of pumps used for dewatering for laying of sewer line amounting to ` 1,00,000.00 o) Cost of disposal of earth/rubbish/malba left by other agencies. Agencies amounting to ` 1,17.085.00 p) Cost of extra thickness of base plaster in item No.7.7 amounting to ` 17,487.00 q) Plastering of exposed surface of RCC shelves amounting to ` 18,382.40 Total ` 6,39,518.40 9. The suit seeks refund of short payment due to wrong measurements in respect of No.9.6 amounting to ` 2,81,217.00. It is alleged that Item No.9.6 concerned provision for water cement paint on the outside surface of walls, which in turn were provided with rough cast. Plaster with graded or crushed stone aggregate 6 mm by item No.9.10 of the efficient of 250% for finishing of such a surface with water cement paint was used. DDA has measured this same without enhancing the actual surface area by 250% and as a result the plaintiff has been paid 150% less. The shortfall on this account comes to ` 2,81,217.00, the details of which are given in the suit, as follows: Area paid under item no. 9.10 - 12653.07 sqm Cost 12853.07 x 150% (9.55+ 55.15%) - ` 2,61,217.00 10. The plaintiff seeks refund of what it terms as illegal deductions by operation of item No. 3.9 to the extent of ` 1,78760.00. It is alleged that Item No.3.9 of the agreement provides for “Add/deduct for plastering of exposed surface of RCC surface” with a unit rate of ` 10.55 per sqm plus 55.15% contractors enhancement under clause 12 of the agreement. The exposed CS(OS) No.1347/1998 Page 6 surface is defined in sub para (c) para 5.4.7.2 CPWD specifications 1877 vol. I page 108. The plaintiff says that no deduction could be to be made for any area which is exposed and not plastered and is less than 0.5 sqm. The deduction made by DDA is alleged to be illegal and needs to be refunded to the plaintiff. The total deductions made are indicated thus: 11464.43 sqm @ Rs.10.05 + 55.15% ` 178760.00 Thus a sum of Rs.178760.00 is claimed. 11. The plaintiff next claims compensation payable under clause 10 CC of the agreement amounting to ` 18,28,690.00, and details the same as follows: (i) Due to wrong computation ` 1547101 (ii) On cost of work done which are not paid. ` 2,81,589.50 Total ` 18,28,690.50 12. The suit claims, towards cost of deployment of staff engineer and machinery beyond the stipulated date of completion not originally contemplated at ` 6,03.000.00. It is submitted that the plaintiff, on account of delay in execution, incurred extra expenditure for deployment of staff, engineer and machinery beyond the period of 15 months stipulated for completion of work in terms of the agreement. The amount sought is detailed as follows: a) Graduate engineer 1 no. @ ` 5000/- p.m. ` 5000.00 b) Diploma engineer 1 no. @ ` 3000/- p.m. ` 3000.00 c) Head Mistry 1 Nos. @ ` 2500/- p.m. ` 2500.00 d) Supervisor 4 Nos. @ 1250/- p.m. each ` 5000.00 e) Chowkidar 6 nos. @Rs.1000/- p.m. each ` 6000.00 f) Clerk 2 nos Rs.1500 p.m. each ` 3000.00 g) Accountant1nos.@2500/-p.m. `2500.00 T&P and other equipment ` 2.5 lacs @ 18% pm ` 3000.00 TOTAL ` 30,000.00 It is alleged that such expenditure of ` 30,000/- p.m. for work of the magnitude is justified as it is hardly 2.5% of expected monthly out turn of ` 12,21,501.00 keeping into consideration the tendered cost of ` 1,83,22,518.00 to be completed in 15 months stipulated in the agreement. The plaintiff complains incurring a loss (after applying the principle of mitigation of loss to the extent of 50% on ` 72,0000.00) ` 6,03,000.00 CS(OS) No.1347/1998 Page 7 13. The suit also claims the sum of ` 2,68,488.00 towards loss of profitability due to delay in completion of the contract amount. Here, it is stated that the loss in profit suffered by due to delay in completion of the work wholly attributable to DDA, is on the following considerations: Work done after the stipulated date of completion ` 96.43,265.00 Profit @ 15 % ` 14,91,490.00 Loss @ 18% on the delayed completion of work 1491490 x 18 x 24 x1 = ` 2,68,468.00 100x 12x 2 14. The plaintiff also claims interest of 18% p.a. on the outstanding sum of ` 81,54,667.50 w.e.f. 12.06.1995 till 28.05.1998 final realization of the amount, which is ` 43,44,806.80. DDA, according to the plaintiff, is liable to pay ` 1,24,99,474.30 till the date of the suit and further interest thereupon till actual realization. The plaintiff submits having sent a legal notice dated 24.10.1997 to DDA calling upon it to make payments; the legal notice did not evoke any response. The cause of action, says the plaintiff, arose, on the date of award of contract, on the date of completion of the work, on 12.12.1994; on 06.07.1995 when certificate of completion was issued by DDA, on 11.09.1996 when part payment was made but the balance outstanding remained unpaid. DDA’s stand: 15. The DDA disputes the petitioner’s entitlement, contending that the work was awarded to a partnership firm, M/s. J.S. Constructions and not to the plaintiff, as a proprietor. It is submitted that there is no evidence or material to justify that the plaintiff is entitled to claim the suit amounts. 16. The DDA denies that there was any delay in the completion of the contract, attributable to its conduct or omission. It is submitted that there were perhaps minor hindrances, which were duly accounted for in the parties’ Extension of Time documents, approval of which was granted to and enjoyed by the plaintiff. DDA disputes the plaintiff’s entitlement for any of the claims. According to it, the plaintiff never suffered any losses or incurred any extra expenditure so as to be entitled to claim the amounts set-out in the suit. CS(OS) No.1347/1998 Page 8 17. The DDA disputes that any amount is payable to the plaintiff under the final bill. It is claimed that on the contrary, the Provisional Completion Certificate dated 12.12.1994 stipulated compliance with conditions spelt-out there, which were not in fact complied with, as a result of which the DDA is entitled to ` 9,14,276.21/-. This is claimed as a justification for the withholding release of bank guarantee. 18. On the question of delay, it is submitted that it is not attributable to DDA in not furnishing the drawings on time and failing to supply of materials and making timely payment of running bills are all not enforceable claims because in terms of Extension of Time proformas submitted by the plaintiff, no hindrances were in fact pointed nor was extension of time on such account was claimed by the plaintiff. It is also argued that the plaintiff cannot claim such amount in view of Clause-10 of the agreement and Clause-1 of the specifications and conditions. The same rationale is pressed into service in regard to other heads of delays, such as delay in handing-over of site, issuance of materials, delay in laying of electrical conduits by other agencies and delays in conveying decisions from time to time. The defendant relies upon a condition in the Extension of Time proforma Part-1, produced as Ex. DW-1/1, where the plaintiff agreed not to claim liquidated damages during the extended time. 19. The DDA denies that the plaintiff ever informed it about its condition of seeking 30% extra consideration for continuing to work. It is also submitted that there was no such agreement between the parties to pay any such additional amounts. Similarly, as regards alleged amounts wrongly withheld from running bills, it is submitted that such amounts were withheld due to objections raised by the Quality Control Cell, and in any case, cannot be refuted. The DDA has to recover an amount of ` 9.41 lakhs. The plaintiff’s claim with regard to reimbursement or payment towards cost of SCI pipes is denied. The DDA submits that the actual measurement was taken as per CPWD specifications and relies upon Annexure-B to the written statement and further states that no amount was ever charged. 20. In regard to Claim No. (vii) – i.e. Work not completed as per description in Item by Agreement nor in the CPWD Specifications, 1977, all the claims are denied. The DDA submits that the cost of centering and shuttering had to be done as per Item 2.5 of the Contract and was covered as part of the work, in view of paras 64 and 6.4.6 of the specifications. With regard to CS(OS) No.1347/1998 Page 9 claim- vii(b), i.e. Cost of supply of bitumen, the DDA denies the amount, stating that the plaintiff was not entitled to the same, in view of Item Nos. 2.6 and 8.1 of the contract, the latter requiring that the spread coarse sand had to be carried-out. It is also submitted that the rate of execution of Item 2.6 includes cost of bitumen. As to claim vii(c), i.e. Payment towards M.S. Flats, C.C. Block etc., the defendant argues that the rate in Item 6.1 is inclusive in the operation and if at all the plaintiff is entitled to any amount it cannot exceed ` 9,028. On claim vii(d), i.e. Extra Costs for white cement, the DDA’s counsel denies the same, contesting that there was no stipulation and that White Cement, wherever required, was to be provided by it in terms of the rate in Item 7.7. It is submitted that the DDA only provides Grey Cement, which is well-known in the trade amongst all the contractors. On claim vii(8), i.e. term 9.7 requiring use of primer, the DDA argues that such entitlement does not arise, since the plaintiff has placed reliance on Item 9.7, which relates to wood work whereas the primary and steel galvanized items/iron work is covered by Item 9.9. Likewise, the DDA submits that the claim of quantity being 139.26 does not deal with the work executed under Item 9.7 and, in fact, deals with work executed under Item 9.9. The DDA additionally states that the Item rates under 9.9 are exclusive of the cost of primer under para 13.33 and 13.34 of CPWD specifications. 21. The DDA denies claim vii(f), stating that any such amount towards drainage system, in addition to Clause 11.5 and 11.12 towards fitting collar etc., is payable in view of Special Condition No. 3.14, which stipulated that SCI collars required for fixing SCI pipe of the requisite size were to be provided by the Contractor free of cost. The claim towards fixing of GI pipes made by the plaintiff under Item 12.1 and 12.2 are denied. The DDA states that the rate of providing and fixing of GI pipes included cost of fitting and no extra payment was to be made for G.I. Union work which was paid in accordance with paras 19.8.1 and 19.8.2 of CPWD specifications. The DDA refutes the claim in item vii(h), i.e. payment for provision at the junction of roof and wall on the inside of rooms, kitchens etc. It is stated that this is not payable in view of condition No II of the additional conditions forming part of contract. Claim vii(i), for extra rates payable over 3 metres high construction or part thereto in excess of 10 meters and the plaintiff’s reliance on condition 3.15 of the CPWD Specifications, 1977 and DSR 1989 is denied, saying that such amounts are not due. The DDA relies on condition 3.15 of the specifications and states that reference to DSR, 1989 is out of context in view of the specific condition forming part CS(OS) No.1347/1998 Page 10 of the contract. Claim vii(j), i.e. providing C.C. paths/payment around levels requiring laying of concrete in panels, centering and shuttering as being an additional portion, based on Items 10.1 and 5.11 are denied. It is argued that the rates of Items 10.1 and 5.11 are inclusive of such works. Reliance is placed on Item 16.1.6 and 16.1.7 of Volume 1, paras 17.10.2, 17.10.7 and 17.10.8, Volume-2 of CPWD specifications. All other items in Claim No. 7(k) to (q) are also denied. 22. Referring to claim viii, the DDA states that the plaintiff is not entitled to enhancement and proportionate payment on the basis of actual service being 250% or that he was paid 150% less. Here, the DDA says that the measurement was in accordance with para 13.25.6.1 and rate charged as per para 13.25.7, which indicate that the rates were inclusive of costs of materials and labor. It also relies upon clause 9.10 of the contract and argues that I.S. specifications are relied upon out of context and that the agreement between parties never provisioned for enhancement of the service by 250%. The plaintiff’s claim (ix) that no deduction could be made for any area which is exposed, and plastered but is less than 0.5 square meters, is denied. The DDA relies upon para 3.9 of the schedule of quantities attached with the agreement and submits that in fact, no deducted as alleged, was made. 23. The plaintiff’s claim under clause 10(CC) has been refuted. It is contended by the DDA that the plaintiff is not entitled to such amounts as no details were furnished and the plaintiff merely relies upon unsubstantiated conclusions, based on its calculation. Similarly, with regard to Claim 11, i.e. extra expenditure of ` 30,000/- per month, for the 54% of the work done after the stipulated date, amounting to an alleged loss of ` 6,03,000/-, the DDA says that the plaintiff did not incur any extra expenditure or suffer any loss. It is argued that payment under clause 10(CC) was made, which also covered all such expenses. The DDA emphasizes that prolongation of the work was not on account of its acts or omissions. Similarly, with regard to claim 12, i.e. loss of profit incurred due to delay in completion of work, the DDA also denies any liability, relying upon the plaintiff’s undertaking submitted at the time of extension of time in Proforma Part-1 was granted, stating that he would not claim liquidated damages incurred during the extended period. It is submitted by the DDA that such undertaking was neither retracted, nor withdrawn in any manner and that extension of time proforma in fact enabled the plaintiff to perform the work even though less than half the same had been done before the stipulated period. CS(OS) No.1347/1998 Page 11 Based on such undertaking, and other facts, the DDA agreed to extend the time which was actually approved for 732 days, ultimately ending with actual completion of work, on 12.12.1994. It is submitted that the plaintiff has not refuted this averment or the document. 24. On the basis of pleadings and documents on the record, this Court had framed the following issues on 06.11.2003: “1. Whether the suit is bad for non-joinder of necessary parties?OPD 2. Whether a valid notice was served under Section 53-B of Delhi Development Act, 1957? If not, to what effect? OPD; 3. Whether there was any delay in completion of the contract attributable to the defendant? OPP. 4. Whether the plaintiff is entitled to the payment of Rs.81,54,667/- under various heads as mentioned in para 6 of the plaint? OPP. 5. Whether the plaintiff is entitled to his claims in view of the undertaking given by him at the time request for extension was made by him? OPP. 6. Whether the plaintiff is entitled to interest on Rs.81,54,667/-, if so at what rate and from what period? OPD. 7. Relief.” 25. The Court directed the examination of parties’ witnesses on commission. The plaintiff examined himself; the defendant examined one witness as DW-1. Both the parties have led voluminous evidence. FINDINGS Issue Nos. 1 and 2 26. As evident from the manner in which these issues were framed, the onus lay upon DDA to show that necessary parties were not impleaded. It has not led