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2007 Supreme(Del) 2196
144 (2007) DELHI LAW TIMES 408
DELHI HIGH COURT
Sanjay Kishan Kaul, J.
K.R. BUILDERS PRIVATE LTD. – Plaintiff
versus
DELHI DEVELOPMENT AUTHORITY & ANR. – Defendants
C.S. (OS) 142 of 2003
Decided on : 28.9.2007
For the Plaintiff:Mr. Raman Kapur and Ms. Nidhi Jain, Advocates.
For the Defendants:Mr. Gaurav Sarin, Advocate.
Interpretation of contractual terms, application of statutory provisions, and assessment of evidence to determine the validity of claims and grant of relief in a suit for recovery of amounts due under a construction agreement.
Headnote:
The Delhi High Court ruled on a suit filed by a private limited company against the Delhi Development Authority (DDA) and its Executive Engineer for recovery of a sum of Rs. 35,71,475.43 for work done under a construction agreement. The court addressed several issues, including the validity of a legal notice served under Section 53B of the Delhi Development Act, 1957, the maintainability of the suit against the Executive Engineer, the existence of a cause of action, the entitlement of the plaintiff to various claimed amounts, and the grant of interest.
Fact of the Case:
The plaintiff, a private limited company, entered into an agreement with DDA for the construction of flats. The plaintiff claimed various amounts due and payable by DDA, including security deposit, double rate recovery against cement and bitumen, reduction item statement (RIS), escalation, watch and ward charges, and damages for idle machinery. DDA denied the claims, alleging delays and poor planning on the part of the plaintiff.
Finding of the Court:
The court held that the legal notice served under Section 53B of the Delhi Development Act was valid and complied with the statutory requirements. The suit against the Executive Engineer was not maintainable as there was no privity of contract between the plaintiff and the Executive Engineer. The plaintiff had a cause of action to file the suit as there were delays in executing the work, non-payment of amounts due, and refusal to take possession of the flats.
Issues: ['Validity of legal notice under Section 53B of the Delhi Development Act, 1957', 'Maintainability of suit against the Executive Engineer', 'Existence of cause of action', 'Entitlement of plaintiff to claimed amounts', 'Grant of interest']
Ratio Decidendi: The court analyzed each claim made by the plaintiff and determined its validity based on the terms of the agreement, relevant circulars, and evidence presented. The court rejected claims that were not substantiated or were found to be already paid or adjusted. The court also considered the applicability of escalation clauses and watch and ward charges circulars and granted the plaintiff amounts found to be due and payable.
Final Decision: The court decreed the suit in favor of the plaintiff and against DDA for the sum of Rs. 4,27,586.34 along with pendente lite and future interest @ 12% per annum simple interest till the date of recovery. The court also directed DDA to consider incorporating a suitable arbitration clause in their contracts to facilitate the resolution of disputes by technical experts.
Sanjay Kishan Kaul, I.-The present suit has been filed by the plaintiff, a private limited company, duly incorporated under the Companies Act, 1956 for recovery of a sum of Rs. 35,71,475.43 against the defendant Nos. 1 and 2 being Delhi Development Authority, Vikas Sadan, INA, New Delhi and Executive Engineer, Northern Division No. 10, DDA, Ashok Vihar, Phase I, New Delhi respectively. The said suit has been instituted by one Shri K.R. Gupta, Managing Director of the plaintiff company vide board resolution (Ex. PW1/1).
2. Defendant No.1 invited tenders for the work of construction of 144 SFS houses Category III including sanitary and water supply installation and internal development in Sector A-5, Pocket 13, at Narela, Delhi. The plaintiff submitted its tender vide its letter which was accepted by defendant No.2 vide its letter dated 20.4.1993. Thereupon the plaintiff entered into an agreement with the defendant No.1 vide agreement No. 01/EE/ ND-10/DDA/93-94 dated 27.4.1993 (Ex. D1) (hereinafter referred to as the said agreement) to execute the said work of construction. As per the said agreement the work had to commence on 30.4.1993 and had to be completed by 29.10.1994. The plaintiff applied for extension of time to 29.10.1998 (Ex. D3) which was granted by defendant No.1 without the levy of compensation as per Clause 2 of the said agreement.
3. It is stated that the plaintiff mobilized all material and labour to complete the aforesaid work within the stipulated period of 18 months, but there were delays on the part of defendant No.1 due to which the work stood prolonged for a period of 66 months.
4. It is stated that the said work was completed by 29.10.1998 vide completion certificate (Ex. D5) subject to the rectification of defects and balance items of work and the final bill was paid by defendant No.1 on 15.1.2000. However, the plaintiff claims that various due and payable amounts of the plaintiff were not paid by the defendants which have been detailed in para 11 of the amended plaint. The said claims have been summarized below:
Sr. Claim of the plaintiff Amount
No.
(a) Security Amount:
By way of Bank guarantee of Rs. 1,35,000/- plus Rs.65,000
Bank Guarantee of Rs. 1,00,000/- plus Rs.3,00,000/-
(b) Double Rate Recovery against cement and bitumen Rs. 28,139.40
(c) Amount withheld on account of quality control Rs.40,000/
(d) Wrongly recovered on account of Tax Deduction Rs.9,848/
(e) Welding of Ornamental Grill Rs. 1,38,245/.
(f) Cement/ concrete shuttering for holdfast of doors Rs.19,391.49
(g) Reduction Item Statement (RIS) Rs.80,759.45
(h) Escalation (i.e. Clause 10cc) on (RIS) Rs.43,504.10
(i) Escalation on account of less/under payment
under Clause 10cc Rs. 16,01,007.53
(j) Escalation on claims of welding of Ornamental Grills and cement used under Clause 10cc Rs. 72,780.49 d
(k) Amount due and payable on account of extra work of finishing edges of electric board and switch junction Rs.50,400/
(l) Watch and Ward charges Rs. 2,90,400/
(m) Unproductive expenditure in respect of
handing over of flats Rs. 1,76,000/
(n) Damages on account of idle machinery due
to prolongation of work Rs.7,20,000/
In addition to the above, Claim of Interest @ 18% per annum on the above said amounts
5. It is further stated that defendant No.1 has not been able to allot and hand over the possession of the said constructed flats to the allottees. Due to the aforesaid reason, the last part of finishing i.e. final coat of white wash, paint, fixing of fittings and glasses, etc. which is required to be done at the time of physical possession of the said flats has not been undertaken by the plaintiff. It is also stated the ward and watch of the plaintiff is still continuing at the site despite the fact that the work completed on 29.10.1998 and maintenance period of six months lapsed on 28.4.1999.
6. It is averred by the plaintiff that besides the aforesaid, there are various due and payable amounts of the plaintiff which have been withheld by defendant
