The judgment established the principle that in government contracts, the party in breach may be subject to penalties and contract rescission if they fail to adhere to the contract terms, and the burden of proof for damages lies with the claiming party.

INDERMEET KAUR, J.

1. M/s. Saini Construction Company (hereinafter referred to as the plaintiff) has filed the present suit seeking recovery of an amount of Rs. 66,72,626/- along with pendente lite and future interest calculated at the rate of 15% per annum beside costs. Out of the sum of Rs. 66,72,626/- the principle figure is of Rs. 51,32,789/- with interest calculated at the rate of 15% per annum which accumulates to Rs. 15,39,837/-. The contention of the plaintiff is that the penalty amount of Rs. 17,58,033.90, earnest money of Rs. 7,73,000/- and the performance guarantee of Rs. 9,76,700/- was illegally deducted from his final bill which amount is liable to be reimbursed to him. He has also claimed damages in the sum of Rs. 10 lacs for the illegal recession of the contract and the consequential loss of profits which was suffered by the plaintiff and compensation due to the breach of the contract.

2. The plaintiff is a registered Government contractor executing various works with the Government and other local bodies including Delhi Jal Board (hereinafter referred to as the defendant).

3. Parties had entered into a contract on 14.04.2005 for execution of work to be carried out by the plaintiff i.e. for providing and laying 800 mm dia rising main/feeder main from Vikas Marg to Vishwakaram Park (Geeta Colony) UGR & BPS in TYA, Delhi under an agreement No. 1/2006-2007. The salient features of the contract included a tendered amount of Rs. 1,95,33,710/- the estimated cost of the project was Rs. 1,70,09,500/- the date of contract was 24.03.2006 stipulated date of start was 22.05.2006 and the stipulated date of completion was six months thereafter i.e. on 22.11.2006.

4. The project could not be completed in time. It was accordingly rescinded on 21.05.2007.

5. The case as set up by the plaintiff is that all initial preparations including mobilizing men, material, tools and plants was effected immediately on the date of the award of the work. The plaintiff could not however proceed with the work as the defendant has failed to fulfill its reciprocal promises and obligations under the contract which include as follows:-

(i) Provide full and hindrance free site for execution of work.

(ii) Issue drawings/details for the works.

(iii) Provide lay out for the work to be executed.

(iv) Obtain necessary permissions from local authorities.

(v) Make timely payments for the work executed.

(vi) Inspection and approval of material/pipes etc. before procurement and use."

6. Inspite of all efforts made by the plaintiff which included the arrangements by engaging necessary staff and labour, procurement of M.S. plates and having placed orders for the supply of further quantities of plates to be used in the work, the project could not be completed in time and this was because of the non-compliance of the reciprocal obligations to be carried out by the defendant.

7. On 24.08.2006, the defendant informed the plaintiff that the road cutting permission from the MCD and PWD was likely to be obtained by 30.08.2006 and the work may not be ready for taking up till 01.09.2006. It was thus an admitted position of fact that more than 100 days were lost without any work being undertaken which was for no fault on the part of the plaintiff.

8. The plaintiff vide letter dated 06.06.2006 informed the defendant about the procurement of M.S. plates and other material which were required to be used in the work; the plaintiff also requested the defendant to get the necessary permission from the local authorities including the DDA and the MCD in order that the work could be completed in time. The defendant however failed to handover the site till the first week of September, 2006.

9. In its letter dated 13.09.2006, the plaintiff requested the defendant to arrange for the road cutting permission from the concerned department but this also met with no avail. The plaintiff also informed the defendant on 13.09.2006 that it had complied with the requirement for laying pipes and pla