The security deposit is liable to be refunded upon the compliance of the conditions in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments.

Prathiba M. Singh, J.

1. These are a batch of appeals which have arisen out of disputes between Contractors/Plaintiffs (hereinafter, ‘Contractors’) on the one hand and the North Delhi Municipal Corporation (hereinafter, ‘NrDMC’) and East Delhi Municipal Corporation (hereinafter, ‘EDMC’), on the other. NrDMC and EDMC are collectively referred to as ‘Corporations'. The facts in each appeal are different and hence separate judgments are being passed in each of the appeals.

2. Briefly, these are cases where various work orders were placed on Contractors by both the Corporations. The works were executed by the Contractors and thereafter, the Engineer-in-Charge has passed the final bills. Payments in respect thereof were not made. Suits for recovery were filed by the Contractors. The Trial Court decreed the suits in favour of the Contractors.

3. In respect of each of the work orders, the Contractors seek either/all of the following payments:

(a). Payment of the principal amount as passed in the final bill;

(b). Refund of security deposit;

(c). Interest on account of late payment of the principal amount, as also due to delay in refund of security deposit.

4. The Corporations rely on Clauses 7 and 9 of the General Conditions of Contract in respect of payment of principal amount and interest, read with the amendment of 19th May, 2006. In respect of the security deposit, the Corporations rely on Clauses 17 and 45 of the General Conditions of Contract for Municipal Corporation of Delhi Works (hereinafter, ‘General Conditions of Contract’). In addition, the Corporations also rely upon Circular dated 10th June 2014 signed by the Chief Engineer, MCD which was issued in the nature of a clarification. The questions that have arisen in all these cases are -

(i) Whether payment of the principal amount can be delayed in view of Clause 7 and Clause 9 of the General Conditions of Contract read with the amendments?

(ii) Whether the refund of earnest money/security deposit can be delayed in view of Clauses 17 and 45 of the General Conditions of Contract?

(iii) Whether interest is payable on delayed payments/refunds and if so, for which period?

5. Arguments have been addressed by Mr. Sunil Goel and Ms. Mini Pushkarna on behalf of the Corporations - NrDMC and EDMC, respectively. On behalf of the Contractors in some matters, Mr. Vinay Kumar has made submissions.

Background of the case

6. In the present case, the Contractor was awarded work order No.412 dated 25th September 2014, and work order No. 261 dated 4th December 2014. The Contractor contends that the work was completed in time and the period prescribed for defect liability also passed without any negative remark to the satisfaction of the Engineer –in- Charge. The final bills were passed for the following amounts by the Corporation, details of which are as under:

However, in the above table there are calculation errors. The total sum payable is Rs.8,44,048/- and not Rs. 9,29,912/- as claimed by the contractor. Despite repeated requests, the amount was not paid. Legal notice dated 22nd May, 2015 qua work order No.412 and notice dated 14th September, 2015 qua work order No.261 were issued to the Corporation. Thereafter, the subject suit for recovery of Rs.9,29,912/- was filed.

7. The Corporation filed its written statement and pleaded as under:

“2. That the suit of the plaintiff is pre-mature and as such the same is liable to be dismissed. There is a spe