IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
North Delhi Municipal Corporation & Anr. - Appellants
Versus
Deepak Kumar - Respondent
RFA 318 of 2021 & CM Appl. 31717 of 2021 (Int. Stay), CM Appl. 31719 of 2021 (Cond. of Delay of 193 days in filing Appeal), RFA 323 of 2021 & CM Appl. 31999 of 2021 (Int. Stay), CM Appl. 32001 of 2021 (Cond. of Delay of 382 days in filing Appeal), RFA 324 of 2021 & CM Appl. 32063 of 2021 (Int. Stay), CM Appl. 32065 of 2021 (Cond. of Delay of 193 days in filing Appeal), RFA 325 of 2021 & CM Appl. 32069 of 2021 (Int. Stay), CM Appl. 32071 of 2021 (Cond. of Delay of 382 days in filing Appeal), RFA 371 of 2021 & CM Appl. 38630 of 2021 (Int. Stay), CM Appl. 38632 of 2021 (Cond. of Delay of 193 days in filing Appeal)
Decided On : 16-09-2022
Interest - Recovery Suit - Code of Civil Procedure - [Section 96 of CPC] - [CS No. 178/2017] - [Summary of Acts and Sections: The court discussed the provisions of Clause 9 of the Notice Inviting Tender (NIT) and its implications on the payment of interest. The court also referred to the decision in EDMC v. Rajkumar Jain [2018(249) DLT 57] to establish the reasonable time for making payment of a final bill based on the value of work orders.]
Fact of the Case:
The plaintiff completed the work awarded by the defendant, but the defendant delayed the payment of the final bill. The plaintiff filed a suit claiming the outstanding payment with interest.
Finding of the Court:
The court decreed the suit of the plaintiff for a sum of Rs. 3,54,848/- with interest @6% and directed that interest will be payable after expiry of 6 months of the date of the passing of the bill.
Issues: The issues involved were whether the plaintiff was entitled to recover a sum of Rs. 5,07,497, whether the plaintiff is entitled to recover pedentelite and future interest @12% p.a., and the relief.
Ratio Decidendi: The court held that the plaintiff was entitled to receive the payment for the work done and that the defendants could not deny interest on delayed payments based on Clause 9 of the NIT. The court also relied on the decision in EDMC v. Rajkumar Jain [2018(249) DLT 57] to establish the reasonable time for making payment of a final bill.
Final Decision: The appeals were dismissed with no order as to costs.
JUDGMENT
Rekha Palli, (Oral) J. - The present decision disposes of five regular first appeals assailing five judgments all dated 03.09.2019 passed by the learned ADJ, Tis Hazari Courts, Delhi in five different recovery suits filed by the respondent/plaintiff. Since the issues involved in all these appeals are identical, the same are being disposed of by this common judgment.
2. For the sake of convenience, the facts of the RFA 318/2021 are being referred to and the parties will, hereinafter be referred to as per their position before the learned Trial Court.
3. The present regular first appeal under Section 96 of the Code of Civil Procedure (hereinafter, CPC) seeks to assail the judgment and decree dated 03.09.2019 passed by the learned ADJ, Tis Hazari Courts, Delhi in CS No. 178/2017. Vide the impugned judgment, the learned Trial Court has decreed the suit of the respondent/plaintiff for a sum of Rs.3,54,848/- along with interest @ 6% per annum w.e.f. 26.01.2015.
4. The defendant no.2/The Executive Engineer (M-1), City Zone, NDMC invited tenders on behalf of defendant no.1/NDMC for the improvement of lane in Gali Imam Wali by pdg. RMC in ward no.79, City Zone and Improvement of Channel and approach to Park at Parade Ground road in Ward No.79, City Zone. The plaintiff approached the defendant no.2 for carrying out the said work and the defendant no.2, after being satisfied that the plaintiff fulfilled the requisite conditions for carrying out the aforesaid work, awarded the work order in his favour on 28.02.2014 and 20.05.2014 for which purpose the parties entered into two agreements on 06.03.2014 and 31.05.2014. The plaintiff completed the aforesaid work within the stipulated time to the satisfaction of the defendant no.2 and without any negative remark in the period prescribed for the defect liability.
5. Upon completion of the work, the defendant no.2 made the final measurement of the work and all the bills pertaining to the aforesaid work orders submitted by the plaintiff were duly passed and recorded in the measurement books of the defendant no.1. However, since no payment towards the final bills was received by the plaintiff and that too despite repeated representations and legal notice, the plaintiff filed a suit claiming the outstanding payment of the final bill with interest.
6. The suit was defended by the defendant/appellant by filing its written statement wherein it was inter alia urged that as per the terms and conditions of the Notice Inviting Tender (hereinafter, NIT), the payment of bills was dependent on availability of funds with defendant no.1 from time to time in the particular head of account. It was further averred that any payment to the plaintiff was only to be made after clearance of the past liabilities of the defendant and therefore the plaintiff could not be paid till sufficient funds were available with the defendant. It was finally claimed that the plaintiff, having accepted the general conditions of the NIT, was bound by Clause 9 of the same which clearly provided that the payment would be released subject to the availability of funds with the appellants.
7. After completion of pleadings, the learned Trial Court framed the following issues:
1. Whether the plaintiff was entitled to recover a sum of Rs. 5,07,497/-? OPP
2. Whether the plaintiff is entitled to recover pedentelite and future interest @12% p.a. ? OPP
3. Relief?
8. Upon consideration of the evidence led by the parties, the learned Trial Court, vide its impugned judgment has decreed the suit of the respondent/plaintiff for a sum of Rs. 3,54,848/- with interest @6% and has directed that interest will be payable after expiry of 6 months of the date of the passing of the bill. The relevant findings of the learned Trial Court read as under-
'14. ISSUE NO. 2 Whether plaintiff is entitled to any interest? If yes, then at what rate and for what period?
15. The onus to prove this issue was upon plaintiff. The present case pertains only to work order no. 1 an
The plaintiff was entitled to receive the payment for the work done and the defendants could not deny interest on delayed payments based on Clause 9 of the NIT.
The contractor is entitled to interest on delayed payments even when contract clauses suggest payment depends on fund availability; unreasonable delays cannot negate interest obligations.
The main legal point established in the judgment is that contractual clauses must be reasonable and not unconscionable, and contractors should be paid within a reasonable time as per Section 46 of th....
The judgment established the requirement for reasonable time for payment and the illegality of clauses that postpone consideration indefinitely.
Indefinite payment conditions in contracts are unreasonable and violate the principle of contractual consideration, requiring clarity and a specified timeline.
Payment terms in contracts must include reasonable timelines; indefinite delays render contractual clauses illegal and against public policy.
The main legal point established in the judgment is the entitlement to extra work payment and interest on delayed payments under the terms of the contract and the Interest Act, 1978.
The contractor is entitled to 6% interest on delayed payments as per previous court judgments regarding contractor compensation.
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