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DELHI HIGH COURT
MANMOHAN, ASHA MENON
North Delhi Municipal Corporation – Appellant
Versus
Garg Construction Co. – Respondent
JUDGMENT
Manmohan, J. (Oral)--Present appeal has been filed challenging order dated 7th January, 2021 passed by learned District Judge (Commercial court-05), Central Delhi, Tis Hazari in CS(COMM) 684/2020, whereby the respondent's application under Order XII Rule 6 has been allowed and the suit has been decreed against the appellant.
2. Briefly stated, the facts of the present case are that respondent-Plaintiff was awarded two work orders both dated 1/4/2016 and it completed the same within stipulated time, to the satisfaction of the appellant. The final bills for both work orders amounting to Rs.9,95,681/- were approved by the appellant. However, the payment was not released within prescribed time. Thereafter, the respondent-plaintiff sent a legal notice to the appellant to which the appellant replied stating that the payments would be made after the amount is released by the SDM/Delhi Government. The respondent-plaintiff then filed the suit for recovery before the District Court.
3. Appellant contested the suit and admitted its liability to pay the amount of passed bills but stated that work orders were placed at the request of SDM/Delhi Govt. and due to non receipt of paymen
Payment terms in contracts must include reasonable timelines; indefinite delays render contractual clauses illegal and against public policy.
Indefinite payment conditions in contracts are unreasonable and violate the principle of contractual consideration, requiring clarity and a specified timeline.
The judgment established the requirement for reasonable time for payment and the illegality of clauses that postpone consideration indefinitely.
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 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 court upheld that delayed payments must be compensated with interest, emphasizing that the appellants’ claims of irregularities were unsubstantiated and did not impede the contractors' right to r....
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.
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