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DELHI HIGH COURT
MANMOHAN, ASHA MENON
North Delhi Municipal Corporation – Appellant
Versus
Barahi Construction – Respondent
| Table of Content |
|---|
| 1. appellant's appeal against payment recovery. (Para 1 , 2 , 3) |
| 2. arguments regarding payment delays and contract conditions. (Para 4 , 5 , 6 , 7) |
| 3. court's findings on legality of contract clauses. (Para 8 , 10) |
| 4. contractual obligations determined unreasonable. (Para 9 , 11 , 12 , 14) |
| 5. appeal dismissed; order upheld. (Para 19) |
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) 683/2020, 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 five work orders on 1/4/2016 and it completed the same within stipulated time, to the satisfaction of the appellant. The final bills for all work orders amounting to Rs.38,34,799/- 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 aft
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 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.
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 lack of privity of contract and failure to establish a cause of action were central to the court's decision.
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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