Delhi District Court
M/S Big Brothers Projects Pvt Ltd vs M/S Ansal Urban Condominiums Pvt Ltd And … on 16 January, 2025
IN THE COURT OF SH. VIDYA PRAKASH
DISTRICT JUDGE (COMMERCIAL COURT)-02
NEW DELHI DISTRICT, PATIALA HOUSE COURTS
NEW DELHI
CNR NO.: DLND010128922019
CS (COMM.)/165/2019
IN THE MATTER OF:-
M/S BIG BROTHERS PROJECTS PVT LTD
Regd. Office at 102, Plot No.6
Anupam Plaza-I, LSC
Gazipur, Delhi - 110 096
(Through Its Authorized Representative/
Director Sh. Prashant Dhyani)
......PLAINTIFF
VERSUS
1. M/s Ansal Urban Condominiums Pvt. Ltd.
2. M/s Ansal Landmark Township Pvt. Ltd.
Both having Regd. Office at:
115, Ansal Bhawan
16, K. G. Marg,
New Delhi- 110001
......DEFENDANT
Date of institution of suit : 22-07-2019
Date of reserving judgment : 28-11-2024
Date of pronouncement of judgment : 16-01-2025
JUDGEMENT
1. Vide this judgment, I shall dispose off the present suit for
recovery of Rs.83,47,263/- along with costs and pendent-
lite & future interest @ 12 % per annum, filed by the
plaintiff against the defendants.
CS (COMM.)/165/2019 Page 1 of 47
BRIEF FACTS OF THE CASE:
2. Brief facts of the present case, as discernible from relevant
paras of the plaint, are as under:-
2.1 The plaintiff is stated to be a duly incorporated
company, registered and governed under the
provisions of The Companies Act, 1956.
2.2 The defendant nos.1 & 2 are also stated to be
companies incorporated under the Companies Act.
The defendant no.1 company is subsidiary of
defendant no.2 and the defendant no.2 is in actual
control and is responsible for day-to-day
functioning of the defendant no.1 and is jointly and
severally liable for the liabilities of defendant no.1.
2.3 The plaintiff was awarded contract for various
Plumbing and sanitary jobs/works by the
defendants for their project ‘The Group Housing
Towers at Aquapolis, Ghaziabad’ and accordingly,
work orders were issued by the defendants giving
description of the jobs to be performed in the said
project by the plaintiff. The details of the various
work of plumbing, sanitary and other
works executed between the plaintiff and the
defendants for various towers of the project are
as under:-
Sr. Work Order No. Date
No.
1 AUCPL/GHZ/WO/11/22 14.11.2011
CS (COMM.)/165/2019 Page 2 of 47
Sr. Work Order No. Date
No.
2 AUCPL/GHZ/WO/12/43 10.06.2012
3 AUCPL/GHZ/WO/12/57 14.07.2012
4 AUCPL/GHZ/WO/12/52 27.06.2012
5 AUCPL/GHZ/SERV/WO/15/454 31.08.2015
6 AUCPL/GHZ/SERV/WO/15/210 26.11.2015
7 AUCPL/GHZ/WO/13/125 30.11.2013
2.4 It is averred that the defendants had been causing
undue delays in the execution of the work and had
been changing scope of work by amending the
work orders from time to time, as the ground work
for performing sanitary and plumbing work of the
project was not ready. Due to amendments in the
work orders from time to time, not only abnormal
delay in execution of the work was caused but it
also resulted in huge losses to the plaintiff as the
plaintiff was burdened with overheads costs such as
idling of men, machinery, resources and
opportunity loss for abnormal period of 5 years.
The details of the amended work orders are stated
to be as under:-
2.4.1 Work order No.AUCPL/GHZ/WO/11/22
dated 14.11.2011 was initially awarded for
total cost of Rs.1,33,03,076/- for Tower
No.D-4 & B2B, the same was firstly
amended on 23.7.2013 and total cost was
changed to Rs.1,50,02,123/-, secondly on
CS (COMM.)/165/2019 Page 3 of 47
27.1.2014, the total cost was changed to
Rs.1,58,16,731/- and thirdly on 7.11.2015
and total cost was changed to
Rs.1,09,74,589/-, which itself shows that
the work order dated 14.11.2011 was
amended till 7.11.2015 and scope of work
was changed. Thus, the plaintiff till
7.11.2015 could not perform the awarded
work. Further, in the last amendment dated
7.11.2015, lot of plumbing works (for
which work front could not be provided by
defendants in Tower D4 & Tower B2B)
were deleted from the scope of Work order
No.AUCPL/GHZ/WO/11/22 dated
14.11.2011 and for these deleted works,
two new work orders
AUCPL/GHZ/SERV/WO/15/210 dated
26.11.2015 for Tower D4 &
AUCPL/GHZ/SERV/WO/15/211 dated
26.11.2015 for Tower B2B, were issued to
plaintiff to conceal/ Hide defendants’
failure to provide work fronts. Even
thereafter also, the work front was not
available to perform the sanitary and
plumbing work covered under these two
new work orders as again the ground work
was not completed by the defendants and
they also changed the planning. It is stated
that further till 23.7.2016, the ground work
was not completed by the defendants so
CS (COMM.)/165/2019 Page 4 of 47
that the plaintiff could not perform the job,
which caused enormous overheads
resulting in huge losses to the plaintiff.
The plaintiff could hardly execute the
work amounting to Rs.92,857/- in Tower
D4 only against the awarded WO/
AUCPL/GHZ/SERV/WO/15/210 dated
26.11.2015 for value of Rs.3,92,164/- and
the plaintiff could not execute any work in
Tower No-B2B against the awarded
WO/AUCPL/GHZ/SERV/WO/15/211
dated 26.11.2015 for value of
Rs.6,57,169/- as the ground work was not
completed by the defendants, which
caused enormous overheads resulting in
huge losses to the plaintiff.
2.4.2 Work order No.AUCPL/GHZ/WO/12/43
dated 10.6.2012 for tower No.D-11 was
awarded for a total cost of Rs.79,76,151/-,
the same was firstly amended on
14.1.2014 and total cost was changed to
Rs.95,20,455/-, which itself shows that the
work order dated 10.6.2012 was amended
till 14.1.2014 and scope of work was
changed. Thus, the plaintiff till 14.1.2014
could not perform the work and thereafter
also, the work front was not available to
perform the sanitary and pluming work as
the ground work was not completed by the
CS (COMM.)/165/2019 Page 5 of 47
defendants and they also changed the
planning and drawings. It is stated that
thereafter till 23.7.2016, the ground work
was not completed by the defendants so
that the plaintiff could perform the job,
which caused enormous overheads
resulting in huge losses to the plaintiff.
The plaintiff could hardly execute the
work amounting to Rs.19,34,074/- only
against the awarded PO value of
Rs.95,20,455/- as ground work in Tower
D-11 was not complete. Even till date in
Tower D-11, the basic ground work was
not complete so as to perform the Sanitary
& Plumbing works.
2.4.3 Work order No.AUCPL/GHZ/WO/12/57
dated 14.7.2012 was awarded for total cost
of Rs.4,09,982/-, the same was amended
on 24.12.2015 and total cost was changed
to Rs.3,44,254/-, which itself shows that
the work order dated was amended till
24.12.2015 and scope of work was
changed. Thus, the plaintiff till 24.12.2015
could not perform the work and thereafter
also, the work front was not available to
perform the sanitary and pluming work as
the ground work was not completed by the
defendants and they also changed the
planning and drawings and further till
CS (COMM.)/165/2019 Page 6 of 47
23.7.2016, the ground work was not
completed by the defendants so that the
plaintiff could perform the job, which
caused enormous overheads resulting in
huge losses to the plaintiff.
2.4.4 Work order No.AUCPL/GHZ/WO/13/125
dated 30.11.2013 was awarded for total
cost of Rs.65,96,289/-, the same was
amended on 11.2.2015 and total cost was
changed to Rs.65,59,489/-, and later on
also, again amended on 31.8.2015 and
total cost was changed to Rs.54,30,195/-
which itself shows that the work order
dated was amended till 31.8.2015 and
scope of work was changed. Thus, the
plaintiff till 31.8.2015 could not perform
the work and thereafter also, the work
front was available to perform the sanitary
and pluming work as the ground work was
not completed by the defendants and they
also changed the planning and drawings
and further till 23.7.2016, the ground work
was not completed by the defendants so
that the plaintiff could perform the job,
which caused enormous overheads
resulting in huge losses to the plaintiff.
2.4.5 With respect to the remaining work orders
till 23.7.2016, the ground work was not
completed by the defendants so that the
CS (COMM.)/165/2019 Page 7 of 47
plaintiff could perform the job, which
caused enormous overheads resulting in
huge losses to the plaintiff.
2.5 It is claimed that the plaintiff had deployed men
and machinery at the project site and the plaintiff
was burdened with their costs for a period of about
5 years, whereas, had the defendants not amended
the scope of work and their ground work was
completed for performing sanitary and plumbing
work, the plaintiff would have completed the entire
work within the stipulated time. Even till
23.7.2016, the ground work was not completed by
the defendants for performing sanitary and
plumbing work, which forced the plaintiff to
demobilize from the site as the plaintiff was not
able to bear the overhead cost of men and
machinery and idling of resources and opportunity
loss to earn from other projects, had the defendants
not delayed provided ground work to perform
plumbing and sanitary work awarded to the
plaintiff. As such till 23.7.2016, the plaintiff kept
on suffering losses and finally demobilized itself
from the site and raised the final invoices to claim
the cost of the work performed by it, as per the
terms of the contract.
2.6 That as per the terms and conditions of the said
work orders, it was item rate contact as such the
plaintiff was entitled to be paid with respect to the
actual quantity executed and work performed as
CS (COMM.)/165/2019 Page 8 of 47
well as escalation in terms of agreement between
the parties, besides the losses suffered by the
plaintiff. In this regard, the plaintiff has relied and
referred to terms and condition nos. 2, 5 and 8
regarding Item Rates for New Contract, Term of
Payment and Escalation respectively, in Para no.6
of the plaint.
2.7 It is further stated that the plaintiff performed
various plumbing and sanitary works in the said
project for the period from November 2011 to 23rd
July 2016 as per the terms of the work orders.
Plaintiffs were raising the running bills (RA Bills)
with respect to the work performed from time to
time, but timely payments were not made by
defendants as per the terms and conditions of the
contract, rather some part payments were only
made and that too after great delay, due to which
plaintiff suffered huge losses.
2.8 From the beginning, there were acts of breach of
the terms of contract by the defendants, which
caused great loss to plaintiff. It is stated that due to
non availability of timely government approvals/
sanctions with the defendants, work fronts were not
ready for installation of sanitary and plumbing
work; non-payments of running bills as per
schedule; pending civil work and non-finalization
of decisions relating to the final positing of the
sanitary and plumbing work and there were site
hindrances by the defendants, the floors of the
CS (COMM.)/165/2019 Page 9 of 47
towers were not ready for installation and
finalization of plumbing and sanitary work, and
amendment of work orders, due to which the
project was considerably delayed and it was
causing great loss to the plaintiff. It is stated that
the defendants were under obligations to provide
fronts ready for installation of sanitary and
plumbing work and made timely payment of the
RA bills raised by the plaintiff but the defendants
failed to do so. As the progress of the work was
stalled due to acts of breaches of the defendants and
the plaintiff suffered huge loss due to idling of the
resources, men and machinery and burden of
overheads and opportunity losses also. On repeated
demands by plaintiff for compensation of their
losses, some part payments of Rs.2,73,000/- only
against Idle labour and Rs.3,21,435/- towards
Escalation were initially paid in the Running Bills,
although, initially the plaintiff was promised by the
defendants that they would be properly
compensated for the losses suffered by them but
later on the defendants failed to fulfill their
promises and refused to compensate the plaintiff
for the delay caused and the losses suffered by the
plaintiff.
2.9 Therefore, on account of acts of delays/ breaches on
part of defendants and non-payments of the running
bills of the plaintiff in time, the plaintiff had no
option but to take decisions to demobilize from the
CS (COMM.)/165/2019 Page 10 of 47
project w.e.f. 23.7.2016 in order to prevent further
losses due to idling of the resources, men and
machinery and burden of overheads. The
defendants were not even making the payment of
running (RA) bills submitted by the plaintiff within
normal accepted period of 30 days in the trade and
due to which, the plaintiff was finding it difficult to
manage its expenses and was suffering further
losses as the plaintiff had deployed its men and
machinery at the site especially for the project of
the defendants.
2.10 It is stated that as per the terms of the contract
between the parties, the plaintiff was entitled to be
paid for the work performed and material supplied.
It is further stated that for the period November
2011 to 23rd July 2016, the plaintiff completed
various works and raised RA bills and also raised
final bills dated 23.7.2016 on the basis of certified
measurements and agreed rates. The plaintiff also
raised bills towards the escalation permitted under
the terms of contract, and claimed the losses
suffered by it, but the defendants failed to pay the
same.
2.11 It is further stated that the plaintiff submitted final
bills after demobilizing from the site on 23.7.2016
on the basis of the measurement books, which were
already certified and since only part/ stage
payments were made by the defendants earlier as
such the plaintiff being fully entitled to claim the
CS (COMM.)/165/2019 Page 11 of 47
remaining cost of the work performed by the
plaintiff, raised the final invoices dated 23.7.2016
upon the defendants, but the defendants failed to
pay the same. It is stated that as per the terms of the
contract, the plaintiff is very much entitled to claim
the invoices with respect to the work completed by
the plaintiff along with permitted escalation,
besides the losses suffered by the plaintiff. The
details of running bills submitted on the basis of
duly certified measurement books and final bills
raised are stated as under:-
1. Work order No.AUCPL/GHZ/WO/11/22 dt 14.11.2011
17th RA BILL FINAL BILL Amount Balance
received
Rs.1,03,64,289Rs.1,10,58,738Rs.1,03,66,604Rs.6,93,134
It is hereby submitted that the total amount received
Rs.1,03,66,604/- includes the payment of Rs.2,73,000/- paid
by defendants towards part of idling labour and
Rs.3,21,435/- paid by the defendants towards escalation and
since the idling of labour and escalation have been claimed
separately in the present suit as such after separating the
said amount, the amount of bill amount due is as under;
17TH RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
Rs.1,03,64,289Rs.1,10,58,738Rs.97,72,169 Rs.12,86,569
2. Work order No.AUCPL/GHZ/WO/12/43 dt 10.6.2012
6th RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
Rs.18,57,319 Rs.19,34,074 Rs.23,57,430 -Rs.4,23,356
3. Work order No.AUCPL/GHZ/WO/12/57 dt 14.7.2012
6th RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
Rs.2,98,521 Rs.3,54,164 Rs.2,79,910 Rs.74,254
4. Work order No.AUCPL/GHZ/WO/12/52 dt 27.6.2012
4th RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
CS (COMM.)/165/2019 Page 12 of 47
Rs.1,08,958 Rs.1,19,952 Rs.1,01,293 Rs.18,659
5. Work order No.AUCPL/GHZ/SERV/WO/15/454 dt
31.8.2015
1st RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
Rs.57,568 Rs.79,914 Rs.54,837 Rs.25,078
6. Work order No.AUCPL/GHZ/SERV/WO/12/210 dt
26.11.2015
1st RA BILL & AMOUNT BALANCE
FINAL BILL RECEIVED
92857 NIL 92857
7. Work order No.AUCPL/GHZ/WO/13/125 dt 30.11.2013
7th RA BILL FINAL BILL AMOUNT BALANCE
RECEIVED
Rs.51,69,049 Rs.56,91,045 Rs.54,42,467 Rs.2,48,578
8. Work order No.AUCPL/GHZ/SERV/WO/15/211 dt
26.11.2015
Word Done Amount Balance
received
NIL NIL
2.12 It is stated that the defendants even failed to make
the payment of the running bills (RA Bills), which
were even certified by the defendants and the final
bills claimed on the basis of certified measurement
books. The plaintiff had, on certain occasions, sent
emails dated 24.2.2014, 7.3.2014, 29.8.2014 and
letter dated 17.8.2015 to the defendants pointing
out the delays on their part and also the
non payment of the RA bills of the plaintiff and
losses suffered by the plaintiff, but despite the
same, no action or payment was made by the
defendants.
CS (COMM.)/165/2019 Page 13 of 47
2.13 It is also stated that the plaintiff was also entitled to
the escalation with respect to the work performed
by the plaintiff in terms of the agreement between
the parties. The details of the permitted escalation
are mentioned in Para no. 13 of the plaint.
2.14 It is further claimed that in addition to the amount
due towards the work completed and escalation,
due to acts of breaches and abnormal delay on part
of defendants, the plaintiff also suffered losses as
the plaintiff had to pay for the salaries of
employees deployed exclusively for the work
orders, loss of profits, and the rental etc. for extra
period as such the plaintiff is entitled to claim the
said amount from the defendants. The details of the
losses suffered by the plaintiff, which the plaintiff
is entitled to claim from defendants, are stated as
under:-
2.14.1 In respect of Work order
No.AUCPL/GHZ/WO/11/22 dt
14.11.2011, it is stated that with respect to
this particular work order, the plaintiff had
to employ one Supervisor and one store
keeper. Due to acts of delays and breaches
as explained above, the plaintiff was
burdened with their salaries for extra
period from May 2012 to June 2016. The
plaintiff was further burdened with tools
rent for the extra period from May 2012 to
June 2016. The plaintiff paid salary to the
CS (COMM.)/165/2019 Page 14 of 47
supervisor @ Rs.10,000/- p.m. for the
period from May 2012 to September 2013,
@ Rs.12,000/- p.m. for the period
November 2013 to March 2014, @
Rs.15,000/- p.m. for the period April 2014
to September 2014, @ Rs.23,000/- p.m.
for the period October 2014 to June 2016
in all total Rs.8,15,000/-. Likewise, the
plaintiff paid a sum of Rs.4,95,990/-
towards the salary of Store Keeper and
further a sum of Rs.1,50,000/- for the
period from May 2012 to June 2016 as
tools rent. In all, the plaintiff is claiming a
sum of Rs.14,60,990/- from the defendants
with respect to the above work order
towards losses only. It is claimed that the
defendants had paid a sum of
Rs.2,73,000/- as an interim part payment
to the plaintiff in their running bill towards
the idling of labour. Hence, the balance
claimed amount is Rs.11,87,000/- only.
2.14.2 In respect of Work order
No.AUCPL/GHZ/WO/12/43 dated
10.6.2012, it is stated that with respect to
this particular work order, the plaintiff had
to employ one Supervisor and one
store-keeper. Due to acts of delays and
breaches as explained above, the plaintiff
was burdened with their salaries for extra
CS (COMM.)/165/2019 Page 15 of 47
period from June 2014 to March 2016.The
plaintiff was further burdened with room
rent for the extra period from June 2014 to
March 2016. The plaintiff paid salary to
the supervisor @ Rs.15,000/- p.m. for the
period from June 2014 to November 2014,
@ Rs.25,000/- p.m. for the period from
December 2014 to December 2015, in all,
total Rs.4,15,000/-. Likewise, the plaintiff
paid a sum of Rs.2,16,850/- towards the
salary of Store Keeper and further, a sum
of Rs.55,000/- for the period from May
2012 to June 2016 towards room rent. In
all, the plaintiff is claiming a sum of
Rs.6,86,850/- from the defendants with
respect to the above work order towards
losses only.
(b) Besides the same, the plaintiff is also
entitled to claim a sum of Rs.9,06,312/-
towards the loss of profits since the
expected profits is generally @ 15% which
is expected profit of such nature of work,
for which any person would undertake
work. The total work awarded to the
plaintiff was for value of Rs.79,76,151/-
and the expected profits @15% on the
same, comes to Rs.11,96,423/-, whereas,
the defendants could execute work of only
Rs.19,34,074/- till 23.7.2016, as the work
CS (COMM.)/165/2019 Page 16 of 47
front was not ready as such the plaintiff
earned profits of 15% on Rs.19,34,074/-
i.e. Rs.2,90,111/- and in this process, the
loss of profit comes to Rs.9,06,312/-, had
the complete ground work was provided
by the defendants to the plaintiff for
execution of work for value of
Rs.79,76,151/- and on the said value, the
plaintiff would have earned 15% as profit.
Therefore, it is stated that in all, the total
losses suffered by the plaintiff are
Rs.6,86,500/- plus Rs.9,06,312/- i.e.
Rs.15,92,812/-, which the plaintiff is
entitled to claim from the defendants.
2.15 It is further the case of the plaintiff that due to
non-payment of final bills raised by the plaintiff as
per the terms of the contract and the escalation
amount, the defendants are also liable to pay
interest @ 12 % p.a. as per trade practices and in
consonance with the normal banking lending rates.
A sum of Rs.16,96,759/- has become due
towards the interest alone calculated towards the
same @ 12 % p.a. for the period of delay, which
the defendants are liable to pay to the plaintiff.
2.16 Thus, in view of above, the plaintiff has claimed
from the defendants, the following amounts which
the defendants are allegedly liable to pay to the
plaintiff:-
CS (COMM.)/165/2019 Page 17 of 47
S.N Work Amount Escalation Losses Interest
order due as peramount insuffered in@ 12%
number final bills Rs. Rs. p.a. in Rs.
in Rs.
1 WO/11/22 12,86,569 7,81,249 11,87,000 10,08,993
2 WO/12/43 -4,23,356 4,93,494 15,92,812 5,15,514
3 WO/12/57 74,254 Nil Nil 23,019
4 WO/12/52 18,659 Nil Nil 5,784
5 WO/15/ 25,077 Nil Nil 7,774
454
6 WO/15/ 92,857 Nil Nil 28,786
210
7 WO/13/ 2,48,578 Nil Nil 1,06,889
125
Total 13,22,638 12,74,743 27,79,812 16,96,759
Total Amount 70,73,952
GST @ 18% 12,73,311
Grand Total 83,47,263
2.17 It is further averred that the plaintiff served notice
dated 04.04.2019 upon the defendants, thereby
calling upon them to make the payment of above
said amount of Rs.83,47,263/-, but, the defendants
despite service of the same, failed to make any
payment. Thus, it is stated that the defendants are
liable to pay interest @ 12% p.a. on the said
amount during pendency of the present suit and till
the time, amount is actually recovered from them.
Hence, the present suit came to be instituted.
CS (COMM.)/165/2019 Page 18 of 47
3. At this juncture, it may be relevant to note that initially, the
present suit was filed as non-commercial suit before the
concerned Court of Ld. Additional District Judge-04, PHC,
New Delhi and subsequent to direction of Ld. Principal
District & Sessions Judge, PHC, New Delhi contained in
Order No.81-111/Judl./NDD/PHC/ND dated 06-1-2020,
the present case was received by this Court.
4. Summons of the suit were issued to the defendants in
terms of relevant order for 04-10-2019. On being served
with same, both the defendants put their appearance
through counsel namely Rakesh Kumar, Advocate on next
date of hearing i.e. 04-10-2019 and vakalatnama came to
be filed. The defendants were directed to file written
statement within time prescribed under the law and the
matter was adjourned for 04-2-2020 for settlement of
issues.
5. At this stage, it is worthwhile to note here that due to
outbreak of Covid-19 pandemic, the matter get adjourned
en bloc in view of directions of Hon’ble Delhi High Court
and Ld. Principal District & Sessions Judge, PHC, New
Delhi. Subsequently, the matter was taken up for hearing
through virtual mode/ hybrid mode, in pursuant to further
directions of Hon’ble Delhi High Court and Ld. Principal
District & Sessions Judge, PHC, New Delhi.
6. It is also worthwhile to note that an application under
Order VIII Rule 10 CPC read with S. 151 CPC was moved
on behalf of plaintiff for striking off the defence of the
defendants. Reply thereto was also filed on behalf of
CS (COMM.)/165/2019 Page 19 of 47
defendants, thereby contesting the same. In the
meantime,written statement along with an application
seeking condonation of delay in filing written statement
were also filed on behalf of the defendants. Besides, an
application under Order I Rule 10 read with S. 151 CPC
was also filed on behalf of defendant no.2 seeking its
deletion from the array of defendants. Reply to aforesaid
application for deletion of defendant no.2 was filed by
plaintiff, thereby contesting the same.
7. Vide common detailed order dated 29-01-2021, the
aforesaid condonation application of defendants was
dismissed, however, said application of plaintiff under
Order VIII Rule 10 CPC read with S. 151 CPC was
allowed, thereby striking of the defence of the defendants.
8. At this stage, it may also be noted here that due to second
wave of Covid-19 pandemic, the matter again get
adjourned en bloc in view of directions of Hon’ble Delhi
High Court and Ld. Principal District & Sessions Judge,
PHC, New Delhi. Subsequently, the matter was again
taken up for hearing through virtual mode/ hybrid mode, in
pursuant to further directions of Hon’ble Delhi High Court
and Ld. Principal District & Sessions Judge, PHC,
New Delhi.
9. The aforesaid application under Order I Rule 10 read with
S. 151 CPC of the defendant no.2 for striking out its name
from array of parties, was dismissed, vide detailed order
dated 06-10-2021, passed by Ld. Predecessor of this Court.
It is apposite here to mention that the defendant no.2 had
CS (COMM.)/165/2019 Page 20 of 47
challenged the aforesaid order under Article 227 of the
Constitution of India, by way of petition bearing CM (M)
1081/2021 titled as ‘Ansal Landmark Township Pvt. Ltd.
v. Big Brothers Projects Pvt. Ltd.‘ filed before Hon’ble
Delhi High Court. However, the said petition was
dismissed by Hon’ble Delhi High Court, vide order
dated 29-11-2021.
10. Thereafter, the defendant no.2 had also preferred an
application under Order VII Rule 11 CPC read with S. 151
CPC for rejection of plaint, however, subsequently it made
statement regarding withdrawal of said application.
Accordingly, the same was dismissed as withdrawn on
07-12-2021.
11. In support of its case, the plaintiff has examined its one of
the directors/ AR namely Sh. Prashant Dhyani as PW1,
who has deposed on the lines of the averments made in the
plaint in his evidence by way of affidavit (Ex.PW1/A). He
also relied upon / proved the following documents:-
Sr. Documents Mark/ Exhibit
1. Memorandum & Article of Ex.PW1/1
Association of Plaintiff
Company
2. The extract of Board Resolution Ex.PW1/2
dated 13.4.2019 of plaintiff
company
3. Copy of Work Order dated Ex.PW1/3
14.11.2021 with Annexure-I
and Special Terms and
CS (COMM.)/165/2019 Page 21 of 47
Sr. Documents Mark/ Exhibit
Conditions
4. The copy of amended work Ex.PW1/4
order dated 23.7.2013
5. The copy of amended work Ex.PW1/5
order dated 27.1.2014
6. The copy of amended work Ex.PW1/6
order dated 07.11.2015
7. Printout of the 17th RA Bill Ex.PW1/7
dated 12.3.2016
8. Printout of the final bill dated Ex.PW1/8
23.7.2016
9. Copy of work order dated Ex.PW1/9
26.11.2015 with Annexure-I &
Terms and conditions
10. Print out of 1st RA/Bill dated Ex.PW1/10
23.7.2016
11. Copy of work order dated Ex.PW1/11
10.6.2012
12. Copy of work order dated Ex.PW1/12
14.1.2014
13. Printout of 6th RA Bill Ex.PW1/13
14. Printout of final bill dated Ex.PW1/14
23.7.2016
15. Copy of Work Order dated Ex.PW1/15
14.7.2012 with terms and
condition
16. Copy of Amended Work Order Ex.PW1/16
with Annexures
17. Printout of 6th RA Bill Ex.PW1/17
CS (COMM.)/165/2019 Page 22 of 47
Sr. Documents Mark/ Exhibit
18. Printout of final bill dated Ex.PW1/18
23.7.2016
19. Copy of work order dated Ex.PW1/19
30.10.2013
20. Copy of amended work order Ex.PW1/20
with Annexures
21. Copy of amended work order Ex.PW1/21
with Annexures
22. Print out of 7th RA Bill Ex.PW1/22
23. Print out of the Final Bill dated Ex.PW1/23
23.7.2016
24. Copy of work order dated Ex.PW1/24
27.6.2012 with Annexures and
terms and conditions
25. Print out of 4th RA Bill Ex.PW1/25
26. Print out of final bill dated Ex.PW1/26
23.7.2016
27. Copy of amended work order Ex.PW1/27
with annexures
28. Print out of 1st RA Bill Ex.PW1/28
29. Print out of the final bill dated Ex.PW1/29
23.7.2016
30. Copy of amended work order Ex.PW1/30
with annexures
31. Printout showing the summary Ex.PW1/31
of Escalation dated 23.7.2016
and its calculation
32. The statement of Index for WPI Ex.PW1/32
for all commodities from office
CS (COMM.)/165/2019 Page 23 of 47
Sr. Documents Mark/ Exhibit
of economic advisor and office
of Labour Bureau showing
consumer price index
33. Printout showing the summary Ex.PW1/33
of Escalation dated 23.7.2016
and its calculation
34. The Printout of Index for WPI Ex.PW1/34
for all commodities from office
of Economic Advisor and office
of Labour Bureau showing
consumer price index
35. Print out of calculation Sheet Ex.PW1/35
showing the losses and interest
calculation
36. Calculation sheet showing Ex.PW1/36
salary of the two employees
claimed for the period May,
2012 to June, 2016 and tool rent
for the said period
37. The statement showing total Ex.PW1/37
wages of Rs.4,83,000/- paid to
Mr. Satish Upadhyay,
Supervisor by cheque for period
01-11-2014 to 31-7-2016,
which were duly encashed by
him
38. Copies of vouchers of various Ex.PW1/38 to
dates in respect of Work Order Ex.PW1/46
No.AUCPL/GHZ/WO/11/22
CS (COMM.)/165/2019 Page 24 of 47
Sr. Documents Mark/ Exhibit
dtd. 14.11.2011
39. Copies of vouchers of various Ex.PW1/47 to
dates in respect of Work Order Ex.PW1/72
No.AUCPL/GHZ/WO/11/22
dtd. 14.11.2011
40. Print out of Calculation sheet Ex.PW1/73
showing losses and interest
calculation in respect of Work
Order
No.AUCPL/GHZ/WO/12/43
dated 10.6.2022
41. Calculation Sheet showing Ex.PW1/74
salary of two employees
claimed for the peirod May
2012 to June 2016 and tool rent
for the said period
42. Statement showing total wages Ex.PW1/75
of Rs.3,25,000/- paid to Mr.
Ramesh Pokhiryal, Supervisor
by cheque/ cash for the period
13.12.2014 to 9.1.2016 which
were duly encashed by him
43. Copies of vouchers of various Ex.PW1/76 to
dates in respect of Work Order Ex.PW1/122
No.AUCPL/GHZ/WO/12/43
dated 10.6.2022
CS (COMM.)/165/2019 Page 25 of 47
Sr. Documents Mark/ Exhibit
44. Printouts of emails dated Ex.PW1/123
24.2.2014, 07.3.2014 and to
29.8.2014 Ex.PW1/125
45. Office copy of letter dated Ex.PW1/126
17.8.2015
46. Office copy of Notice dated Ex.PW1/127
04.4.2019, postal receipts and to
courier receipts Ex.PW1/131
47. Printout of the ledger account Ex.PW1/132
for the period 01-4-2011 to
23.7.2016
48. Printout of the list of share Ex.PW1/133
holders of defendant no.2 as [De-exhibited]
downloaded from the official
website of Ministry of
Corporate Affairs i.e.
www.mca.gov.in
49. Printout of the list of share Ex.PW1/134
holders of defendant no.1 as [De-exhibited]
downloaded from the official
website of Ministry of
Corporate Affairs i.e.
www.mca.gov.in
50. Affidavit under S. 65B of Ex.PW1/135
Indian Evidence Act w.r.t. [De-exhibited]
Ex.PW1/133 to Ex.PW1/134
CS (COMM.)/165/2019 Page 26 of 47
Sr. Documents Mark/ Exhibit
51. Affidavit under S. 65B of Ex.PW1/136
Indian Evidence Act w.r.t. other
electronic evidence.
12. It may also be mentioned that PW1 was cross-examined at
length on behalf of defendants, which shall be discussed in
subsequent paras of this judgment.
13. Ld. Counsel of plaintiff had made statement regarding
closure of plaintiff’s evidence on 17-02-2022. However,
subsequent thereto, an application under S. 151 CPC was
moved on behalf of plaintiff for filing fresh affidavit under
Order XI Rule 6 (3) CPC, as applicable to the Commercial
Courts Act, 2015 along with additional affidavit in
evidence of PW1, which was allowed vide order dated
25.7.2023, passed by Ld. Predecessor of this Court. In
view thereof, PW-1 Sh. Prashant Dhyani was further
examined by way of additional affidavit Ex.PW1/B, who
proved the said affidavit under Order XI Rule 6 (3) CPC as
Ex.PW1/37.
14. It may also be noted here that the defendants stopped
appearing before this Court, and consequently, they were
proceeded against ex parte, vide order dated 16.02.2024,
passed by this Court.
15. I have already heard Sh. Rajesh Mahindru, Ld. Counsel
for the plaintiff. I have also gone through the material
available on record including the plaint and the evidence,
oral as well as documentary, led from the side of the
plaintiff.
CS (COMM.)/165/2019 Page 27 of 47
16. I have duly considered the submissions made on behalf of
the plaintiff and have also gone through the judicial
precedents filed on behalf of the plaintiff.
ANALYSIS & CONCLUSION
Limitation
17. Firstly, I shall decide as to whether or not the suit is filed
within period of limitation. In this regard, after referring to
the relevant documents i.e. work orders, amended work
orders and RA Bills and Final Bills dated 23.07.2016, and
evidence of PW1, Ld. Counsel for plaintiff has vehemently
argued that the present suit is well within period of
limitation. It is submitted that the plaintiff had carried out
the work from November, 2011 to 23rd July, 2016 and it
being an item rate contract, the payments were to be
released in phase manner i.e. 65% of the value of the
specific work was to be released at the time of placing the
material at site, 10% at installation of material, 10% at
testing, 10% at commission and balance 5% was retained
as retention amount to be released later on and thus, it is
contended that the cause of action is continuing. Ld.
Counsel for plaintiff further argued that the plaintiff
submitted final bills on 23.7.2016 for all the work orders.
The amount claimed under the work orders of
Rs.13,22,638/- (after deducting over payment of
Rs.4,23,356) consists of remaining 10% of testing, 10% of
commissioning and balance 5% of retention amount and
the fresh work executed after last running bill submitted
for each work order. It is further argued that the claims of
escalation were also calculated upto the date of final bill
CS (COMM.)/165/2019 Page 28 of 47
dated 23.7.2016. It is also submitted that losses claimed
are on account of overstaying till 23.7.2016 and thus, they
can be claimed only after 23.7.2016 when the plaintiff
demobilized from site as the defendants were promising to
pay the same. He further argued that the rest is the interest
amount and GST and thus, the period of limitation is to be
reckoned from the said date of 23.7.2016, which expires
on 22.7.2019. In view there, it is contended by Ld. Counsel
of plaintiff that since the plaintiff got instituted the present
suit on 22.7.2019 i.e. within period of 3 years and hence,
the suit is within period of limitation.
18. This is a suit for recovery of money and limitation is 3
years from the date when the cause of action arises.
19. As already noted above, the defendants failed to file
written statement even within the maximum period of 120
days and hence, their defence was struck off. Plaintiff has
examined PW1 in order to prove its case. PW-1 has led
his evidence by way of affidavit and additional affidavit
[Ex.PW1/A and Ex.PW1/B] and deposed on the line of the
averments made in plaint, besides proving various
documents including final bills dated 23.7.2016
[Ex.PW1/8, Ex.PW1/14, Ex.PW1/18, Ex.PW1/23,
Ex.PW1/26 and Ex.PW1/29]. Although, PW1 was
cross-examined on behalf of defendants, yet, there is no
cross-examination on the point of limitation. Therefore, it
is established on record that the plaintiff has submitted
final bills dated 23.7.2016 against all the work orders,
which are duly proved by PW1 as Ex.PW1/8, Ex.PW1/14,
Ex.PW1/18, Ex.PW1/23, Ex.PW1/26 and Ex.PW1/29. In
CS (COMM.)/165/2019 Page 29 of 47
view thereof, the period of limitation would commence
from 23.7.2016 and would end on 22.7.2019. Admittedly,
the suit has been filed on 22.7.2019. Therefore, in the
totality of the facts and circumstances of the case and
keeping in view evidence led by the plaintiff, this Court is
of the opinion that the suit is within the prescribed period
of limitation.
Jurisdiction:
20. While pointing out from the record, Ld. Counsel of
plaintiff has argued that the defendants carry on and work
for gain through its registered office, which is situated at
K. G. Marg, New Delhi, which falls within the territorial
jurisdiction of this Court. Further, Ld. Counsel of plaintiff
has also drawn attention of this Court towards Clause
No.29 of the General Conditions in respect of all work
orders and stated that it was agreed between the parties
that the Court at Delhi shall have jurisdiction in the event
of any dispute between the parties and thus, it is contended
that this Court has territorial jurisdiction to try and
entertain the present suit.
21. In view of aforesaid submission, it would be apposite here
to reproduce the relevant clause of General Condition
regarding jurisdiction, which reads as under:-
“xxx
29. JURISDICTION
The parties unequivocally agree that they waive off
their right to sue or be sued, in respect of any matter,
claim or dispute arising out of or in any way relating
to this Contract, at any place other than Delhi.
xxx”
CS (COMM.)/165/2019 Page 30 of 47
22. Therefore, in view of the above noted submissions of
Ld. Counsel of plaintiff, which is duly substantiated from
the record, this Court is of the considered view that this
Court has territorial jurisdiction to try and entertain the
present suit.
Entitlement
23. Ld. Counsel of plaintiff has argued that the entire
testimony of PW-1 has remained unchallenged and
unrebutted from the side of defendants and therefore,
the plaintiff is entitled to the decree, as prayed for.
He also referred to the relevant documents proved by
PW1, in order to bring home his point that these
documents clearly prove that suit amount of
Rs.83,47,263/- was due towards the defendants at the time
of filing of the suit. He, therefore, prayed that the suit may
be decreed.
24. In support of his contentions, Ld. Counsel of plaintiff has
relied upon following judgments:-
reported as 212 (129) DRJ 630;
24.2 “Bharat Starch Industries Ltd. v. Prudent
International Shipping And Trading Co. Ltd.“,
reported as 1995 (4) AD 343;
24.3 “Gotan Lime Stone Khanij Udyog Pvt. Ltd. v. State
of Rajasthan & Ors” reported as 2015 Legal Eagle
787;
CS (COMM.)/165/2019 Page 31 of 47
24.4 “Saurabh Exports v. Blaze Finlease” reported as
2006 129 (DLT) 429;
24.5 “Welspun Specialty Solutions Limited (Formerly
known as Remi Metals Gujarat Ltd.) v. Oil &
Natural Gas Corporation Ltd.”, reported as 2022
AIR (SC) 1; and
24.6 “A. T. Brij Paul Singh v. State of Gujarat ” reported
as 1984 AIR (SC) 1703.
25. The suit amount i.e. Rs.83,47,263/- claimed by the
plaintiff is founded on three different heads, which are as
under:-
25.1 Rs.13,22,638/- towards outstanding balance against
final bills dated 23.07.2016 in respect work done
against all six work orders;
25.2 Rs.12,74,743/- towards escalation of costs against
first two work orders; and25.3 Rs.27,79,812/- towards loss of profits in respect of
first two work orders;
26. The plaintiff has also claimed Rs.16,96,759/- towards
interest calculated @ 12% per annum on the amounts due
towards outstanding balance, escalation costs and loss of
profits. In this manner, the plaintiff has claimed a sum of
Rs.70,73,952/-. Further, the plaintiff has also claimed GST
@ 18% on the said amount, which comes to
Rs.12,73,311/- and thus, the plaintiff has claimed total sum
of Rs.83,47,263/-.
CS (COMM.)/165/2019 Page 32 of 47
27. It is the specific case of the plaintiff that the plaintiff was
awarded contract for various plumbing and sanitary jobs/
works by defendant no.1, which is a subsidiary of
defendant no.2 for their project ‘The Group Housing
Towers at Aquapolis, Ghaziabad’ for the Towers D4, D8,
D11 and B2B. Further, the defendants had been changing
scope of work by amending the said work orders from time
to time, as the ground work for performing sanitary and
plumbing work of the project was not ready, which caused
undue delay in execution of the work, as a result of which,
the plaintiff has suffered losses.
28. As already noted above, the plaintiff has examined PW1 in
order to prove its case. PW1 has proved various work
orders and amended work orders as Ex.PW1/3 to
Ex.PW1/4, Ex.PW1/9, Ex.PW1/15, Ex.PW1/16,
Ex.PW1/19 to Ex.PW1/21, Ex.PW1/24, Ex.PW1/27 and
Ex.PW1/30. Besides, PW1 has also proved final bills dated
23.07.2016 submitted by the plaintiff against said work
orders as Ex.PW1/8, Ex.PW1/14, Ex.PW1/18, Ex.PW1/23,
Ex.PW1/26 and Ex.PW1/29, copies of vouchers of
different dates in respect of work orders from Ex.PW1/38
to Ex.PW1/72 and ledger account for the period from
01-4-2011 to 23.7.2016 as Ex.PW1/32.
29. As already noted above, the defence of the defendants
stands struck off due to non-filing of written statement by
them within the prescribed maximum period of 120 days
from the date of service of summons of the suit. However,
they were permitted to cross-examine PW1 on the limited
grounds available under the law. PW-1 was
CS (COMM.)/165/2019 Page 33 of 47
cross-examined on their behalf. In his cross-examination,
PW1 stated that defendant no.2 neither placed any work
order upon the plaintiff, nor the plaintiff supplied any
goods to defendant no.2. After issuance of Ex PW1/7
[Printout of 17th RA Bill dated 12.3.2016], there has been
balance outstanding payable to the plaintiff by the
defendants. Ledger account Ex PW1/132 of defendant no.
1 in the books of plaintiff company finds mention of the
work done, payments received, balance outstanding with
all details; and therefore, he denied the suggestion that
after issuance of Ex PW1/7 i.e. the 17th running bill, there
is no clarity in the pleadings and the evidence of the
plaintiff with respect to work done and outstanding
payments. He admitted that bill amount outstanding does
not match with the amount claimed in the suit. However,
he clarified that the claim in the suit includes balance
outstanding as per Ex PW1/132; escalation, losses suffered
due to overstaying, labour losses, interest on balance
payments and because of that, the outstanding balance in
Ex PW1/132 cannot be the same when compared with the
claim in the suit.
30. PW-1 in his further cross-examination has stated that
details of losses suffered are mentioned in Para no.31 of
Ex PW1/A and Para no. 14 of the plaint also finds mention
of the details of the losses suffered by the plaintiff.He also
stated that attendance records of work force at site were
maintained by plaintiff and even clients maintain them.
31. Thus, from the cross-examination of PW-1 conducted on
behalf of the defendants, nothing has been brought on
CS (COMM.)/165/2019 Page 34 of 47
record, which could discredit his testimony and/or claim of
the plaintiff. Accordingly, it is established on record that
there is an outstanding balance amount of Rs.13,22,638/-
against the final bills.
32. As regards amount towards escalation, PW1 has also
proved printouts showing summary of Escalation dated
23.7.2016 and their calculation sheets as Ex.PW1/31 and
Ex.PW1/33. In this regard, PW-1 in his cross-examination,
has stated that the component of escalation is not included
in the bills and denied the suggestion that component of
escalation is included in the bills. He stated that escalation
component starts only after expiry of initial contract
period. Details of escalation are mentioned in Para 29 of
Ex PW1/A and further details are in Ex PW1/31. He stated
that only part payment for claim of escalation was received
from the defendants and denied the suggestion that entire
payment for claim of escalation was received from
defendants and the claim of escalation in the plaint is
bogus. As already noted above, not only the witness of
plaintiff has successfully withstood the test of cross
examination during the trial, but also, there is no iota of
evidence from the side of the defendants, their defence
being already struck off.
33. Thus, it is established on record that the plaintiff is entitled
to recover Rs.12,74,743/- towards escalation costs from
the defendants.
34. The plaintiff has claimed Rs.27,79,812/- towards losses of
profits. It is the specific case of the plaintiff that the
CS (COMM.)/165/2019 Page 35 of 47
plaintiff suffered huge loss due to idling of the resources,
men and machinery and burden of overheads and
opportunity losses also. On repeated demands by the
plaintiff for compensation of their losses, some part
payments of Rs.2,73,000/- only towards Idle labour were
initially paid in the Running Bills, although, initially the
plaintiff was promised by the defendants that it would be
properly compensated for the losses suffered by it, but
later on, the defendants failed to fulfill their promises and
refused to compensate the plaintiff for the delay caused
and losses suffered by the plaintiff and due to which, the
plaintiff had to demobilize from the site w.e.f. the year
2016. The plaintiff suffered losses as the plaintiff had to
pay for the salaries of employees deployed exclusively for
the work orders, loss of profits, and the rental etc. for extra
period. The plaintiff was burdened with the salaries of 2
employees for extra period from May 2012 to June 2016.
In all, the plaintiff is claiming a sum of Rs.14,60,990/-
from the defendants with respect to the above work order
towards losses only. The defendants had paid a sum of
Rs.2,73,000/- as an interim part payment to plaintiff in
their running bill towards the idling of labour. The same
goes to show that there is an admission on the part of the
defendants of their obligation to pay for the losses suffered
by it. Hence, the plaintiff is entitled to claim balance
claimed amount of Rs.11,87,000/-, from the defendants in
respect of first order dated 14.11.2011.
35. In respect of 2nd Work order dated 10.6.2012, it is stated
that the plaintiff was burdened with salaries of 2
CS (COMM.)/165/2019 Page 36 of 47
employees for extra period from June 2014 to March 2016.
In all, the plaintiff is claiming a sum of Rs.6,86,850/- from
the defendants with respect to the above work order
towards losses only.
36. Further, the plaintiff has also claimed a sum of
Rs.9,06,312/- towards the loss of profit since the expected
profits is generally 15% which is expected profit of such
nature of work order No.AUCPL/GHZ/WO/12/43 for
which any person would undertake work. Therefore, in all,
the total losses suffered by the plaintiff are claimed to be
Rs.6,86,500/- plus Rs.9,06,312/ i.e. Rs.15,92,812/- towards
this work order, which the plaintiff is entitled to claim
from the defendants.
37. In this regard, PW1 has proved print out of Calculation
Sheet showing the losses and interest calculation as
Ex.PW1/35, Calculation Sheet showing salary of the two
employees claimed for the period from May, 2012 to June,
2016 and tool rent for the said period as Ex.PW1/36, the
statement showing total wages of Rs.4,83,000/- paid to Mr.
Satish Upadhyay, Supervisor by cheque for the period
from 01-11-2014 to 31-7-2016 as Ex.PW1/37, Calculation
Sheet showing salary of the two employees claimed for the
period from May, 2012 to June, 2016 and tool rent for the
said period as Ex.PW1/74 and the statement showing total
wages of Rs.3,25,000/- paid to Mr. Ramesh Pokhiryal,
Supervisor by cheque for period from 13-12-2014 to
09-1-2016 as Ex.PW1/75 and copies of vouchers of
different dates in respect of work orders as Ex.PW1/38 to
Ex.PW1/72.
CS (COMM.)/165/2019 Page 37 of 47
38. At this juncture, it would be apposite to reproduce the
provision of S.73 of the Indian Contract Act in order to
appreciate the submissions raised on behalf of plaintiff.
Said provision is reproduced hereunder:-
“73. Compensation for loss or damage caused by breach of
contract. – When a contract has been broken, the party who
suffers by such breach is entitled to receive, from the party
who has broken the contract, compensation for any loss or
damage caused to him thereby, which naturally arose in the
usual course of things from such breach, or which the parties
knew, when they made the contract, to be likely to result
from the breach of it.
Such compensation is not to be given for any remote and
indirect loss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation
resembling those created by contract. – When an obligation
resembling those created by contract has been incurred and
has not been discharged, any person injured by the failure to
discharge it is entitled to receive the same compensation
from the party in default, as if such person had contracted to
discharge it and had broken his contract.
Explanation.–In estimating the loss or damage arising
from a breach of contract, the means which existed of
remedying the inconvenience caused by the non-performance
of the contract must be taken into account.”
39. In “M. C. Luthra v. Ashok Kumar Khanna“, reported as
2018 SCC OnLine Del 7462, our own Hon’ble High Court
held as under:-
“xxxx
18. In sum and substance what is held by the Constitution
Bench of the Supreme Court in the cases of Fateh Chand
(supra) and the recent judgment in Kailash Nath Associates
(supra) is that whenever there is a breach of contract then
earnest money which is forfeited because of the breach,
whether by a plaintiff or a defendant in a contract, the
forfeiture is of that amount which are in fact liquidated
damages specified under a contract and that for claiming
damages under a contract, whether liquidated under Section
74 of the Contract Act or unliquidated under Section 73 of
the Contract Act, existence of loss is a sine qua non. In other
words, if no loss is caused to a seller who has in his pocket
monies of buyer, then the seller can only forfeit a nominal
amount unless the seller has pleaded and proved that losses
CS (COMM.)/165/2019 Page 38 of 47
have been caused to him on account of the breach of contract
by the buyer. Once there is no pleading of loss suffered by a
seller under an agreement to sell, then large amounts cannot
be forfeited though so entitled to a seller under a clause of an
agreement to sell/contract entitling forfeiture of ‘earnest
money’ because what is forfeited is towards loss caused, and
that except a nominal amount being allowed to be forfeited
as earnest money, any forfeiture of any amount, which is not
a nominal amount, can only be towards loss if suffered by the
seller. Thus if there is no loss which is suffered by a seller
then there cannot be forfeiture of large amounts which is not
a nominal amount, simply because a clause in a contract
provides so.
40. Thus, the principles of law as laid down by Hon’ble High
Court with respect to S. 73 and S. 74 of the Indian
Contract Act can be summarized as under:-
40.1 Where a sum is named in a contract as a liquidated
amount payable by way of damages, the party
complaining of a breach can receive as reasonable
compensation such liquidated amount only if it is a
genuine pre-estimate of damages fixed by both the
parties and found to be such by the Court. In other
cases, where a sum is named in a contract as a
liquidated amount payable by way of damages,
only reasonable compensation can be awarded not
exceeding the amount so stated. Similarly, in cases
where the amount fixed is in the nature of penalty,
only reasonable compensation can be awarded not
exceeding the penalty so stated. In both the cases,
the liquidated amount or penalty is the upper limit,
beyond which the Court cannot grant reasonable
compensation.
40.2 Reasonable compensation will be fixed on well-
known principles that are applicable to the law of
CS (COMM.)/165/2019 Page 39 of 47
contract, which are to be found inter alia in Section
73 of the Contract Act.
40.3 Since Section 74 provides for award of
reasonable compensation for damage or loss caused
by a breach of contract, damage or loss caused is a
sine qua non for the applicability of the
said Section.
40.4 The Section applies whether a person is a plaintiff
or a defendant in a suit.
40.5 The sum spoken of may already be paid or be
payable in future.
40.6 The expression ‘whether or not actual damage or
loss is proved to have been caused thereby’ means
that where it is possible to prove actual damage or
loss, such proof is not dispensed with. It is only in
cases where damage or loss is difficult or
impossible to prove that the liquidated amount
named in the contract, if a genuine pre-estimate of
damage or loss, can be awarded.
40.7 Section 74 will apply to cases of forfeiture
of earnest money under a contract.
Where, however, forfeiture takes place under the
terms and conditions of a public auction before the
agreement is reached, Section 74 would have no
application.
41. In the case of A. T. Brij Paul Singh (supra), Hon’ble Apex
Court has held as under:-
CS (COMM.)/165/2019 Page 40 of 47
“xxx
8. Once it is held that the respondent was guilty of breach
of works contract, part of which was already performed
and for performing which the appellant, a Poona based
contractor had transported machinery and equipment
from Poona to the work site near Rajkot in Saurashtra,
certainly he would be entitled to damages. One of the
heads of damages under which claim is made is ‘loss of
expected profit in the work.’ The claim under this head as
canvassed before the High Court was in the amount of
Rs.4,30,314/-
9. xxx
10. Mr. Aneja, learned counsel for the appellant urged
that the appellant was placed at a comparative
disadvantage on account of his two appeals arising from
two identical contracts inter partes being heard on two
different occasions by two different Benches even though
one learned Judge was common, to both the Benches. Mr.
Aneja pointed out that in the appeal from which the
cognate Civil Appeal No. 1998/72 arises, the same High
Court in terms held that the claim by way of damages fox
loss of profit on the remaining work at 15% of the price
of the work as awarded by the trial Court was not
unreasonable. The High Court had observed in the
cognate appeal that ‘the basis adopted by the learned civil
Judge in computing the loss of profit at 15% on the value
of the remaining work contract cannot be said to be
unreasonable’. In fact, the High Court had noticed that
this computation was not seriously challenged by the
State, yet in the judgment under appeal the High Court
observed that actual loss of profit had to be proved and a
mere percentage as deposed to by the partner of the
appellant would not furnish adequate evidence to sustain
the claim. In this connection the High Court referred to
another judgment of the same High Court in First Appeal
No. 89 of 1965 but did not refer to its own earlier
judgment rendered by one of the Judges composing the
Bench in First Appeal No. 384 of 1952 rendered on 3/6
July, 1970 between the same parties. When this was
pointed out to Mr. Mehta, his only response was that the
Court cannot look into the record of the cognate appeal.
We find the response too technical and does not merit
acceptance. We are not disposed to accept the contention
of Mr. Mehta for two reasons: (1) that in an identical
contract with regard to another portion of the same.
Rajkot-Jamnagar road and for the same type of work, the
High Court accepted that loss of profit at 15% of the
price of the balance of works contract would provide a
reasonable measure of damages if the State is guilty of
breach of contract. The present appeal is concerned with
CS (COMM.)/165/2019 Page 41 of 47
the same type of work for a nearby portion of the same
road which would permit an inference that the work was
entirely identical. And the second reason to reject the
contention is that ordinarily a contractor while submitting
his tender in response to an invitation to tender for a
works contract reasonably expects to make profits. What
would be the measure of profit would depend upon facts
and circumstances of each case. But that there shall be a
reasonable expectation of profit is implicit in a works
contract and its loss has to be compensated by way of
damages if the other party to the contract is guilty of
breach of contract cannot be gainsaid. In this case we
have the additional reason for rejecting the contention
that for the same type of work, the work site being in the
vicinity of each other and for identical type of work
between the same parties, a Division Bench of the same
High Court has accepted 15% of the value of the balance
of the works contract would not be an unreasonable
measure of damages for low of profit. We are therefore,
of the opinion that the High Court was in error in wholly
rejecting the claim under this head.
11. Now if it is well-established that the respondent was
guilty of breach of contract inasmuch as the rescission of
contract by the respondent is held to be unjustified, and
the plaintiff-contractor had executed a part of the works
contract, the contractor would be entitled to damages by
way of loss of profit. Adopting the measure accepted by
the High Court ha the facts and circumstances of the case
between the same parties and for the same type of work
at 15% of the value of remaining parts of the works
contract, the damages for loss of profit can be measured.
xxx”
42. In view of aforesaid facts and circumstances, the evidence
available on record, the fact that there is no opposition
whatsoever to the evidence of plaintiff from the side of the
defendants and the legal position discussed by Hon’ble
Apex Court and Hon’ble Delhi High Court in above
referred decisions, this Court is of the considered opinion
that it is established on record that the plaintiff is entitled
to Rs.27,79,812/- towards losses suffered by it from the
defendants.
CS (COMM.)/165/2019 Page 42 of 47
43. As regards interest, it is argued on behalf of the plaintiff
that since the defendants withheld the legitimate payments
due and payable by them to the plaintiff, the plaintiff is
also entitled to recover interest from them. Keeping in
view the submissions and the fact that transactions
between the parties are commercial in nature, this Court is
in agreement with the submissions made on behalf of the
plaintiff regarding its claim of interest @12% per annum
as calculated by them on the aforesaid outstanding
amounts due and payable by the defendants to the plaintiff.
Accordingly, the plaintiff is entitled to recover
Rs.16,96,759/- towards interest @ 12 % per annum.
44. Keeping in view the nature of transactions between the
parties, the plaintiff is also entitled to recover
Rs.12,73,311/- towards GST @ 18% on the aforesaid
outstanding amounts.
45. In view of the foregoing reasons and discussions made
hereinabove, the Court is of the view that the plaintiff is
entitled to Rs.83,47,263/- from the defendants.
46. Since the defendants illegally and without any reasonable
ground, withheld the aforesaid amounts due towards the
plaintiff company and utilized the said amount for their
benefit, the defendants are liable to pay pendent-lite and
future interest @ 12% per annum on the said suit amount.
47. As regards the joint and several liability of both the
defendants, Ld. Counsel of plaintiff contended that the
application under Order 1 Rule 10(2) CPC moved by
defendant no.2 has already been dismissed vide detailed
CS (COMM.)/165/2019 Page 43 of 47
order dated 06-10-2021 passed by Ld. Predecessor of this
Court and even the petition under Article 227 of the
Constitution of India, 1950, being CM(M) 1081/2021
preferred before Hon’ble Delhi High Court, has already
been dismissed on 29-11-2021. While relying upon S. 182
of the Contract Act, he further submitted that defendant
no.1 was acting as an agent of defendant no.2. He pointed
out that defendant no.2 is actual owner of the land and
building of the ‘housing project’ and to sell the flats after
their completion, whereas, the defendant no.1 was acting
on behalf of defendant no.2 to raise construction of flats on
its property. He further submitted that defendant no.2
being owner, could have awarded the contract and the
defendant no.1, thus, had awarded the work orders in
question to the plaintiff only as subsidiary of defendant
no.2 and same would show that defendant no.1 was acting
on the authority and instructions of defendant no.2 only.
He also pointed out that the defendant no.2 owns 50.04%
of defendant no.1, which would clearly demonstrate that
the actual control of affairs of defendant no.1 rests with
defendant no.2. In this regard, it would be apposite to refer
to the decision of Hon’ble Delhi High Court in case of
Utair Aviation (supra), wherein it is held as under:-
“xxxx
17. It is well established principle of law that a party
who is not privy to the contract, cannot sue for
enforcement of the said contract and the said
principle has been laid down by the English courts
from time to time which has been appreciated by the
Indian Courts with the well recognized exceptions.
There are number of exceptions which have been
carved out by the courts to the principle of privy to
the contract ever since the said principle was evolved
CS (COMM.)/165/2019 Page 44 of 47
by the English Courts. This is due to the reason that
the definition of consideration under Section 2(d) of
the Indian Contract Act, 1872 is wide enough to
encompass a situation wherein contract is entered into
between the two parties and the consideration may or
may not pass from them and can pass from the third
party.
18.xxx
19. It is clear from the aforementioned observations
of Division Bench of Calcutta High Court that the
doctrine of privity of contract although is applicable
even in India but, the same has been applied with well
recognized exceptions and the court of equity like in
India may not be strictly guided by the said dictum of
Twaddle v. Atkinson (supra) in order to defeat the
claims of the parties. This was the era to carve out the
exceptions to the principle of privity of contract
which is that a stranger to a contract cannot sue. From
time to time, number of exceptions has been evolved
against the rule of privity of contract and more than
often quoted exceptions are that a person for whose
benefit the contract is entered into, can certainly sue
as he is beneficiary in the contract. Similarly, a
person who is a trustee of the third party can also sue
likewise, even if he is a stranger to a contract. These
are not exhaustive exceptions and as seen above from
the observations of Division Bench that in a given
facts and circumstances.
20.xxx
21. There are other exceptions also which are equally
recognized to the said principle of privity to the
contract and reference is invited to the case of Jnan
Chandra Mukherjee vs Manoranjan Mitra And Ors.,
decided on 27 June, 1941 reported as AIR 1942 Cal
251 wherein the Division Bench of Calcutta High
Court after analyzing the authorities on the aspect of
privity to the contract has observed:-
“3. So far as the first point is concerned, the
law seems to be fairly well settled. A stranger
to a contract which reserves a benefit for him
cannot sue upon it either in English or in
Indian law even though in India the
consideration need not move from the
promisee. There are two well-recognised
exceptions to this doctrine. The first is where
a contract between two parties is so framed as
to make one of them a trustee for a third; in
CS (COMM.)/165/2019 Page 45 of 47
such cases the latter may sue to enforce the
trust in his favour and no ohjection can be
taken to his being a stranger to the contract.
The other exception covers those cases where
the promisor, between whom and the stranger
no privity exists, creates privity by his
conduct and by acknowledgment or otherwise
constitutes himself an agent of the third
party.” (Emphasis Supplied)
xxxx”
48. In view of above mentioned reasons and the discussion
made hereinbefore and taking guidance from the above
referred decision of Hon’ble Delhi High Court, this Court
is of the considered opinion that both the defendants are
jointly and severally liable to pay the amount due towards
the plaintiff.
RELIEF:
49. In the light of the aforesaid discussion, Court is of the view
that the plaintiff has been able to prove its case on
the basis of preponderance of probability. Thus, the
suit is decreed in favour of the plaintiff and
against the defendants and thus, the following reliefs are
granted:-
49.1 The plaintiff is entitled to recover Rs.83,47,263/-
(Rupees Eighty Three Lacs Forty Seven Thousand
Two Hundred and Sixty Three only );
49.2 Pendente-lite and future interest is awarded @ 12%
per annum from the date of filing of the suit till the
date of its realisation;
49.3 Cost of the suit is also awarded in favour of the
plaintiff.
CS (COMM.)/165/2019 Page 46 of 47
50. Decree sheet be prepared accordingly.
51. File be consigned to Record Room, after due compliance.
Digitally signed
Announced in the open Court VIDYA by VIDYA PRAKASH on16th Day of January, 2025 PRAKASH Date: 2025.01.16 17:15:27 +0530 (VIDYA PRAKASH)
DISTRICT JUDGE (COMMERCIAL COURT)-02
PATIALA HOUSE COURTS, NEW DELHI
CS (COMM.)/165/2019 Page 47 of 47
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