Full Text
HIGH COURT OF DELHI
W.P.(C) 116/2021 & connected matters
GARG CONSTRUCTION COMPANY ….. Petitioner
MS BUILDERS ..... Petitioner
BARAHI CONSTRUCTION ..... Petitioner
M/S KRISHNA CONSTRUCTION ..... Petitioner
M/S KALRA CONST. CO ..... Petitioner
M/S RAKESH BANSAL ..... Petitioner
M/S ANKUR GUPTA ..... Petitioner
M/S SHIVANSH CONSTRUCTION ..... Petitioner
M/S BANSAL CONSTRUCTION ..... Petitioner
M/S M K TRADERS ..... Petitioner
M/S GUPTA RADHEY SHYAM ..... Petitioner
M/S S.V CONSTRUCTION CO. ..... Petitioner
MS. MONIKA ..... Petitioner
M/S DEVANSH CONSTRUCTION ..... Petitioner
M/S A.A CONSTRUCTION ..... Petitioner
M/S MUDIT CONSTRUCTION ..... Petitioner
ANIL KUMAR BHARDWAJ ..... Petitioner
ATUL GUPTA ..... Petitioner
LALITA GARG ..... Petitioner
M/S PREM BROS THROUGH ITS PROPRIETOR.
SHRI PREM SINGH BHARDWAJ ..... Petitioner
M/S KHAN ENTERPRISES THROUGH ITS PROPRIETOR. MR.ASLAM KHAN ..... Petitioner
M/S J.S SETHI AND SONS THROUGH ITS PROPRIETOR SHRI G.S SETHI ..... Petitioner
M/S MAHESWARI CONST. CO. THROUGH ITS PROPRIETOR. SHRI ANIL MAHESWARI ..... Petitioner
M/S RAKESH GUPTA THROUGH ITS PROPRIETOR SH. RAKESH GUPTA ..... Petitioner
M/S ISLAMUDDIN THROUGH ITS PROPRIETOR MR. ISLAMUDDIN ..... Petitioner
MIS DEEPAK CONST. CO. THROUGH ITS PROPRIETOR SHRI DEEPAK ..... Petitioner
M/S SUNSHINE CONST. CO. THROUGH ITS PROPRIETOR SHRI SUMIT KUMAR ..... Petitioner
M/S RASHTRIY A CONST. CO. THROUGH ITS PROPRIETOR SHRI RAJINDER KUMAR ..... Petitioner
M/S BALJEET SINGH SATENDER PARKASH AND ASSOCIATES THROUGH ITS
PROPRIETOR SHRI BALJEET SINGH ..... Petitioner
M/S ASHOK KUMAR GUPTA THROUGH ITS PROPRIETOR. SHRI ASHOK KUMAR GUPTA ..... Petitioner
M/S MOHD RASHID THROUGH ITS PROPRIETOR MOHD. RASHID ..... Petitioner
M/S SAJID KHAN THROUGH ITS PROPRIETOR MR. MOHD. SAJID ..... Petitioner
M/S VIKAS DANDONA CONST. CO. THROUGH ITS PROPRIETOR SHRI VIKAS DANDONA ..... Petitioner
M/S M K GUPTA ..... Petitioner
M/S ARPIT ELECTRIC CO ..... Petitioner
M/S M. CHHIBBA AND CO ..... Petitioner
M/S NARENDER SINGH DHANKAR ..... Petitioner
M/S DHANKAR CONSTRUCTIONS ..... Petitioner
M/S VIJENDER BHARDWAJ ..... Petitioner
M/S VINOD COMPANY (THROUGH ITS PROPRIETOR MR. VINOD KUMAR GUPTA) ..... Petitioner
DEEPAK KUMAR ..... Petitioner
M/S R.S. CONSTRUCTIONS (THROUGH ITS PROPRIETOR MR. RAMESH YADAV) ..... Petitioner
M/S SUMIT INFRA (THROUGH ITS PROPRIETOR MR. SUMIT GUPTA) ..... Petitioner
M/S MONU ENTERPRISES ..... Petitioner
M/S SUDHIR CONSTRUCTION ..... Petitioner
M/S KAY CONSTRUCTION CO ..... Petitioner
M/S SAMEER ENTERPRISES ..... Petitioner
M/S NA CONSTRUCTION ..... Petitioner
M/S DEEPIKA ENTERPRISES ..... Petitioner
M/S NARENDER CONSTRUCTION ..... Petitioner
M/S AKASH CONSTRUCTION ..... Petitioner
M/S PRATEEK CONST CO. ..... Petitioner
M/S HARDIT SINGH KOCHHAR ..... Petitioner
M/S KOCHHAR CONSTRUCTION ..... Petitioner
M/S ANUBHAV GUPTA ..... Petitioner
M/S KAYS BUILDCON ..... Petitioner
M/S JAPNEET BUILDERS ..... Petitioner
BHARAT CONST ..... Petitioner
M/S LAMBA BROTHERS THROUGH ITS PROP ..... Petitioner
M/S AGGARWAL ASSOCIATES ..... Petitioner
M/S NEW LAMBA BROTHERS ..... Petitioner
M/S LANDSCAPE CONST ..... Petitioner
M/S MOHAN LAL AND CO ..... Petitioner
M/S PREM PRAKASH GUPTA AND CO ..... Petitioner
M/S DEEPAK CONST CO ..... Petitioner
M/S PUNEET CONST CO ..... Petitioner
M/S PUNEET ENTERPRISES ..... Petitioner
M/S NEERAJ GUPTA ..... Petitioner
ANURAG RANA ..... Petitioner
M/S G.R. CONSTRUCTIONS ..... Petitioner
PREM MEHTA ..... Petitioner
SRK CONSTRUCTION COMPANY ..... Petitioner
M/S R.K. TUSHIR CONSTRUCTION COMPANY ..... Petitioner
M/S GAURAV MEHTA ..... Petitioner
M/S JATIN CONSTRUCTION ..... Petitioner
M/S PRADEEP KUMAR ..... Petitioner
M/S JAGDAMBA TRADING CO ..... Petitioner
M/S VINOD KUMAR THROUGH ITS PROP.
VINOD KUMAR ..... Petitioner
M/S AMIT SEHRAWAT THROUGH ITS PROP. AMIT SEHRAWAT ..... Petitioner
GUPTA ENGINEERING CO ..... Petitioner
K K ENTERPRISES ..... Petitioner
SHREE BUILDERS ..... Petitioner
M/S RAJ KUMAR KESAR ..... Petitioner
M/S SANJEEV BUILDERS ..... Petitioner
M/S ASHOK KUMAR BAHIL ..... Petitioner
M/S SHRI SHIV SHANKAR CONST CO. THROUGH ITS PROP. USHA ARYA ..... Petitioner
M/S ARYA AND CO. THROUGH ITS PROP.
SATYA PAL SINGH ARYA ..... Petitioner
M/S HARPREET ARORA THROUGH ITS PROP.
HARPREET ARORA ..... Petitioner
M/S SARAB CONSTRUCTIONS THROUGH ITS PROP. MITALI ARORA ..... Petitioner
M/S ARORA CONSTRUCTIONS ..... Petitioner
M/S TANYA CONSTRUCTIONS ..... Petitioner
M/S KAPIL CONSTRUCTION ..... Petitioner
KARTAR BUILDERS ..... Petitioner
M/S AIPL AND PPMPPL (JV) ..... Petitioner
NITIN GUPTA ..... Petitioner
VIKAS BANSAL ..... Petitioner
M/S ANSH CONSTRUCTION ..... Petitioner
MUNICIPAL CORPORATION OF DELHI AND ANR ..... Respondents
GOVT. OF NCT OF DELHI AND ANR. ..... Respondents
Present : Mr. Sandeep Agarwal, Sr.
Advocate with Mr. Sandeepan Pathak, Mr. Manish Kumar
Srivastava, Mr. Sagar Arora, Mr. Mayank Goel, Mr. Tarun Diwan, Ms. Pyari, Ms. Himanshi Bhardwaj, Mr. Vasu Bhardwaj, Mr. Robin Bhardwaj, Ms. Vandana Bhanot, Mr. Khwaja Siddiqui, Mr. Ashwani Kumar, Mr. Ramneek Singh, Ms. Jyoti Nambiar and Mr. V.P. Rana, Advocates for the petitioners.
Mr. Kunal Vajani and Mr. Siddhant Nath, Standing
Counsels for MCD with Mr. Utkarsh Kulvi, Advocate, for the respondents.
JUDGMENT
1. By way of the present batch of petitions filed under Article 226 of the Constitution of India, the petitioners have sought release of payments due and payable to them under the bills prepared and approved by respective Assistant Engineer(s) and counter-signed by Junior Engineer(s) of the erstwhile North Delhi Municipal Corporation, East Delhi Municipal Corporation and South Delhi Municipal Corporation (hereinafter, collectively referred to as ‘Corporation’) against the works executed by the petitioners. The petitioners have also claimed interest @ 24% per annum from the date of approval of the bills.
2. As the issue raised in all petitions is the same, they have been taken up for consideration together and are being disposed of accordingly vide a common judgment. With the consent of the parties, W.P.(C) 116/2021 is being treated as the lead case.
3. A perusal of the petitions would show that the petitioners claim themselves to be registered contractors engaged with the Corporation for carrying out development work in various municipal wards. They are aggrieved by the failure of the Corporation in making payments due towards them for execution of tender works, and reportedly in some cases, the bills have remained pending for reimbursement by the Corporation since the year 2014-15.
4. Learned counsels for the petitioners submitted that the Corporation has not released the due payments, ostensibly relying on Clauses 7 and 9 of the General Conditions of Contract. It was also submitted that despite repeated reminders, the Corporation has failed to take requisite action and the same has resulted in a situation where the petitioners have been forced to take loan from the market, on interest, for executing others’ tenders. To supplement the petitioners’ contentions, a summary of outstanding dues/arrears has been placed on record depicting the principal amounts and interests claimed by them. The summary of claimed dues towards principal amounts is extracted below:- Summary of Outstanding Dues/ Arrears S. No. Writ Petition No. Title of Writ Petition Outstanding Principal Amount of Bills claimed in the Writ Petition (In Rupees) (A) Amount received during pendency of Writ Petition, if any. [In Rupees] (B) Principal Outstanding Amount [In Rupees] C= (A-B) 1 W.P. (C) 116/2021 Garg Construction Co. vs. NDMC 6,20,42,493 8,71,701 6,11,70,792 2 W.P. (C ) 5486/2022 Gaurav Mehtan VS. NDMC 2,04,85,656 10,22,238 1,94,63,418 3 W.P. (C ) 9924/2022 K K Enterprises VS. NDMC 21,27,856 NIL 21,27,856 4 W.P. (C ) 9966/2022 Shree Builders VS. NDMC 51,58,050 9,13,927 42,44,123 5 W.P. (C ) 2511/2022 Neeraj Gupta VS. NDMC 97,70,963 NIL 97,70,963 6 W.P. (C ) 3419/2022
G. R. Constructions
VS. NDMC 1,23,42,184 NIL 1,23,42,184 7 W.P. (C ) 4299/2022 Prem Mehta VS. NDMC 59,49,751 6,99,167 52,50,584 8 W. P. (C ) 4350/2022 SRK Construction VS. NDMC 24,73,490 NIL 24,73,490 9 W.P. (C ) 5032/2022 R.K. Tushir Const. VS. NDMC 2,02,58,092 32,30,706 1,70,27,386 10 W. P. (C ) 6141/2022 Jatin Const. VS. NDMC 1,75,27,385 19,71,669 1,55,55,716 11 W.P. (C ) 9747/2022 Gupta Engineering Co VS. NDMC 27,94,916 NIL 27,94,916 12 W.P. (C ) 483/2021 M S Builders VS. NDMC 1,68,19,438 17,39,039 1,50,80,399 13 W.P. (C ) 492/2021 BarahiConsts.VS. NDMC 4,52,88,898 52,23,226 4,00,65,672 14 W.P. (C ) 2140/2021 Krishna Builders VS. NDMC 1,37,95,533 7,25,429 1,30,70,104 15 W.P. (C ) 2190/2021 Kalra Const. VS. NDMC 3,59,59,729 16,72,298 3,42,87,431 16 W.P (C ) 2198/2021 Rakesh Bansal VS. NDMC 5,69,61,996 82,43,095 4,87,18,901 17 W.P. (C ) 2202/2021 Ankur Gupta VS. NDMC 2,16,15,005 4,12,830 2,12,02,175 18 W.P. (C ) 2411/2021 Shivansh Const. VS. NDMC 89,77,511 NIL 89,77,511 19 W.P. (C ) 2412/2021 Bansal Const.VS. NDMC 3,38,61,518 1,01,89,67 2,36,71,847 20 W.P. (C ) 2413/2021 M K traders VS. NDMC 4,87,70,044 10,04,471 4,77,65,573 21 W.P.(C ) 2704/2021 Gupta Radhey Shyam VS. NDMC 1,56,86,985 10,21,898 1,46,65,087 22 W.P. (C ) 2705/2021 S.V. Const VS. NDMC 21,24,475 NIL 21,24,475 23 W.P. (C ) 5444/2021 Devansh Const. VS. NDMC 1,30,25,348 3,49,327 1,26,76,021 24 W.P. (C ) 5445/2021 A.A Const VS. NDMC 6,17,89,958 18,01,193 5,99,88,765 25 W.P. (C ) 5446/2021 Mudit Const VS. NDMC 4,90,43,552 42,13,777 4,48,29,775 26 W.P.(C) 4859/2021 Monika vs. NDMC 97,29,307 12,59,097 84,70,210 27 W.P.(C) 7280/2021 Lalita Garg vs. NDMC 12,61,503 NIL 12,61,503 28 W.P. (C) 7276/2021 Atul Gupta vs. NDMC 83,84,461 NIL 83,84,461 29 W.P. (C) 6952/2021 Anil Kumar Bhardwaj vs. NDMC 66,04,904 7,59,152 58,45,752 30 W.P. (C) 13773/2022 Vikas Bansal Vs. MCD 2,78,10,366 NIL 2,78,10,366 31 W.P. (C) 13136/2022 Nitin Gupta Vs.MCD 5,17,17,971 3,43,030 5,13,74,941 32 W.P. (C) 9889/2021 Ashok Kumar Vs. NDMC 31,03,651 NIL 31,03,651 33 W.P. (C) 9887/2021 Baljeet Singh Satender Parkash Vs. NDMC 21,87,597 NIL 21,87,597 34 W.P.(C) 9874/2021 Deepak Const. Co. Vs. NDMC 45,67,684 8,00,000 37,67,684 35 W.P.(C) 9814/2021 J.S. Sethi & Sons Vs. NDMC 25,10,482 4,68,196 20,42,286 36 W.P.(C) 9873/2021 Islamuddin Vs. NDMC 53,66,439 4,83,187 44,71,157 37 W.P.(C) 9809/2021 Khan Enterprises Vs. NDMC 60,45,632 4,78,000 55,67,632 38 W.P.(C) 9871/2021 MaheswariConst.Co. Vs. NDMC 28,49,200 6,92,467 21,56,733 39 W.P.(C) 9890/2021 Mohd Rashid Vs. NDMC 22,07,597 NIL 22,07,597 40 W.P.(C) 8910/2021 Prem Bros. Vs. NDMC 27,02,289 7,44,198 19,58,091 41 W.P.(C) 9885/2021 RashtriyaConst Co. Vs. NDMC 21,03,217 NIL 21,03,217 42 W.P.(C) 9891/2021 Sajid Khan Vs. NDMC 3,11,76,155 14,53,526 2,97,22,629 43 W.P.(C) 9876/2021 Sunshine Const. Co. Vs. NDMC 9,98,973 NIL 9,98,973 44 W.P.(C) 9907/2021 Vikas DandonaConst Co. Vs. NDMC 16,14,599 NIL 16,14,599 45 W.P. (C) 14989/2021 Aggarwal Associates Vs. NDMC 31,23,684 NIL 31,23,684 46 W.P. (C) 11731/2021 Akash Construction Vs. NDMC 27,16,063 NIL 27,16,063 47 W.P.(C) 7013/2022 Amit Sehrawat Vs. NDMC 74,62,962 NIL 74,62,962 48 W.P.(C) 12245/2021 Anubhav Gupta Vs. NDMC 25,23,285 4,06,870 20,31,494 49 W.P.(C) 10503/2021 Arpit Electric Co. Vs. NDMC 1,24,56,620 8,22,048 1,14,68,350 50 W.P.(C) 10606/2022 Arya & Co. Vs. NDMC 31,06,000 NIL 31,06,000 51 W.P.(C) 10598/2022 Ashok Kumar Bahl Vs. NDMC 10,95,479 NIL 10,95,479 52 W.P.(C) 12246/2021 Bharat ConstCo.Vs. NDMC 50,96,903 NIL 50,96,903 53 W.P.(C) 1387/2022 Deepak ConstCo.Vs. NDMC 83,47,243 NIL 83,47,243 54 W.P.(C) 11286/2021 Deepak Kumar Vs. NDMC 24,15,798 NIL 24,15,798 55 W.P.(C) 11477/2021 Deepika Enterprises Vs. NDMC 9,30,723 NIL 9,30,723 56 W.P.(C) 10606/2021 Dhankar Construction Vs. NDMC 25,23,058 14,83,511 10,39,547 57 W.P.(C) 12243/2021 Hardit Singh Kochar Vs. NDMC 48,89,962 1,64,980 47,24,982 58 W.P.(C) 6796/2021 Jagdamba Trading Co. Vs. NDMC 37,50,060 NIL 37,50,060 59 W.P.(C) 12274/2021 Japneet Builders Vs. NDMC 8,56,460 8,56,460 NIL 60 W.P.(C) 11449/2021 Kay Const. Co Vs. NDMC 47,71,405 83,928 46,87,477 61 W.P.(C) 12249/2021 Kays Buildcon Vs. NDMC 14,87,951 NIL 14,87,951 62 W.P.(C) 12244/2021 Kochhar Const Vs. NDMC 9,69,253 2,49,895 7,19,358 63 W.P.(C) 14959/2021 Lamba Brothers Vs. NDMC 87,27,811 NIL 87,27,811 64 W.P.(C) 1336/2022 Landscape Const Vs. NDMC 13,03,311 NIL 13,03,311 65 W.P.(C) 10501/2021 M K Gupta Vs. NDMC 25,55,824 11,96,995 13,58,829 66 W.P.(C) 10504/2021
NDMC 2,50,42,447 8,51,524 2,41,90,923 67 W.P.(C) 1361/2022 Mohan Lal & Co. Vs. NDMC 59,43,128 NIL 59,43,128 68 W.P. (C) 11438/2021 Monu Enterprises Vs. NDMC 10,59,646 2,76,396 7,83,251 69 W.P.(C) 11456/2021 N A Construction Vs. NDMC 11,03,593 NIL 11,03,593 70 W.P.(C) 10605/2021 Narender Singh Dhankar Vs. NDMC 54,95,834 NIL 54,95,834 71 W.P.(C) 11728/2021 Narender Construction Vs. NDMC 2,10,62,339 NIL 2,10,62,339 72 W.P.(C) 15152/2021 New Lamba Brothers Vs. NDMC 15,61,612 NIL 15,61,612 73 W.P.(C) 6781/2022 Pradeep Kumar Vs. NDMC 35,05,524 35,05,524 NIL 74 W.P.(C) 11771/2021 Prateek Const Co. Vs. NDMC 87,75,708 NIL 87,75,708 75 W.P.(C) 1386/2022 Prem Prakash Gupta & Co. Vs. NDMC 35,80,033 19,88,666 15,91,367 76 W.P.(C) 1456/2022 Puneet const Co. Vs. NDMC 6,53,211 NIL 6,53,211 77 W.P.(C) 1457/2022 Puneet Enterprises Vs. NDMC 21,32,766 NIL 21,32,766 78 W.P.(C) 10590 /2022 Raj Kumar Kesar Vs. NDMC 53,46,709 4,58,950 48,87,759 79 W.P.(C) 9872/2021 Rakesh Gupta Vs. NDMC 3,66,44,566 8,14,609 3,58,29,957 80 W.P.(C) 11451/2021 Sameer Enterprises Vs. NDMC 63,75,693 NIL 63,75,693 81 W.P.(C) 10597/2022 Sanjeev Builders Vs. NDMC 57,27,812 4,83,280 52,44,532 82 W.P.(C) 10605/2022 Shri Shiv Shankar Const Co. Vs. NDMC 9,49,519 NIL 9,49,519 83 W.P.(C) 11440/2021 Sudhir Construction Vs. NDMC 17,66,524 NIL 17,66,524 84 W.P.(C) 10607/2021 Vijender Bhardwaj Vs. NDMC 38,85,249 NIL 38,85,249 85 W.P.(C) 6842/2022 Vinod Kumar Vs. NDMC 2,05,31,732 5,29,877 2,00,01,855 86 W.P.(C) 12157/2022 Ansh Construction Vs. NDMC 24,43,777 4,85,905 19,57,872 87 W.P. (C) 12070/2022 Arora Construction Vs. NDMC 23,06,739 NIL 23,06,739 88 W.P. (C) 12051/2022 Harpreet Arora Vs. NDMC 15,97,586 NIL 15,97,586 89 W.P.(C) 12111/2022 Kapil Constructions Vs. NDMC 22,63,055 NIL 22,63,055 90 W.P.(C) 12127/2022 Kartar Builders Vs. NDMC 51,91,10 NIL 51,91,10 91 W.P.(C) 12066/2022 Sarab Constructions Vs. NDMC 6,39,167 NIL 6,39,167 92 W.P.(C) 12108/2022 Tanya Constructions Vs. NDMC 33,24,104 NIL 33,24,104 93 W.P.(C) 13020/2022 AIPL & PPMPPL (JV) v. MCD and Ors. 1,18,79,663 NIL 1,18,79,663 94 W.P. (C) 11314/2021 Sumit Infra. vs. NDMC 75,46,829 NIL 75,46,829 95 W.P. (C) 11287/2021 R.S. Constructions v NDMC 22,59,288 NIL 22,59,288 96 W.P. (C) 11285/2021 Vinod & Company v NDMC 1,21,26,435 NIL 1,21,26,435 97 W.P.(C) 2938/2022 Anurag Rana v. Govt. of NCT of Delhi 1,19,38,998 4,91,789 1,14,47,209
5. Though the Corporation had at the first instance filed a Counter- Affidavit contesting the petitions, subsequently, Ms. Shilpa Shinde, Additional Commissioner (Engineering), MCD appeared before this Court on 09.09.2022 and stated that the Corporation has taken a decision to release the payments towards principal amounts. In this regard, a copy of policy dated 13.10.2022 approved by the Commissioner, MCD has been placed on record alongwith an affidavit of the aforementioned officer regarding mode and manner of disbursement.
6. Mr. Kunal Vajani, learned Standing Counsel for the Corporation, submitted that though a decision has been taken by the Corporation to make payments due towards principal amounts, the same would be released to the petitioners in a phased manner in terms of the policy dated 13.10.2022. It was further submitted that a sum of Rs.30 crores has been allocated to be released to the contractors on a monthly basis in the ratio of 38:38:24 i.e. on the basis of geographical spread and staff strength of the erstwhile North Delhi Municipal Corporation, South Delhi Municipal Corporation and East Delhi Municipal Corporation. Learned Standing Counsel also drew attention of the Court to policy dated 13.10.2022 placed on record to submit that payments would be released as per seniority of bills according to cut out date of each erstwhile Corporation, subject to the following three conditions:-
(i) The contractor shall certify that they have not received the payment earlier, either in part or in full, with respect to the claim raised by them against the Corporation,
(ii) The contractor shall submit an undertaking that if any payment is erroneously made, it would be returned to the Corporation on first demand, and
(iii) An affidavit to the above effect will be rendered to the Corporation before disbursement of payment under this policy.
7. Learned counsels for the petitioners contended that the Corporation, by way of above policy, has in-principle agreed to release payments towards the principal amounts, but its decision to release the payments as per seniority of the bills, that too in the manner stipulated in policy dated 13.10.2022, would result in further delay of about four to five years. The policy was challenged on various other grounds, including inter-alia that being an administrative decision, the same is ultra vires the DMC Act.
8. Before proceeding further, it is noted that a similar issue of release of payments against bills prepared, verified and approved by the respondent/Corporation in respect of contractors engaged with it for tender works came up before this Court in North Delhi Municipal Corporation and Anr. v. Sanjeev Kumar reported as 2018 SCC OnLine Del 8053, wherein a Co-ordinate Bench of this Court observed as under:-
82. These clauses in effect say that the Contractor is left with no remedy if the Corporation does not pay for the work that has been executed. Such a Clause would be illegal and contrary to law. Such clauses, even in commercial contracts, would be contrary to Section 25 read with Section 46 of the Contract Act.
83. The clauses do not specify an outer time limit for payment. The expression reasonable time has to be `a time'. The concept of time itself is ensconced with specificity and precision. Clause 9 is the opposite of being precise. It is as vague and ambiguous as it could be because it depends on factors which are totally extraneous to the contract, namely – • Allotment of funds to the Corporation by the Government; • Allotment of funds in a particular head; • Allotment of funds for payments who are in queue prior to the contractor; xxx
85. By applying the above said principles, in respect of final bills raised by Contractors for works executed, that have been approved by the Engineer-in-Charge, the Clauses have to be read in the following manner: a) Reasonable time for making of payments of final bills in respect of work orders up to Rs.[5] lakhs shall be 6 months and work orders exceeding Rs.[5] lakhs shall be 9 months from the date when the bill is passed by the Engineer-in-Charge. b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded, while applying the queue system. c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non-payment would attract payment of interest for the delayed periods. d) A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable. e) To the extent that queue basis is applied only for clearing of payments which do not extend beyond the period of 6 months and 9 months period, it is reasonable. However, if the queue basis is applied in order to make Contractors wait for indefinite periods for receiving payments, then the same would be unreasonable and would have to therefore be read down. f) The Security amount/Earnest money deposited would be refundable upon the fulfilment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments.”
9. Although learned counsels on both sides have cited a catena of decisions, the same need not be gone into in view of the decision taken by Corporation to release the payments which are due to the petitioners towards principal amounts.
10. On a reading of the policy dated 13.10.2022, however, it is evident that the same is in teeth of the decision of this Court in Sanjeev Kumar (Supra), which was passed in facts and circumstances akin to the present case. It is worthwhile to note that in the captioned case, applicability of queue system to payments due beyond 6/9 months, bereft of an upper time limit, was found to be unreasonable. Further, it was opined that reasonable time for making of payments of final bills in respect of work orders with tendered value up to Rs.[5] lakhs shall be 6 months and work orders with tendered value exceeding Rs.[5] lakhs shall be 9 months from the date when the bill was passed by the Engineer-in-Charge. In the present case, most of the bills date back to the year 2015 and reasonable time for making payment has passed long back.
11. It is apparent that by bringing out the policy dated 13.10.2022 in the present case, the Corporation, has aggravated the agony of the petitioners and other similarly situated persons, as the release of payments has been made dependent on the availability of funds with the Corporation, among other extraneous factors mentioned in the policy. Further, not only the amount allocated for disbursement is miniscule, but also the ratio specified with regard to manner of disbursement bears no rationale. The ratio specified by the Corporation is arbitrary and unreasonable. This Court is also persuaded to take note of the fact that the policy dated 13.10.2022 fails to specify as to how many contractors are awaiting their payments from the Corporation. Insofar as the Corporation’s decision to release payments in a phased manner is concerned, it is reiterated that the brunt of shortage/non-availability of funds with the Corporation shall not be borne by a contractor who has duly executed tendered works and whose bills have been approved.
12. Moreover, the summary of outstanding dues/arrears of principal amounts placed on record by the petitioners has not been disputed by the Corporation, the relevant bills having been prepared and approved by officials of the Corporation itself.
13. Accordingly, the present petitions are allowed and the Corporation is directed to release payments due towards principal amounts to the petitioners, against verified and approved bills, within a period of eight weeks from the date of passing of this judgment. So far as the petitioners’ prayer for interest on delayed payments is concerned, they may pursue their remedy by initiating appropriate proceedings in accordance with law.
14. It is clarified that the present petitions are entertained and disposed of in the peculiar facts and circumstances, where the Corporation has taken a conscious decision to release the payments.
15. Pending applications stand disposed of.
JUDGE JANUARY 25, 2023