Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision :February 10, 2012
+ RFA(OS) No.35/2010
DELHI DEVELOPMENT AUTHORITY ...Appellant
Through: Mr.P.K.Mittal, Advocate.
versus
CONSTRUCTION & DESIGN SERVICES UP JAL NIGAM
….Respondent
Through: None
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI
PRADEEP NANDRAJOG, J. (Oral)
1. With reference to Section 73 and 74 of the Indian
Contract Act, in the absence of there being any proof of the loss
suffered, the learned Single Judge has held that neither Ex.PW-
1/34 nor Ex.PW-1/35 evidence basis on which the Superintending
Engineer levied penalty invoking clause-2 of the contract and
thus held that claim of DDA to recover the penalty levied must
fail.
2. Vide Ex.PW-1/2 dated 28.09.1995 DDA awarded work
of constructing a Sewage Pumping Station to the respondent and
vide Ex.PW-1/3 dated 04.10.1995 a written contract was
executed. The work progressed very slowly and was ultimately
rescinded vide Ex.PW-1/33 dated 17.09.1999 and even till then
only around 40% of the work was completed.
3. Various exhibits referred to by the learned Single
Judge in para 4 and 5 of the impugned judgment would highlight
RFA(OS) No.35/2010 Page 1 of 4
that the respondent was very slow in executing the work and
various letters were written to it by the appellant. As against 15
months’ time within which work had to be completed i.e.
07.01.1997 not more than 40% work could be completed till
17.09.1999.
4. Clause-2 of the contract reads as under:-
“The time allowed for carrying out the work as
entered in the tender shall be strictly observed by the
contractor and shall be deemed to be the essence of
the contract on the part of contractor and shall be
reckoned from the Tenth Day after the day on which
the order to commence the work is issued to
contractor. The work shall throughout the stipulated
period of the contract be proceeded with all due
diligence and the contractor shall pay as
Compensation an amount equal to one percent, or
such smaller amount as the Superintending Engineer
Delhi Development Authority (whose decision in
writing shall be final) may decide on the amount of
estimated cost of the whole work as shown in the
tender, for every day that the work remains
uncommenced or unfinished, after the proper dates.
And further, to ensure good progress during the
execution of the work, the contractor shall be bound
in all cases in which time allowed for any work
exceeds, one month (save the special jobs) to
complete one-eight of the whole of the work before
one-fourth of the whole time allowed under the
contract has elapsed, three-eight of the work, before
three-fourth of such time has elapsed. However, for
special job if a time-schedule has been submitted by
the Contractor and the same has been accepted by
the Engineer-in-Charge, the contractor shall comply
with the said time-schedule. In the event of the
contractor failing to comply with this condition, he
shall be liable to pay as compensation an amount
equal to one percent or such smaller amount as the
Superintending Engineer Delhi Development Authority
(whose decision shall be final) may decide on the said
estimated cost of the whole work for everyday that
the due quantity of work remains incomplete;
provided always that the entire amount of
compensation to be paid under the provisions of this
RFA(OS) No.35/2010 Page 2 of 4
clause shall not exceed ten percent of the estimated
cost of work as shown in the tender.
The contractor shall be required to submit a detailed
programme for completing of work with the stipulated
period in the form of a Bar-Chart, covering all major
activities, to the Engineer-in-Charge, within 10 days
from the date of award of work, modification
suggested by the Engineer-in-Charge shall be ensured
by the contract or that the time schedule as laid down
in the aforesaid Bar-Chart is adhered. To in case of
any slip, the time lost will have to be made good by
the contractor by speeding up the activities in such
cases, he shall be bound to follow the Engineer-in-
Charge.”
5. The respondent had been proceeded against ex-parte
at the trial and has chosen not to appear even before us. The
evidence led by the appellant has remained unrebutted.
6. Suffice would it be to state that the observations of
the Supreme Court in para 68 of the decision reported as AIR
2003 SC 2629 ONGC v. Saw Pipes Ltd. are squarely applicable in
the instant case as per which delayed constructions such as
completing construction of road or bridges within stipulated time
would be difficult to be linked with actual losses suffered by the
State and in such cases the pre-estimated damages envisaged in
the contract have to be paid.
7. Now, a Sewage Pumping Station is not something from
which Revenue would be generated by the State. It is a public
utility service and has a role to play in maintaining or preserving
clean environment. If Sewage Pumping Stations are not set up,
sewage would stagnate as cess pools in low lying areas and
would cause environmental degradation, both air and soil. That
apart, in a delayed project, interest on blocked capital would
obviously be a measure of damages.
RFA(OS) No.35/2010 Page 3 of 4
8. The learned Single Judge has ignored as aforesaid and
held that in the absence of proof of damages, compensation
levied under clause-2 cannot be recovered. The learned Single
Judge is incorrect in view of the law declared by the Supreme
Court and thus we allow the appeal and set aside the impugned
decree. Suit filed by the appellant is decreed in sum of
` 20,86,446/- with pendente lite and future interest @9% per
annum from date of suit till realization and the suit filed by the
appellant is disposed of accordingly with costs all throughout.
(PRADEEP NANDRAJOG)
JUDGE
(PRATIBHA RANI)
JUDGE
FEBRUARY 10, 2012
dk
RFA(OS) No.35/2010 Page 4 of 4
% Date of Decision :February 10, 2012
+ RFA(OS) No.35/2010
DELHI DEVELOPMENT AUTHORITY ...Appellant
Through: Mr.P.K.Mittal, Advocate.
versus
CONSTRUCTION & DESIGN SERVICES UP JAL NIGAM
….Respondent
Through: None
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI
PRADEEP NANDRAJOG, J. (Oral)
1. With reference to Section 73 and 74 of the Indian
Contract Act, in the absence of there being any proof of the loss
suffered, the learned Single Judge has held that neither Ex.PW-
1/34 nor Ex.PW-1/35 evidence basis on which the Superintending
Engineer levied penalty invoking clause-2 of the contract and
thus held that claim of DDA to recover the penalty levied must
fail.
2. Vide Ex.PW-1/2 dated 28.09.1995 DDA awarded work
of constructing a Sewage Pumping Station to the respondent and
vide Ex.PW-1/3 dated 04.10.1995 a written contract was
executed. The work progressed very slowly and was ultimately
rescinded vide Ex.PW-1/33 dated 17.09.1999 and even till then
only around 40% of the work was completed.
3. Various exhibits referred to by the learned Single
Judge in para 4 and 5 of the impugned judgment would highlight
RFA(OS) No.35/2010 Page 1 of 4
that the respondent was very slow in executing the work and
various letters were written to it by the appellant. As against 15
months’ time within which work had to be completed i.e.
07.01.1997 not more than 40% work could be completed till
17.09.1999.
4. Clause-2 of the contract reads as under:-
“The time allowed for carrying out the work as
entered in the tender shall be strictly observed by the
contractor and shall be deemed to be the essence of
the contract on the part of contractor and shall be
reckoned from the Tenth Day after the day on which
the order to commence the work is issued to
contractor. The work shall throughout the stipulated
period of the contract be proceeded with all due
diligence and the contractor shall pay as
Compensation an amount equal to one percent, or
such smaller amount as the Superintending Engineer
Delhi Development Authority (whose decision in
writing shall be final) may decide on the amount of
estimated cost of the whole work as shown in the
tender, for every day that the work remains
uncommenced or unfinished, after the proper dates.
And further, to ensure good progress during the
execution of the work, the contractor shall be bound
in all cases in which time allowed for any work
exceeds, one month (save the special jobs) to
complete one-eight of the whole of the work before
one-fourth of the whole time allowed under the
contract has elapsed, three-eight of the work, before
three-fourth of such time has elapsed. However, for
special job if a time-schedule has been submitted by
the Contractor and the same has been accepted by
the Engineer-in-Charge, the contractor shall comply
with the said time-schedule. In the event of the
contractor failing to comply with this condition, he
shall be liable to pay as compensation an amount
equal to one percent or such smaller amount as the
Superintending Engineer Delhi Development Authority
(whose decision shall be final) may decide on the said
estimated cost of the whole work for everyday that
the due quantity of work remains incomplete;
provided always that the entire amount of
compensation to be paid under the provisions of this
RFA(OS) No.35/2010 Page 2 of 4
clause shall not exceed ten percent of the estimated
cost of work as shown in the tender.
The contractor shall be required to submit a detailed
programme for completing of work with the stipulated
period in the form of a Bar-Chart, covering all major
activities, to the Engineer-in-Charge, within 10 days
from the date of award of work, modification
suggested by the Engineer-in-Charge shall be ensured
by the contract or that the time schedule as laid down
in the aforesaid Bar-Chart is adhered. To in case of
any slip, the time lost will have to be made good by
the contractor by speeding up the activities in such
cases, he shall be bound to follow the Engineer-in-
Charge.”
5. The respondent had been proceeded against ex-parte
at the trial and has chosen not to appear even before us. The
evidence led by the appellant has remained unrebutted.
6. Suffice would it be to state that the observations of
the Supreme Court in para 68 of the decision reported as AIR
2003 SC 2629 ONGC v. Saw Pipes Ltd. are squarely applicable in
the instant case as per which delayed constructions such as
completing construction of road or bridges within stipulated time
would be difficult to be linked with actual losses suffered by the
State and in such cases the pre-estimated damages envisaged in
the contract have to be paid.
7. Now, a Sewage Pumping Station is not something from
which Revenue would be generated by the State. It is a public
utility service and has a role to play in maintaining or preserving
clean environment. If Sewage Pumping Stations are not set up,
sewage would stagnate as cess pools in low lying areas and
would cause environmental degradation, both air and soil. That
apart, in a delayed project, interest on blocked capital would
obviously be a measure of damages.
RFA(OS) No.35/2010 Page 3 of 4
8. The learned Single Judge has ignored as aforesaid and
held that in the absence of proof of damages, compensation
levied under clause-2 cannot be recovered. The learned Single
Judge is incorrect in view of the law declared by the Supreme
Court and thus we allow the appeal and set aside the impugned
decree. Suit filed by the appellant is decreed in sum of
` 20,86,446/- with pendente lite and future interest @9% per
annum from date of suit till realization and the suit filed by the
appellant is disposed of accordingly with costs all throughout.
(PRADEEP NANDRAJOG)
JUDGE
(PRATIBHA RANI)
JUDGE
FEBRUARY 10, 2012
dk
RFA(OS) No.35/2010 Page 4 of 4