M/S FANKAAR INTERIORS PVT LTD vs. M/S DOONVALLEY TECHNOPOLIS PVT LTD

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
nd
% Reserved on: 02 April, 2018
th
Pronounced on: 10 April, 2018

+ CS(COMM) 243/2016

M/S FANKAAR INTERIORS PVT LTD
..... Plaintiff
Through Mr.Rajat Joseph, Advocate.

versus

M/S DOONVALLEY TECHNOPOLIS PVT LTD
..... Defendant
Through Mr.Keshav Mohan, Mr.Rishi K.
Awasthi and Ms.Ritu Arora,
Advocates.

CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA

YOGESH KHANNA, J.

O.A. 21/2017 (filed against order dated 09.12.2016 of the
learned Joint Registrar);
IA No.1970/2017 (under Section 5 of the Limitation Act for
condoning 45 days in moving OA No.21/2017);
IA No.8138/2017 (under Section 5/8 of the Arbitration Act);
IA No.10169/2017 (for leave to defend moved by defendant);
IA No.10170/2017 (under Section 5 of Limitation Act for
condoning 369 days in moving IA No.10169/2017)
1. All four applications and Chamber Appeal No.21/2017 have
been moved by the defendant. Before coming to the appeal and
applications, some dates and facts relevant are noted hereunder:-
a) The plaintiff instituted this suit under Order 37 of the Civil
Page 1 of 11
CS(COMM) 243/2016



Procedure Code for an amount of
98,49,229/- with interest @
12% from November, 2012 till the date of realization and costs
against the defendant;
b) sometime in October, 2009, the defendant, through its
representatives, commenced negotiations and discussions with the
plaintiff at its Delhi Office for interior decoration / refurbishment
work in the Public Areas such as the Lobby, Bar, All Day Dining,
Banquet, Public Toilets, Front Office and Guest Rooms (King &
Twin) of the Radisson Hotel Metropolis at Rudrapur, Uttarakhand
vide letter of agreement dated 02.12.2009 bearing No.DTPL/LOI/
FANKAR/RDPR/DEC09 for a total consideration of
7.00
Crores;
c) the plaintiff commenced the work and completed it on or
around 20.02.2012 and handed over the site to the defendant and
gross bill to the tune of
9,95,65,243/- was raised payable by
defendant to the plaintiff without Tax Deducted at Source (TDS)
and other usual expenses. The net amount payable after TDS and
other expenses was worked out to be
6,55,31,337/- and against
this amount the defendant paid an amount of
5,56,82,108/- in
many installments till October, 2011;
d) it is alleged that an amount of
98,49,229/- remained
balance i.e. principal suit amount payable till May, 2014. However,
after making part payment till October 2011, defendant allegedly
evaded the payment due to the plaintiff and even raised false
objections and complaints vide order dated 06.09.2012 regarding
the work in question. The plaintiff in turn wrote to the defendant
Page 2 of 11
CS(COMM) 243/2016



vide letter dated 15.09.2012 and addressed each of the complaints;
e) plaintiff vide letter dated 08.11.2012 called upon the
defendant to clear the principal amount of
98,49,229/-, but all in
vain;
f) the defendant allegedly deducted an amount of
13,91,304/- towards TDS against the gross bill amount. The
statement of account, TDS certificates and relevant VAT Forms for
the year 2009-10, 2010-11, and 2012-13 have also been attached
with the plaint;
g) plaintiff alleged to have asked the defendant to make the
payment and even issued many letters to the defendant to clear the
outstanding suit amount on many occasions viz 20.05.2013,
07.10.2013, and 17.10.2013, but to no avail. The defendant sent
no reply to these letters;
h) thereafter the plaintiff issued the legal notice dated
01.04.2014 and demanded the suit amount of
98,49,229/- with
interest @ 24% from November, 2012 within 21 days of the
receipt of the notice, but the said legal notice was also evaded by
the defendant as per the delivery report dated 03.04.2014.
2. Summons of the suit under Order 37 of the Civil Procedure
Code was duly served upon the defendant on 02.02.2015 and
appearance was entered into by the learned counsel for the
defendant on behalf of the defendant on 09.02.2015. In the
memorandum of appearance the names of the learned counsels viz
Mr.N.Mahabir, Mr.Rajnish Singh and Mr.Anand Singh with their
Page 3 of 11
CS(COMM) 243/2016



addresses were given as that of the defendant for service of the
summons for judgment.
3. The summons for judgment were served upon the learned
counsels on 23.07.2016 and on 08.09.2016 at the addresses given
in the memo of appearance. Since no application for leave to
defend was filed till 09.12.2016, the learned Joint Registrar put up
the matter before Court on 31.01.2017. In the meanwhile, on
13.01.2017, the defendant filed the OA No.21/2017 for setting
aside the order dated 09.12.2016 of the learned Joint Registrar
which appeal is pending till date.
4. The defendant in OA No.21/2017 made allegations viz
though the summons for judgment were served upon it through its
learned counsels named above but the said counsels never
informed the defendant hence application for leave to defend could
not be filed in time. The defendant in appeal though whispered
about the arbitration agreement between the parties, but in the said
appeal the defendant had asked only for setting aside the order
dated 09.12.2016 of the learned Joint Registrar and to allow it to
file an application for leave to defend the present suit. There was
never any prayer to refer the matter to arbitration.
5. The OA No.21/2017 was filed with a delay of 45 days and
hence the defendant moved IA No.1970/2017 for condonation of
delay. In the meanwhile, the defendant moved an application
under Section 5 and 8 of the Arbitration and Conciliation Act,
Page 4 of 11
CS(COMM) 243/2016



1996 (hereinafter referred as ‘the Act’) (IA No.8138/2017) stating
inter alia that there was an agreement dated 16.12.2006 executed
between the parties at Noida, UP and the work under the contract
was to be executed at Ruderpur, Uttrakhand. Clause No. 13 of the
agreement provide for dispute resolution including the arbitration
in case of a dispute or difference between the parties. The
defendant also referred to clause No. 5.11.2 of the General
Conditions of the Contract of the Tender Document which
stipulates the contractor i.e. the plaintiff in the present case after 90
days of his presenting the final claim on the disputed matters may
demand in writing the disputes or differences be resorted to
arbitration. Clause No.13 of the agreement dated 06.12.2009 and
clause No.5.11.2 of the tender document are set out in IA
No.8138/2017.
6. Further IA No.10169/2017 was moved on 27.07.2017 by the
defendant for leave to defend the suit of the plaintiff and IA
No.10170/2017 was moved under Section 5 of the Limitation Act
for delay condonation of 369 days in moving IA No.10169/2017.
7. The thrust of arguments on behalf of the plaintiff is four
folds – a) leave to defend application is not within the statutory
time and as such plaintiff is entitled to a decree; b) the defendant
has not moved an application under Section 5 & 8 of the Act on
the first date of his appearance and rather has moved OA
No.21/2017 wherein he simply asked for setting aside order dated
09.12.2016 and sought permission to file leave to defend
Page 5 of 11
CS(COMM) 243/2016



application and thus submitted to the jurisdiction of this Court and
hence IA No.8138/2017 ought to be dismissed on this ground
alone; c) the suit of the plaintiff is based on admitted liability and
as such there is no dispute which can be referred to arbitration; and
d) the leave to defend application is beyond limitation and as such
be rejected.
8. M/s Johnson Rubber Ind Limited vs M/s Shree Conveyor
System Private Limited CM (M) No.960/2013 decided on
16.10.2014 notes:-
“7. In my opinion, but for the categorical ratio of the
judgment in the case of Booz Allen (supra), this Court would
have been inclined to hold that filing of any application would
not amount to submission to the jurisdiction of the court,
however, once the ratio of Booz Allen’s case (supra) which
specifically holds that filing of any application can amount to
submitting to the jurisdiction of the court, and considering the
categorical language in para 3 of the application filed by the
petitioner/defendant for seeking annexures to the plaint for
filing of the written statement, the filing of such an
application clearly amounts to submitting to the jurisdiction of
the court.
8. I may note that the present case is not a case where the
petitioner/defendant had only received summons of the suit
without a copy of the plaint. It is an admitted position even
before this Court that the petitioner/defendant had received
the copy of the plaint, and therefore the petitioner/defendant
very much knew what was the dispute in the suit. Also, it is not
the case of the petitioner/defendant that it did not have with it
the purchase order in question dated 19.5.2010 which
contained the arbitration clause. Therefore, having a copy of
the plaint and also having a copy of the purchase order
containing the arbitration clause, and yet filing an application
for seeking annexures to the plaint for filing of the written
statement, in my opinion in view of the ratio of the judgment in
Booz Allen’s case (supra), the filing of the application by the
plaintiff/ defendant clearly amounts to submission to the
jurisdiction of the civil court.”

9. Further in Maruti Udyog Limited vs Mahalaxmi Motors
Limited and Another 95 (2002) DLT 290, this Court notes:
Page 6 of 11
CS(COMM) 243/2016



“3. It is settled law that the arbitration clause can be invoked
only when there are differences and disputes with regard to
certain payments or breach of obligations of the respective
parties of the terms of the agreement. However wherever there
is an admitted liability, the arbitration clause cannot be
invoked. The very connotation "admitted liability" suggests
that there are no disputes or differences with regard to the
said admitted liability.
4. xxx xxx
5. What is material for the purpose of Section 8 of the
Arbitration Act is that there should be existence of difference
or disputes with regard to a particular liability arising out of
the terms of the agreement. If the liability is acknowledged
and admitted it does not come within the meaning and ambit
of disputes and differences.”

10. In M/s Fenner (India) Limited vs M/s Brahmaputra Valley
Fertilizer Corporation Limited CS (OS) No.1281/2014 decided
on 08.01.2016 this Court notes:-
“19. I may now come to the two judgments of the learned
Single Judges of this court while interpreting Section 8 of the
Arbitration Act. The case of Captain Amar Bhatia vs. The
Kingfisher Airlines Ltd. (supra) pertained to a case where a
former employee of the defendant had filed for recovery of the
dues. A plea of Section 8 of the Arbitration Act was raised in
the leave to defend application claiming that this is sufficient
to refer the parties to arbitration. In that background, this
court held as follows:-
"12. It cannot be lost sight of that there is really
no denial or dispute raised by the defendant to
the claim of the plaintiff for recovery of arrears
of his salary. There is thus really no dispute for
adjudication by arbitration. I see no reason to
deny to the plaintiff in this suit the relief of
recovery of money which admittedly is due to the
plaintiff and the chances of recovery whereof,
even if a decree were to be passed in favour of
the plaintiff, are remote and to compel the
plaintiff to spend more monies in invoking the
arbitration clause when there is really nothing
for arbitration. Without thus intending this to be
precedent, in the facts and circumstances of the
present case, I reject said argument also of the
defendant....."
20. Similarly, in Maruti Udyog Ltd. vs. Mahalaxmi Motors
Ltd. and Anr., 95 ( 2002) DLT 290(MANU/DE/1439/2001),
the learned Single Judge of this Court on an application under
Section 8 of the Arbitration Act held that where a liability is
admitted, there are no disputes or differences with regard to
the admitted liability. In the absence of any dispute or
differences, the application under Section 8 of the Arbitration
Page 7 of 11
CS(COMM) 243/2016



Act cannot be allowed. The court held as follows:-
"3. It is settled law that the arbitration clause
can be invoked only when there are differences
and disputes with regard to certain payments or
breach of obligations of the respective parties of
the terms of the agreement. However wherever
there is an admitted liability, the arbitration
clause cannot be invoked. The very connotation
"admitted liability" suggests that there are no
disputes or differences with regard to the said
admitted liability.
21. In the light of the pronouncements of the Hon’ble Supreme
Court and of this High Court, it is clear that when no disputes
exist between the parties, namely, what is claimed by the
plaintiff is admitted by the defendant or impliedly admitted by
the defendant, the same cannot be a subject matter of
arbitration proceedings. The reasons for this are quite
obvious. Courts would normally frown upon frivolous and
meaningless litigation between the parties when the facts on
the face of it shows that there is no scope for any adjudication
left.”
11. Further deduction of TDS is an admitted debt, as was held
in Smt.Sudesh Madhok vs M/s Paam Antibiotics Limited and
Another CS (OS) No.1356/1999 decided on 25.10.2010 and it
notes:-
“15.
(1) to (3) xxx xxx
(4) A TDS certificate was issued to the plaintiff, for the
interest payment made, and tax was deducted, as of
December, 1996. The letter enclosing the certificate was
issued in April, 1997.
xxx xxx
18. It is apparent from the above analysis that the payment of
amount, appropriation, payment of interest, deduction of tax,
issuance of certificate, disclosure of the loan amount, till 31-3-
1997 are all a matter of record; they are first defendant’s
clear admissions. The slender thread which its entire defense -
and the opposition to a summary judgment - hangs on the
issuance of cheques by the second defendant, and their
dishonor; the plaintiff having proceeded to file a criminal
complaint, and a letter by second defendant to the plaintiff
assuring repayment.”
12. Further in Jahnvi Makwana Construction Private Limited vs
Marwar Hotels Limited Company Petition No.303/2008 decided
on 17.08.2009 by Gujarat High Court notes:
Page 8 of 11
CS(COMM) 243/2016



“11. As can be seen from the correspondence referred to
hereinbefore it is only on 31-07-2001 that the respondent -
Company comes forward with so-called dispute in relation to
the work done by the petitioner. However, before that on 14-
07-2001 the respondent Company has vide communication
bearing forwarding No.MHL/0001/TDS/4/4133 forwarded
Tax Deduction Certificate dated 27-06-2001 to the petitioner
- Company. It is necessary to take note of the fact that the
payment / credit to the petitioner is at the figure of
Rs.21,70,865.15 and tax of an amount of Rs.47,758/- has been
deducted. The figure of payment/ credit to the account of the
petitioner tallies with the figure mentioned in communication
dated 27-11-2000 from the petitioner to the Company which is
based on the joint measurements undertaken by the
representatives of both the sides. In the circumstances, it is
apparent that the stand adopted by the respondent Company
is not only not bona fide but is in fact a dishonest attempt to
get away from discharging its liability towards the petitioner,
while at the same time, crediting the account of the petitioner
in its books and claiming deduction against its taxable income
so as to reduce the taxable income.”
13. The learned counsel for the plaintiff also referred to
documents at pages No.8 to 26 attached with the plaint showing
the TDS was deducted by the defendant on the invoices and only
such amount of invoices is claimed in this suit.
14. Though the learned counsel for the defendant relied upon
N.N.Vlechha vs I G Petrochemicals Limited 2006 SCC OnLine
Bom 1289 which held:
“……To repeat, the certificate shows that a tax in the sum of
Rs.7,544 has been deducted as against an amount of
Rs.3,77,220. No doubt the respondent has not explained as to
how and in what circumstances the said figure of Rs.3,77,220
came to be arrived at on which Rs.7,544 was deducted as tax
at source. The total amount payable, as per the petitioner, was
Rs.4,17,770. This figure is not shown on the said certificate.
As per the petitioner, the petitioner has received Rs.2,37,820
and Rs.1,79,950 is payable (less Rs.7,544). Either of the said
two figures are also not shown on the said certificate. The
figure shown therein of Rs.3,77,220 has also not been paid to
the petitioner. In other words the figure mentioned therein
cannot be at all correlated to the sum claimed by the
petitioner. In my view, the said certificate, as the very
certificate shows, can prima facie be proof only of the tax
deducted at source and not of the amount due to the petitioner
Page 9 of 11
CS(COMM) 243/2016



more so when what is the amount mentioned therein has not
been shown by the petitioner as due to him. The said
certificate, therefore, in my view, cannot be taken as prima
facie evidence of the debt or liability of the petitioner in the
sum of Rs.3,77,220 when the very case of the petitioner is that
what is due and payable to the petitioner is the sum of
Rs.1,72,406. As already stated, there is a serious dispute as
regards what is due and payable to the petitioner which
dispute cannot be gone into in summary proceedings of this
nature. …”
15. And Everest Electric Works vs Himachal Futuristic
Communications Limited MANU/DE/1494/2004 which notes:
“2. ………..Similarly, having regard to the distinct purposes,
scope and object of the respective provisions of law in these
two Acts, the plea of estoppel can have no application to
deprive the appellants of the legitimate right to invoke an all
comprehensive provision of mandatory character like Section
8 of the 1996 Act to have the matter relating to the disputes
referred to arbitration, in terms of the arbitration agreement".
The court had adverted to its earlier decision in P. Anand
Gajapathi Raju v. P. V. G. Raju in observing that there is no
bar to referral under Section 8 of the 1996 Act even where
such an application had been filed after the first statement
(written statement) on the substance of the dispute, on the
plaintiff not objecting thereto.
16. And Rahul Jain vs Vasant Raj Pandit MANU/DE/
2281/2015 this Court notes as under:-
“7. In the present case, TDS certificates would be evidentiary
admissions only and not judicial admissions of evidence for
the same to form a basis at this stage itself for decreeing of the
suit although issues have been framed with respect to disputed
questions of facts and evidence is going on. ….”
But these decisions are not applicable since the facts of the cited
cases do show there were serious disputes with regard to the
amount payable.
17. In the circumstances IA No.8138/2017 stands dismissed as
defendant did submit to the jurisdiction of this Court by filing OA
No.21/2017. I am also not inclined to allow OA No.21/2017 as
under Order 37 CPC the leave to defend application need to be
Page 10 of 11
CS(COMM) 243/2016



filed within 10 days and if not filed then the application under
Order 37 Rule 7 CPC only would lie, Order 37 CPC being a
complete Code. Hence, there was no need to file OA No.21/2017,
the same being misconceived is also dismissed. Consequently, IA
No.1970/2017 is also dismissed.
18. Similarly, IA No.10169/2017 viz the leave to defend
application being highly belated is also dismissed. No cogent
grounds for delay are shown, hence the delay condonation
application IA No.10170/2017 is also dismissed.
CS(COMM) 243/2016
19. In view of dismissal of all applications and OA, per Order
37 Rule 3(6) (a) CPC leave no other option with this Court except
to decree the suit of the plaintiff for the suit amount of
98,49,229/- with interest @ 12% from November, 2012 till the
date of realization against the defendant. The costs of the suit is
also awarded in favour of the plaintiff. Decree Sheet be drawn
accordingly.

YOGESH KHANNA, J

APRIL 10, 2018
M
Page 11 of 11
CS(COMM) 243/2016