A subcontractor cannot recover from the principal contractor absent proven privity or a joint promise.

The plaintiff, a construction contractor, claimed ₹10 lakhs with 12% interest from Sugam Construction Pvt. Ltd. (“Sugam”) and National Buildings Construction Corporation Ltd. (“NBCC”) for work allegedly executed on an express highway project.

NBCC had awarded part of the project to Sugam, which allegedly entered into a further agreement with the plaintiff dated 26 September 1995.

The plaintiff claimed that he executed work worth ₹46,69,158.76, received ₹39,21,481, and that the balance of ₹7,47,677.76 was paid by NBCC to Sugam but not remitted to him.

Sugam initially contested the suit, disputing the agreement, jurisdiction, limitation and liability.

NBCC remained absent, resulting initially in an ex parte decree against it.

The ex parte decree was later set aside by the High Court in proceedings under Special Civil Application No.8956 of 2010, subject to NBCC depositing the decretal amount and filing its written statement.

In the restored proceedings, NBCC denied privity of contract and contended that the agreement relied upon by the plaintiff was not executed by an authorised NBCC officer.

The Trial Court disbelieved the agreement, found no privity between the plaintiff and NBCC, and dismissed the suit.

The plaintiff appealed under Section 96 of the Code of Civil Procedure, 1908.

During the suit, the plaintiff obtained an order deleting Sugam from the proceedings.

1. Whether the plaintiff established the existence of a legally binding contract or privity of contract between himself and NBCC?

2. Whether the plaintiff proved that Sugam and NBCC were joint promisors so as to make either of them liable for the claimed amount?

3. Whether the agreement at Exhibit 34 and the TDS certificates at Exhibits 66–68 established contractual liability or privity between the plaintiff and NBCC?

The Court applied Section 96 of the Code of Civil Procedure, 1908, governing first appeals.

Under Sections 37, 42, 43 and 44 of the Indian Contract Act, 1872, contractual obligations and the liability of joint promisors arise only where the party sought to be held liable is a party to, or has undertaken, the joint promise; Section 43 permits enforcement against any joint promisor, but only after the existence of a joint promise is proved.

The Court applied the doctrine of privity of contract, namely, that a person who is not a party to a contract ordinarily cannot be held liable under it.

It also endorsed the principle that secondary evidence cannot be relied upon without establishing the foundational conditions for its admission under Section 65 of the Indian Evidence Act, 1872, referring to the authorities cited by the Trial Court, including AIR 2007 SC 1721 and 2011 (1) GLH 586.

Mere direct payment or issuance of TDS certificates by a principal contractor does not, by itself, create privity of contract with a sub-contractor.

The Court held that the plaintiff’s own pleadings established a contractual chain in which NBCC contracted with Sugam and Sugam, in turn, contracted with the plaintiff.

The alleged outstanding amount was therefore a claim arising primarily from the plaintiff–Sugam relationship, not from any direct contract with NBCC.

Even assuming that Exhibit 34 was duly proved, it was an agreement arising from NBCC’s tender arrangement and did not show that NBCC had directly awarded work to the plaintiff or undertaken to pay him.

The TDS certificates and direct payments made by NBCC proved, at most, that payments were made to the plaintiff at Sugam’s instance and that tax was deducted.

They did not establish a contractual relationship or an independent payment obligation between NBCC and the plaintiff; rather, the description of the plaintiff as a “sub-contractor” supported the existence of the plaintiff’s relationship with Sugam.

The plea of joint promisors also failed because the plaintiff produced no contract or other legally sufficient evidence showing that NBCC had jointly promised, along with Sugam, to pay the plaintiff.

Sections 42–44 could not be invoked in the absence of proof of a joint promise.

Further, after the plaintiff deleted Sugam—the alleged principal contracting party—from the suit, no sustainable contractual cause of action remained against NBCC, which was treated only as a formal party.

It held that the plaintiff failed to prove privity of contract between himself and NBCC, failed to establish that NBCC and Sugam were joint promisors, and failed to show that Exhibit 34 or the TDS certificates created contractual liability on NBCC.

The appeal was dismissed as meritless, the Trial Court’s judgment and decree dismissing the suit were confirmed, and the earlier order releasing the amount of ₹14,44,178 deposited by NBCC was made absolute.

No order as to costs was passed.