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2007 DIGILAW 1549 (DEL)

HARINDER ANAND v. DELHI DEVELOPMENT AUTHORITY

2007-08-02

S.MURALIDHAR

body2007
JUDGMENT Dr. S. Muralidhar, J. (Open Court)-The challenge in these writ petitions are to demands raised by the Delhi Development Authority (DDA) against the petitioners for a recovery of certain sums of money as arrears of land revenue under Section 68 of the Punjab Land Revenue Act, 1887 (PLRA). The principal ground of such challenge is that since the work contracts entered into by the DDA with the petitioners, out of which these demands arise, does not contain any clause that permits the DDA to recover such amounts. It is contended that in any event the DDA cannot invoke the provisions of PLRA to recover such amounts. 2. The facts in both writ petitions are more or less similar. For convenience, the facts of the first petition, Writ Petition (C) No. 5073 of 2003 are discussed in some detail. By a contract dated 28.2.1989 entered into with the DDA, the petitioner was awarded the work of "Development of Local Shopping Centre at Madangir." The work commenced on 10.3.1989 and was to be completed within four months. For various reasons, which need not be gone into in these proceedings, the work could not be completed within the stipulated period. It was rescinded on 9.3.1990. The disputes between the parties was, in terms of the contract, referred to arbitration. Before the Arbitrator, the DDA filed, inter alia, counter claims against the petitioner. These included a claim in the sum of Rs. 1,34,130/- "on account of compensation levied under Clause 2 of the contract." The Arbitrator, by an award dated 6.8.1993, held that the action of the DDA in levying compensation under Clause 2 of the contract was unwarranted and accordingly disallowed the counter claim. When, by a petition filed by the petitioner in this Court, the award was sought to be made a rule of Court, the DDA questioned this portion of the award on the ground that the Arbitrator could not have adjudicated upon the claim for compensation under Clause 2 of the Contract as it was an excepted matter. This Court upheld the objection of the DDA by its decision dated 15.11.1999; Harinder Anand v. Delhi Development Authority, 83 (2000) DLT 391=2001 (1) Arb.LR 319 (Delhi). This Court followed the judgment of the Division Bench of this Court in Delhi Development Authority v. M/s. Sudhir Brothers, 57 (1995) DLT 474 (DB)=1995 (2) Arb.LR 306 (DB). This Court upheld the objection of the DDA by its decision dated 15.11.1999; Harinder Anand v. Delhi Development Authority, 83 (2000) DLT 391=2001 (1) Arb.LR 319 (Delhi). This Court followed the judgment of the Division Bench of this Court in Delhi Development Authority v. M/s. Sudhir Brothers, 57 (1995) DLT 474 (DB)=1995 (2) Arb.LR 306 (DB). Accordingly, the portion of the award dealing with DDAs claim for compensation under Clause 2 of the contract was set aside. 3. all. 27.3.2003 the DDA issued to the petitioner the impugned demand notice invoking Section 68 of the PLRA. The petitioner wrote to the Assistant Collector, Grade-I, DDA on 2.6.2003 protesting against the impugned demand on the ground that the delay, if any, in completion of the contract is attributable to the DDA and that the DDA could not invoke the provisions of the PLRA for recovering the amount. In response to the petitioners letter dated 2.6.2003, the DDA on 18.7.2003 filed a rejoinder before the Assistant Collector contending that the amount was recoverable under the PLRA. Further, it was claimed that after the order of this Court dated 15.11.1999 became final the validity of such demand could not be reexamined. 4. Thereafter the petitioner filed the present writ petition on 1.8.2003. While directing notice to issue on 11.8.2003, this Court stayed the impugned demand. 5. The facts in the accompanying petition [Writ Petition (C) 11878 of 2006] are more or less similar except for a difference in the dates of the award and the impugned demand notice. 6. Mr. Sandeep Sharma, learned Counsel appearing for the petitioners submits that in terms of Clause 2 of the Contract, the DDA could only determine the amount of compensation which according to it was payable. The said clause does not permit the DDA to recover the amount of compensation so determined. DDA will have to fie a separate suit for recovering the amount. In support of his submission Mr. Sharma relied upon the judgment of this Court in V.K. Mittal v. Assistant Collector, Grade-l, Delhi Development Authority, 104 (2003) DLT 349=2003 IV AD (Delhi) 31. The said clause does not permit the DDA to recover the amount of compensation so determined. DDA will have to fie a separate suit for recovering the amount. In support of his submission Mr. Sharma relied upon the judgment of this Court in V.K. Mittal v. Assistant Collector, Grade-l, Delhi Development Authority, 104 (2003) DLT 349=2003 IV AD (Delhi) 31. He also placed reliance upon the order dated 18.9.2006 passed by a learned Single Judge of this Court in Bharat Lal v. Delhi Development Authority (Writ Petition (C) No. 5633 of 2004) in which under more or less similar circumstances, this Court quashed the demand raised by the DDA in terms of Clause 2 of the contract read with Section 40A of the Delhi Development Act, 1957 (DD Act). Mr. Sharma also refers to the judgment of the Honble Supreme Court in State of Punjab v. Dharam Singh, AIR 1985 SC 1751 and the judgment of the learned Single Judge of this Court in BWL Limited v. MTNL, 85 (2000) DL T 84, to buttress his submission that the DDA has no power in terms of Clause 2 of the contract to recover the compensation amount by invoking the provisions of PLRA. 7. In order to appreciate Mr. Sharmas submissions Clause 2 of the contract requires to be examined. The relevant portions of the said clause read as under: "Clause 2. 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 of the essence of the contract on the part of the contractor and shall be reckoned from the tenth day after the date 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 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 the 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 and ensure good progress during the execution of the work, the contractor shall be bound in all cases in which the time allowed for any work exceeds, one month (save for 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 one hall of such time has elapsed and three/ fourth 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 falling to comply with this condition, he shall liable to 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 said estimated cost of the work for everyday that the due quantity of work remains incomplete, provided always that the entire amount of compensation to be paid under the provision of this clause shall not exceed ten percent of the estimated cost of the work as shown in the tender. ................" (emphasis supplied) 8. A reading of the above clause shows that there are two situations where the Superintending Engineer, DDA can take a final decision on the amount of compensation that can be recovered from the Contractor for every day that the work remains to be commenced or unfinished. One situation contemplates non-adherence to the time schedule for special jobs. The other gives a similar power to the DDA to recover compensation where time schedules for works other than the special jobs are not met. The clause does not talk of any pre-decisional hearing or procedure of prior notice to the contractor. 9. In its reply to the writ petition, in para 4, the DDA has stated that in raising the impugned demand it has invoked Clause 2 of the contract. In para 7 of the reply, it is stated that the amount could be recovered as "charges" under Section 40A of the DD Act which reads as under: "See. 40A. 9. In its reply to the writ petition, in para 4, the DDA has stated that in raising the impugned demand it has invoked Clause 2 of the contract. In para 7 of the reply, it is stated that the amount could be recovered as "charges" under Section 40A of the DD Act which reads as under: "See. 40A. Mode of recovery of moneys due to Authority-Any money due to the Authority on account of loss or charges, or from the disposal of lands, buildings or other properties movable or immovable, or by way of rents and profits may, if the recovery thereof is not expressly provided for in any other provision of the Act, be recovered by the Authority as arrears of land revenue." 10. After considering the submissions on behalf of the petitioners, this Court is of the view that these petitions under Article 226 are not maintainable. The judgment of this Court in V.K. Mittal (supra) was in a case where the DDA sought to raise a demand payable to it under Clause 29 of the contract. The DDA sought to recover the amount in terms of Section 40A of the DD Act as arrears of land revenue. This Court found that Clause 29 itself provided that the DDA would have to withhold invoking the clause "till the claim arising out of or under the contract is determined by the Arbitrator or by the competent Court." Following judgment of the Honble Supreme Court in State of Punjab v. S. Dharam Singh (supra), this Court in V.K. Mittal (supra) quashed the demand of the DDA as premature. As far as the present cases are concerned, Clause 2 of the contract is invoked and it does not contain the limitation that Clause 29 places on the power of the DDA to recover amounts due to it thereunder. Therefore, the judgment in V.K. Mittal is of no assistance to the petitioners. 11. This Court in fact finds that the present cases are covered on all fours by the judgment of the Division Bench of this Court in Delhi Development Authority v. M/s. Sudhir Brothers (supra). The facts there were more or less similar since even in that case Clause 2 of the contract was invoked by the DDA to claim compensation from the contractor. The arbitrators award rejecting the demand for compensation was challenged by the DDA. The facts there were more or less similar since even in that case Clause 2 of the contract was invoked by the DDA to claim compensation from the contractor. The arbitrators award rejecting the demand for compensation was challenged by the DDA. The Division Bench accepted the contention of the DDA that the demand for compensation under Clause 2, which was an excepted matter, could not form the subject matter of arbitration. While holding that DDA could recover the amount in any manner" open to it", the Division Bench also indicated what remedy was available to the contractor faced with such demand. Para 6 of the said judgment reads as under: "6. It will, therefore, be for the DDA to seek to recover the said amount of Rs. 5,69,743/- in whatever manner it is open to it and in case any such proceedings are taken, it will open to the contractor to raise all defences that may be open to him in law to contend that the levy is bad. In case, the DDA seeks to recover the said amount of compensation from the contractor, it will be open to the contractor to file a suit and raise all such contentions as he may deem fit. We make it clear that the question of limitation will not be raised by either of the parties, in view of the above unfortunate procedure adopted by both parties." (Emphasis supplied) 12. A reading of the judgment of the Division Bench in Sudhir Brothers indicates that where the DDA seeks to recover the amount of compensation from the contractor "in whatever manner it is open to it", it is the contractor to file a suit" and raise all such contentions as he may deem fit." Consequently the Division Bench made clear that the question of limitation would not be raised "by either of the parties" when the contractor files such a suit. 13. This Court is therefore bound by the judgment of the Division , Bench of this Court in Sudhir Brothers which incidentally has not been noticed in the order dated 18.9.2006 of the learned Single Judge in Bharat Lal. 13. This Court is therefore bound by the judgment of the Division , Bench of this Court in Sudhir Brothers which incidentally has not been noticed in the order dated 18.9.2006 of the learned Single Judge in Bharat Lal. The judgment the learned Single Judge of this Court in BWL Limited was in the context of the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 and the facts of that case bear no comparison with the facts in the present cases. In any event the challenge to the impugned demands as being violative of the principles natural of justice can always be raised before the Civil Court. 14. This Court is, therefore, of the view that in regard to impugned demands raised by the DDA, the proper remedy available to the petitioners is to file suits in the Civil Court. It will be open to the petitioners to assail the demands on all possible grounds that may be available to them in law. This would, apart from the challenge on merits and other grounds, include a challenge to the power of the DDA to recover the demand in terms of Section 40A of the DD Act read with Section 68, PLRA. It would be also permissible for the petitioner to seek appropriate interim relief in the same proceedings. Further, the petitioners would also be able to explain the delay in approaching the Civil Court for relief by recourse to Section 14 of the Limitation Act, 1963. 15. With the above observations, these writ petitions are dismissed as not maintainable and with no orders as to costs. Writ Petitions dismissed.