Final Order 3

Order Details: Copy of Judgment
Pdf Text: CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 1 of 13
MHCC010020842020 Suit Filed on : 17.02.2020
Arguments closed : 08.02.2024
Decided on : 07.05.2024
Duration : 04 Y, 02 M, 20 Days
City Civil & Sessions Court, Mazgaon, Greater Mumbai
Court Room No. 31 – Commercial Court
(Additional District Judge : Vijay S. Hingne, LL. M.)
Commercial Suit No. 100413 / 2020 Exhibit No. 52
Plaintiff : Sanjay Vaghji Rathod
M/s. Sanjay Construction,
Shop No. 3, Amrapali Co-operative Housing
Society Ltd., Phirojsha Nagar,
Next to Railway Crossing, Vikhroli (East),
Mumbai 400 079.
VERSUS
Defendants 1 Government of India
Through Secretary, Ministry of Agriculture
& Cooperation, Krushi Bhavan, New Delhi.
2 National Co-operative Construction &
Development Federation of India Ltd.
3rd floor, Business Facilitation Center,
Seepz Sez, Andheri (E), Mumbai 400 096.
3 Seepz Special Economic Zone Authority,
Seepz Service Center Bldg., Seepz Sez,
Andheri (East), Mumbai – 400 096.
Appearances
Plaintiff
: Adv. Shri N. D. Jaywant
Defendant No. 1 & 3
: Adv. Shriram Redij
Defendant No. 2
: Adv. Ashutosh Shukla.
Suit for Recovery of ₹. 38,97,455/-
****************************************************
-- 1 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 2 of 13
J U D G M E N T
(Delivered on this 7th Day of May, 2024)
Suit is preferred for recovery of .	₹ 38,97,455/- with
interest @ 18 % per annum.
Case of Plaintiff :
2) Sanjay Vaghji Rathod is carrying construction business
as, M/s. Sanjay Construction, Mumbai (hereinafter,
plaintiff).
Defendant No. 1 is Government of India, New Delhi
(hereinafter,
D1-GOI).
Defendant No. 2 National Co-operative Construction
and Development Federation of India, Mumbai, Maharashtra,
(hereinafter,
D2-NCCDFI) is society of Contractors.
Defendant No. 3 SEEPZ Special Economic Zone
Authority, Mumbai, Maharashtra (hereinafter,
D3-SEEPZ), is
institution working under D1-GOI.
3) D3 is having
SDF Buildings No. 1 to No. 6 and Gems
and
Jewellery Buildings No. 1 to No. 3. D3 wanted
waterproof
treatments of terrace slab of those buildings.
D3 entrusted said work to D2. Hence, D2 floated
Tender for said work. D2 accepted Proposal of Plaintiff. D2
issued Work Order Dt. 04.03.2017 (hereinafter,
Work Order /
WO), in favour of Plaintiff. Plaintiff and D2 also executed
Agreement on 20.03.2017. Thereby, plaintiff agreed to carry
structural repairs and allied civil work of
SDF Building No. 2 and
No. 3. Accordingly, plaintiff submitted running Bills to D2 as :
Sr. Date Amount (₹)
1. 20.03.2017 17,53,222/-
2. 05.05.2017 58,22,126/-
3. 08.06.2017 1,03,82,729/-
4. 01.12.2017 84,16,068/-
5. 17.04.2018 23,43,395/-
6. 20.05.2018 53,49,593/-
Total 3,40,67,133/-
-- 2 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 3 of 13
4) Against Work of .	₹ 3,40,67,133/-, plaintiff received
.	₹ 3,05,72,903/-. Thereby, .	₹ 34,94,230/- is balance. Hence,
plaintiff issued Notice Dt. 06.07.2019 U / Sec. 80 of CPC.
However, defendants failed to repay the amount. Hence, plaintiff
preferred present Commercial Suit No.100413 / 2020, for
recovery of .	₹ 38,97,455/- with interest @ 18 % p.a.
Written Statement of D1 and D3 (Exh. 2, Dt. 12.03.2021) :
5) Suit is liable to be dismissed with costs, for following
reasons :
1. In wake of onset of monsoon and bad conditions of
structure of buildings, it was imperative to complete
waterproofing work before onset of monsoon. Hence,
D2 and D3 split said work, worth .	₹ 30,26,75,365/-, to
three different contractors, as :
i. M / s. Mahendra Realtor and Infrastructures.
ii. M / s. Sanjay Construction (plaintiff)
iii. M / s. New Construction Concrete Systems.
2. Accordingly, D2 issued Work Order Dt. 04.03.2017 to
plaintiff with revised work for .	₹ 6,32,16,000/-.
3. Accordingly, D3 made payment to D2 as follows :
i. .	₹ 15,13,37,682/- was paid on 16.02.2017
ii. .	₹ 7,56,68,841/- was paid on 04.07.2017
Thereby, D3 paid .	₹ 22,70,06,522/- to D2 (75 % of total
approved cost).
4. Balance 25 % of .	₹ 30,26,75,365/- is not released for
following reasons :
i. Complaints are received under RTI application
about assignment of work to D2.
ii. In Vigilance inquiry, it was found, selection
and appointment of D2 is in violation of Rules.
iii. Said investigation is pending.
5. Ministry of Commerce and Industry (hereinafter,
Ministry) has sought information in prescribed format in
respect of work and payments, made by D3 to D2.
6. D3, vide letter Dt. 14.12.2018 and 08.09.2020,
-- 3 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 4 of 13
forwarded relevant data to said Ministry.
7. Issue regarding assignment of work to D2 and release of
payment to D2 is under scrutiny with Ministry,
8. Plaintiff do not have privity of contract with D1 and D3.
Hence, Suit is bad for misjoinder of D1 and D3.
9. Dispute between parties is not of commercial nature.
Hence, Commercial Suit is not maintainable.
10. D3 received letter Dt. 06.07.2019. However, it cannot
be construed as Notice U / Sec. 80 of the CPC.
11. Suit is not maintainable under O 37 R 2 of CPC.
Written Statement of D2 (Exh. 4, Dt. 12.03.2021) :
6) D2 is Multi-state Co-operative Society. Vide letter Dt.
31.10.2016, D3 appointed D2 for carrying renovation, repairs,
waterproofing, etc. in concerned buildings. Thereby, D2 acted as
agency of D1 and D3, for meager commission of 3 % of work.
7) Under directions of D1 and D3, this D2 invited tenders
on 07.01.2017, for carrying repairs worth .	₹ 35,68,32,015/-. After
scrutiny, relevant tenders were allotted to three contractors.
Plaintiff was one of the contractors.
8) For purpose of supervision, D3 appointed
M/s. Conspro
Management Services as Project Management Consultant.
Conspro was assigned role to ensure quality and quantity of work
and on scrutiny, to issue requisite certificates.
9) Plaintiff satisfactorily carried repair works as per the
Tender. Conspro Management also submitted report about
satisfactory quality of work of plaintiff. Despite that, D2
conducted third party audit through IIT Bombay. IIT Bombay
also submitted that, work has been satisfactorily completed.
Despite that, D3 released only 70 % of the amount.
10) Against entire bill amount of . 75,87,22,315/-, D3 paid	₹
only . 56,36,16,884.91/-, leaving balance of	₹
-- 4 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 5 of 13
.19,51,05,430.09/-. Because of said default by D3, various	₹
contractors had initiated recovery Suits against D2, as follows :
Sr. Name of Contractor Commercial
Summary Suit
1 M/s. Mahendra Realtors & Infrastructure Pvt. Ltd. 1237 /2019
2 M/s. M. S. Shah & Associates 1230 / 2019
3 M/s. Mahendra Realtors & Infrastructure Pvt. Ltd. 1219 / 2019
4 M/s. Sanjay Construction 990 / 2019
5 M/s. New Construction Concrete Systems Pvt. Ltd. 1376 / 2019
11) Plaintiff carried work for D3. Hence, D2 is mis-joinder.
Suit is not maintainable against D2. Hence, Suit be dismissed.
Evidence of Plaintiff :
12) Plaintiff adduced oral and documentary evidence as :
PW1, Exh. 9 : Evidence of plaintiff Sanjay Vaghji Rathod
Exh. 10 : Affidavit U / Sec. 65 B of Indian Evidence Act.
Exh. 12 : Photocopies of Tender Document of 165 pages.
Exh. 13 : Work Order Dt. 04.03.2017 for . 6,32,16,000/-.
₹
Exh. 14 : Plaintiff’s letter Dt. 27.03.2017 with copy of
Agreement Dt. 20.03.2017.
Exh. 15 : Plaintiff’s Running Bill Nos. 1 to 6 issued to D2
Exh. 16 : Plaintiff’s e-mail Dt. 09.02.2019 to D2 and D3
Exh. 17 : Legal Notice Dt. 18.09.2018.
Exh. 18 : Evidence closing pursis Dt. 04.02.2022
Evidence of Defendant No. 2 :
13) D2 adduced oral and documentary evidence as :
DW1, Exh.19 : Evidence of Ravindra T. Manjrekar
Exh.21 : Affidavit U / Sec. 65 B of Indian Evidence Act.
Exh.22 : Copy of letter Dt. 31.10.2016 of D3
Exh.23 : Copy of Tender Documents.
Exh.24 : Copy of Audit Report of Conspro.
Exh.25 : Copy of IIT Bombay Report from D3 to D2.
Exh.26 : Copies of Bills raised by D2 to D3 through email.
Exh.27 : Office copy of Advocate Notice.
Exh. 28 : Printout of email by D2 to D3.
Exh.29 : Copy of Plaint from Commercial Summary Suit filed
by D2 against Union of India, before Hon’ble HC.
-- 5 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 6 of 13
Exh. 30 : Copy of Web details of Exh. 29.
Exh. 31 : Authority Letter.
Exh. 32 : Evidence closing pursis Dt. 30.03.2022 of D2.
Evidence of Defendant No. 1 & Defendant No. 3 :
14) D1 and D3 adduced oral and documentary evidence as :
DW2, Exh.33 : Evidence of Bridget Joe
Exh.35 : Letter Dt. 23.06.2016 issued by D2.
Exh.36 : Letter Dt. 22.10.2016 issued by D2 engaging PMC.
Exh.37 : Letter Dt. 30.06.2017.
Exh.38/1 : Letter Dt. 24.07.2016 issued by D2.
Exh.38/2 : Letter Dt. 02.08.2016 issued by D3.
Exh.39 : Minutes of Meeting held by D3 on 18.11.2016.
Exh.40 : Minutes of Meeting held on 04.01.2017
Exh. 41 : Work Order Dt. 16.02.2017 issued to NFCD.
Exh. 42 : Work Order Dt. 18.04.2017 issued to NFCD.
Exh. 43 : Work Order Dt. 04.03.2017 issued to plaintiff.
Exh. 44 : Original Sanction Order Dt. 16.02.2017.
Exh. 45 : Original Sanction Order Dt. 04.07.2017.
Exh. 48 : Evidence closing pursis Dt. 22.02.2023 of D1 & D3
Issues for determination :
15) Heard the Learned Counsels. Perused Record. Issues
framed by my learned predecessor are reproduced here. My
findings and reasons are as follows :
Issues
Findings
1. Whether Plaintiff proves that he
is entitled to recover ₹
38,97,455/– (balance amount of
3,494,230/– + interest of
₹
	₹
4,03,225/– @ 18 % p. a. from
respective due dates of
repayment) from defendants?...... In the Negative.
2. Whether defendant No. 1 to 3
prove that suit is not
maintainable as summary suit or
commercial suit against them?..... Suit is maintainable
3. What Order as to Cost?................ As Final Order.
4. What Order and Decree?...…....... As Final Order.
-- 6 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 7 of 13
R E A S O N S
Reasons as to Issue No. 2 :
Whether D1 to D3 prove that, suit is not maintainable as
summary suit or commercial suit against them?
16) It is admitted fact that, plaintiff was allotted the Work
Order for waterproofing work.
17) D1 & D3, in Para No. 1 and Para No. 12 of their WS
(Exh. 2) while D2, in Para No. 11 of its WS (Exh. 4), have
challenged the maintainability of the Suit.
It is their contention that, Summary Suit under Order 37
Rule 2 of the CPC is not maintainable against these Defendants.
18) Sec. 2 (1) (C) (I) and (vi) of the Commercial Courts Act
provides that,
“commercial dispute” means a dispute arising out
of--Construction and infrastructure contracts. Hence, it is held
that, the Suit is maintainable as Commercial Suit. Therefore, the
Issue is so answered.
Reasons as to Issue No. 1 :
Whether Plaintiff proves that he is entitled to recover
.38,97,455/– @ 18 % p. a. from defendants?
₹
Inter-relationship between the Parties :
19) In Para No. 3 of the Plaint, plaintiff pleaded that, it was
D2 who floated the tender of waterproof treatment.
In Para No. 4 of the Plaint, plaintiff pleaded that, the
Work Order Dt. 04.03.2017 was issued by D2.
In Para No. 5 of the Plaint, plaintiff pleaded that,
accordingly an Agreement was executed on 20.03.2017 between
the plaintiff and D2.
In Para No. 6 of the Plaint, plaintiff pleaded that,
regarding repairs, it submitted running bills to D2.
In Para No. 8 of the Plaint, plaintiff pleaded that, as he
did not received the payments from D2, hence the plaintiff issued
-- 7 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 8 of 13
Notice U / Sec. 80 of CPC.
In Para No. 9 of the Plaint, plaintiff stated that, D2 is
liable to pay the balance of . 34,94,230/- to plaintiff.	₹
In Para No. 10, plaintiff claimed that, he is entitled to
recover . 38,97,455/- from D2 with interest @ 18 % p. a.	₹
Thereafter, in Para No. 16, plaintiff has made a prayer
clause which reads as follows :
(a) that this Hon’ble Court be pleased to direct the
Defendants by a decree and order of this Hon’ble Court
to pay to the Plaintiff a sum of Rs. 38,97,455/-
comprised of Rs. 34,94,230/- being balance amount
payable by the Defendant No. 2 under the said amended
Work Order and a sum of Rs. 4,03,225/- being the
amount of interest @ 18 % per annum from the
respective due dates of payment under the said bills till
the date of the present suit as per the Particular of Claim
at Exhibit “H” hereto;
20) When confronted about, between whom the dispute lies,
plaintiff deposed during cross-examination, as follows :
It is true to say that this is the dispute between member
i.e. plaintiff and the co-operative society i.e. defendant
No.2.
21) From plaintiff’s pleadings and admissions during cross-
examination, following inferences are drawn :
1. D2 floated the tender.
2. D2 issued Work Order of 6,32,00,000/– Dt.04.03.2017
₹
to plaintiff to carry waterproofing treatments of roof.
3. D2 and plaintiff executed Agreement dated 20.03.2017
regarding structural repairs and allied civil work.
4. D2 assigns work only to its members. Plaintiff got
Work-Order only because, plaintiff is member of D2.
5. D2 appointed Conspro Management Services as Project
Management Consultant to ascertain quality of repairs.
6. Plaintiff submitted running bills to D2.
-- 8 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 9 of 13
7. D2 and PMC used to inspect / verify work of Plaintiff.
8. D2 used to verify the bills and thereafter used to make
the payment in the bank account of the Plaintiff.
9. For bills, Plaintiff used to contact only D2.
10. Plaintiff never had any interaction with the D1 and D3.
22) All these aspects points that, it was essentially contract
between plaintiff and D2. So, whatever amount is recoverable by
plaintiff is from D2.
Arrangements between the Parties :
23) Facts that can be gathered from the dispute are that, D1
and D3 wanted waterproofing work of their building. Hence, they
allocated said work to D2. D2 floated Tenders, wherein it
accepted Tender of plaintiff (contractor). Accordingly, plaintiff
carried waterproofing work and raised the Bills.
Disbursement of funds from D3 to D2 :
24) From pleadings of all parties, it is further admitted fact
that, D3 used to provide funds to D2 and accordingly, D2 used to
disburse it to contractors in proportion to the work completed by
the contractors.
Entire work was of ₹. 75,87,22,315/-.
From said amount, D3 paid . 56,36,16,884.91/- to D2.	₹
D3 withhold ₹. 19,51,05,430.09/-, probably because the
quality of waterproofing was not proper and said aspect got
subjudiced before the Ministry for scrutiny.
25) As per plaintiff, he completed work of ₹. 3,40,67,133/-.
From it, he received ₹. 3,05,72,903/-, while, . 34,94,230/- are	₹
due and recoverable from D2.
26) D2 had received ₹. 56,36,16,884.91/-. It appears that,
said amount has been distributed by D2 among the contractors.
So, now burden is on D2 to show as to, how he
distributed ₹. 56,36,16,884.91/- between various contractors.
-- 9 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 10 of 13
If plaintiff’s Work Order was of ₹. 3,40,67,133/- then,
burden is on D2 to show as to, on what basis, from said amount
(₹.56,36,16,884.91/-), D2 paid only ₹. 3,05,72,903/- and why he
kept ₹. 34,94,230/- balance.
Plaintiff did not lead any evidence on this aspect. D2
has examined Ravindra T. Manjrekar (DW1, Exh.19). Plaintiff
has cross-examined said witness. However, no case is raised by
plaintiff against this witness on all these aspects. From overall
pleading and evidence of plaintiff and D2, it appears that, both
plaintiff and D2 are supporting each other.
Both plaintiff and D2 can support each other. However,
then they also need to be transparent with regards to disbursement
of amount between contractors. Without touching disbursement,
their support to each other is, dramatic.
Quality of Waterproofing work :
27) It is case of D1 & D3 that, D3 paid .	₹ 22,70,06,522/- to
D2 (75 % of total approved cost) and has withheld balance 25 %
amount. D1 and D3 alleged that, work completed by plaintiff was
of inferior quality and hence, aspect relating to quality of work is
subjudiced before the Ministry. Ministry has called all the papers
relating to waterproofing work.
It is not case of plaintiff that, quality-aspect is not
subjudiced before the Ministry or that, D1 and D3 are making
false claims. Thereby, said aspect that the dispute is subjudiced
before the Ministry, is not under challenge from the plaintiff.
28) When aspect relating to quality was confronted, plaintiff
deposed during cross-examination at Para No. 28 as,
….. It is true to say that original work order given to me
was of Rs.9,48,24,000/- and subsequently, revised order
of Rs.6,32,16,000/- was issued to me. As the quantity of
work of particular area assigned to me was less, work
order was revised. It is true to say that I have carried out
the work of the Rs.3,50,00,000/- approximately. It is
true to say that I completed entire work assigned to me
-- 10 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 11 of 13
just by spending the amount of Rs.3,50,00,000/-
approximately. It is true to say that I completed work of
Rs.6,32,16,000/- by using funds of Rs.3,50,00,000/-
approximately.
Thereby, plaintiff is admitting that, work worth .	₹ 6,32,16,000/-
is completed by him by using funds of ₹.3,50,00,000/-. It is not
case of plaintiff that, work was of value of ₹.3,50,00,000/- and
hence, he performed said work with that amount. His answer
shows that, work worth ₹. 6,32,16,000/- was completed by him
with funds of ₹. 3,50,00,000/-. By completing the work in half of
the amount, leads to an inference that, probably, defendant has
compromised the quality of the work.
This supports case of D1 and D3 that, quality aspect is
under scrutiny by the concerned Ministry. So, it is very difficult
to come to conclusion that, plaintiff had completed the work
satisfactorily and there is no dispute regarding quality.
29) Importantly, when dispute is subjudiced before the
Ministry on quality aspect, then unless and until said scrutiny is
not complete, the plaintiff cannot be granted any relief. Granting
relief of recovery or granting decree to plaintiff will amount to
interfering the scrutiny work, being undertaken by the Ministry.
So, unless the scrutiny is not completed and the aspect relating to
quality is not adjudicated, plaintiff cannot be granted any relief.
Non-examination of Expert from Conspro :
30) If there is question regarding quality of construction. In
that backdrop, burden was on plaintiff to show that, he made
proper construction. The best evidence for the plaintiff to prove
said fact was examination of official / expert from M/s. Conspro
Management Services, which was looking after the quality of
construction and which was appointed by D3.
31) D3 raised questions about quality of construction.
Despite that, plaintiff did not examined any official from Conspro
Management Services. Plaintiff also gave no explanation as to
-- 11 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 12 of 13
why he has not examined said official / expert.
32) There is non-examination of Conspro. At the same time,
quality issue is subjudice before the Ministry. In that backdrop,
the claim of plaintiff that,
the work is satisfactorily completed by
the plaintiff, is unacceptable.
Conclusion :
33) From pleadings and evidence of parties, following
inferences are drawn :
1. Plaintiff completed work worth ₹. 6,32,16,000/- with
funds of ₹. 3,50,00,000/-. It is not case of plaintiff that,
work was worth ₹. 3,50,00,000/- and hence, he
completed it within that amount. It means, plaintiff has
compromised upon the quality of work.
2. Quality aspect is under scrutiny of Ministry. It is not
disclosed whether said scrutiny is over or still pending.
3. Irrespective that, the Work Order of the plaintiff is of
₹.3,40,67,133/-. He is claiming the said amount from
D2. Regarding repair work, D2 has received
₹.56,36,16,884.91/-. However, there is nothing before
the Court as to how and on what proportion, D2
distributed said amount between various contractors.
In these circumstances, plaintiff cannot be granted any relief
regarding recovery. Hence, Issue No. 1 is answered in Negative.
Reasons as to Issue No. 3 and No. 4 :
34) In view of negative findings as to Issue No. 1, the
plaintiff is not entitled for any relief. Therefore, the Issues are so
answered and the Suit is disposed off, by following order :
ORDER
1. Commercial Suit No. 100413 / 2020, Sanjay Vaghji
Rathod Vs Government of India, is dismissed.
2. Parties to bear their own costs.
-- 12 of 13 --
CS No.100413/2020
Sanjay – Government of India Judgment (Exh.52) 13 of 13
3. Decree be drawn up accordingly.
4. Judgment pronounced in Open Court.
5. Plaintiff be informed about his right to challenge this
Judgment and period of limitation, for the same.
6. After compliance and period of Appeal, Shirestedar and
AS to consign Record of the Suit, to Record Room.
Mumbai
Dated : 07.05.2024 (Vijay S. Hingne)
Additional District Judge,
Court Room No.31 – Commercial Court
City Civil & Sessions Court,
Mazgaon, Greater Mumbai
Visit ecourts.gov.in for updates or download mobile app “eCourts Services” from
Android or iOS
-- 13 of 13 --