Safiya Malik

The High Court of Delhi Division Bench of Justice Nitin Wasudeo Sambre and Justice Anish Dayal has dismissed the Municipal Corporation of Delhi’s appeal and left undisturbed a decree of over ₹1.01 crore, along with interest, in favour of a contractor over unpaid running bills for construction works at a municipal primary school site. The Court held that the civic body could not justify withholding payments or attribute non-completion to the contractor when execution was disrupted by impediments that the corporation itself was required to clear, including trees at the work area. It found that delays stemmed from the corporation’s lapses in providing a clear site, making its blame on the contractor untenable.

The dispute arose out of a public works contract awarded for construction of a municipal primary school comprising classrooms and ancillary facilities. The contractor, a registered partnership firm engaged in construction activities, was awarded the work pursuant to a tender, with a stipulated completion period of twelve months. According to the contractor, the site was handed over belatedly after local elections, followed shortly by a nationwide lockdown due to the COVID-19 pandemic, which disrupted execution. The contractor further contended that physical hindrances in the form of standing trees at the site prevented full-scale construction, despite repeated requests to the municipal authority for their removal.

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The contractor asserted that demolition work and partial construction were carried out and that running bills were submitted, of which at least one was processed but not paid. The municipal authority, however, alleged abandonment of work, non-compliance with contractual conditions, and failure to submit bills in the prescribed manner. It imposed penalties, ordered closure of the contract, forfeited deposits, and initiated steps to debar the contractor.

Evidence before the Commercial Court included contractual documents, correspondence, running bills, site photographs, and oral testimony of witnesses examined by both sides. The Commercial Court decreed the suit partly, granting recovery, declaratory relief, and injunction. The municipal authority challenged this decree in appeal.

The Division Bench noted that the suit was founded on admitted contractual facts and recorded that “the plaintiff was awarded the work order dated 03rd January 2020 for a sum of Rs.4,02,20,253/-” and that the work involved demolition followed by construction of a municipal primary school. The Court observed that “the site was handed-over late in point of time because of MCD Election” and that shortly thereafter “lockdown was declared by the Government of India on 23rd March 2020.”

On the competence of the witness instituting the suit, the Court recorded that “PW-1, who has signed and verified the plaint, is a partner of the plaintiff firm as reflected from Form A issued by the registrar of firms” and that “in the said capacity… he has entered into the witness-box and is competent to depose.”

With respect to hindrances at the site, the Court observed that “no specific time is provided therein for removal of the hindrances viz. the existing trees” and further recorded that “the appellant was under obligation to remove the trees and there is inordinate delay on the part of the appellant” in coordinating with the concerned departments. It was noted that “05 trees were removed after the lapse of the period of completion… whereas 02 trees were still existing in the work area.”

The Court observed: “The appellant themselves created the situation wherein impediments arose due to their failure to remove the trees which affected the smooth execution of the contract. In such an eventuality and for failure to remove the trees for which the appellant was duty-bound to take action, it is not open for the appellant to blame the respondent for not executing the entire contract within the stipulated time.”

While examining the conduct of the municipal authority, the Court recorded that “the registers as were required to be maintained viz. site order book, hindrance register… were not provided along with the work order.” The Court further observed that “the hindrance register… does not speak of any further entries” and that this fact supported the contractor’s case regarding non-clearance of the site.

On the issue of running bills, the Court observed that “the first running bill was approved” and that “merely because the bill is not on the letter head that by itself will not vitiate the first running bill.” It was further recorded that “it is not the case of the appellant that the running bill was false or that of the work itself was not executed.”

The Bench concluded by observing that “the learned Commercial Court has in detail analysed the evidence in the backdrop of rival pleadings” and that the findings recorded were “an appropriate and possible view.”

The Court ordered that “the appeal lacks merits and is liable to be dismissed and is accordingly dismissed.” The decree for monetary recovery was sustained, whereby “a decree of recovery of Rs.1,01,83,222/- (Rupees One Crore One Lakh Eighty-Three Thousand Two Hundred Twenty-Two only) is passed in favour of the plaintiff and against the defendant, with simple interest @ 8% per annum on the said amount w.e.f. 29.07.2021 till realization of the decreetal amount.”

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The Court also upheld the declaratory relief granted by the Commercial Court, confirming that “the letters/order bearing no. SE/KPZ/2022/D.105 dated 30.06.2022, D/98/EE (Pr.)/KPZ/2022-23 dated 04.07.2022, letter bearing ref. No. D/257/EE (PR.)/KPZ/2022-23 dated 15.12.2022 and show cause notice under revised instruction for inlistment/revalidation of contractor, 2016 bearing ref. No. D/6/EE/PR./KPZ/2022-23 dated 15.02.2023 passed by defendant” stand “declared as null and void.”

The permanent injunction granted by the Commercial Court was affirmed, whereby “the defendant is restrained from enforcing/implementing the letters/orders” referred to above “against the plaintiff. Pending applications, if any, stand disposed of.”

Advocates Representing the Parties

For the Appellant: Mr. Tushar Sannu, Standing Counsel, with Ms. Rajbala and Mr. Umesh Kumar, Advocates

For the Respondent: Mr. Avinash Trivedi and Mr. Rahul Aggarwal, Advocates

Case Title: Municipal Corporation of Delhi v. M/s Ram Niwas Goel
Neutral Citation: 2026: DHC:177-DB
Case Number: RFA (COMM) 677/2025
Bench: Justice Nitin Wasudeo Sambre, Justice Anish Dayal