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Against The Judgment In ... vs By Adv. Sri.J.S.Ajith Kumar on 11 September, 2012

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Delhi High Court
Jain Rolling Mills vs Municipal Corporation Of Delhi on 14 December, 2001
Author: V Aggarwal
Bench: V Aggarwal

JUDGMENT V.S. Aggarwal, J.

1. The present suit has been filed by M/s Jain Rolling Mills, hereinafter described as the plaintiff against the Municipal Corporation of Delhi (defendant) for recovery of Rs. 28,77,732.36.

2. The facts alleged are that in pursuance to the tender notice dated 5th March, 1992 of the defendant for supply of CTD steel bars, the plaintiff submitted its tender/quotation for supply of CTD bars of the thickness (dias) 8 mm to 25 mm of tested quality. The tender/quotation/offer of the plaintiff dated 14.4.1992 contained terms and conditions for supply of the above CTD steel bars. Clause 9 of the terms and conditions provided that if there is any increase in the prices done by the main producer/JPC at the time of delivery of the raw material, the same would be charged from the defendant. In January 1992 the Government of India lifted control on iron and steel and thus the functions of Joint Plant Committee (JPC) has ceased and the main producer of the steel i.e. Steel Authority of India Ltd. (SAIL) continued to function without interference.

3. The defendant vide its letter of 21.4.1992 and 24.4.1992 invited the plaintiff for negotiations with respect to the tenders and made certain amendments but Clause 9 of the terms and conditions remained the same. The tender of the plaintiff was accepted by the defendant vide the letter of 12.5.1992 for supply of CTD bars for 1050 MT of different dias conforming to IS 1786-85. The plaintiff was requested through above letter to execute the agreement and further to start the supply immediately. A formal agreement/contract was executed on 9.5.1992.

4. During the pendency of the contract prices of the raw material on finished material was increased by the main producers. The plaintiff intimated the defendant vide letter of 25th May, 1992 that Govt. has allowed the producers to enhance the rates of steel confirming to IS 1786-85 and further that the date from which the enhancement shall be effected shall be intimated to the defendant. The plaintiff supplied the copies of the enhanced price of steel conforming to IS 1786-85 by main producer i.e. SAIL. The increase in the price was effective from 9th May, 1992. Accordingly supplementary bills were raised in consonance with increase in the price of steel as declared by main producer. The defendant is stated to have paid the amount of bills at the rate initially settled but has not paid the amount for increase in prices, as stated by the plaintiff and raised through supplementary bill. The total amount for the same is stated to be Rs. 21,69,145/- which the defendant is alleged to have not paid despite repeated demands. Vide the letter of 23rd December, 1992 the Executive Engineer (Stores) of the defendant took a frivolous plea that in view of de-control of prices of steel the prices of raw material have not been raised by Govt. of India and as such the claim of the plaintiff for increase of the prices cannot be accepted. The plaintiff contents that this is contrary to Clause 9 of the term and conditions and is entitled to the amount claimed. Hence the present suit.

5. In the written statement filed the defendant contested the suit. it is not in controversy that the agreement alleged by the plaintiff had been arrived at between the parties. However, the right of the plaintiff to raise the supplementary bill has been denied.

6. It has been asserted that plaintiff could not raise supplementary bills on basis of condition No. 9 of the offer of 14.4.1992. Increase of the rates of steel by SAIL has no relevance with the contractual rates agreed upon. The Municipal Corporation could consider to enhance the rates if plaintiff had supplied the complete documentary proof of having purchased the raw material from SAIL on enhanced price for re-rolling of the same against supply of CDT steel bars. The claim as such therefore was rejected and that the plaintiff is not entitled to the amount so claimed.

7. In the rejoinder filed the plaintiff reiterated the assertions raised in the plaint. It is contended that plaintiff is entitled to charge from the defendant any increase in the prices by the main producers and therefore the rejection of the claim by the defendant of the plaintiff is baseless.

8. From the pleadings of the parties on 25th April, 1995 this court had framed the following issues:-

"1. Whether the plaintiff is entitled to a decree of Rs. 28,77,732.36 paise?

2. Whether increase in the price of finished material by the main producers has no bearing on the agreed contractual rates?

3. Whether the plaintiff could not raise supplementary bills on the basis of condition No. 9 of offer dated 14.4.92?"

9. Issues 1 to 3 : All these issue are inter connected and therefore can conveniently be taken up together.

10. Before proceeding further a brief resume of the evidence on the record can well be taken. The plaintiff examined Raja Ram, PW1 who is working in the Steel Authority of India. He brought the price list issued by SAIL for the period from 1st April, 1992 to 18th May, 1992 and from 19th May, 1992 onwards. The photocopy of the same was produced as Ex. PW1/1 and PW 1/2. He further stated that letter of 24th September, 1994 had been issued by the Assistant Manager (Finance) to the plaintiff, copy of which is PW 1/3. J.D. Jain as PW 2 and is one of the partners of the firm. He testified that the defendant had invited tenders for supply of CTD steel bars. He had signed the quotation. The plaintiff had invited for negotiations and the contact had been awarded to the plaintiff. The agreement was executed which is Ex. P8. The defendant had agreed to pay the escalation in the rates in case there is increase in price by the main producers either in raw material or finished goods and that the defendant has failed to pay the same because there was increase in price by the main producers, namely SAIL. During cross-examination the witness stated that rates were mentioned in the accepted tender by the plaintiff. The Executive Engineer had a meeting with him for reducing the rates and for waiver of the condition contrary to NIT. He denied that terms and conditions do not provide for any supplementary bill that could be submitted.

11. As against this evidence the respondent examined Rajiv Sharma, DW1, a Junior Engineer in the Municipal Corporation. He admitted that Municipal Corporation had accepted the tender of the plaintiff and that there was a condition in the offer of the plaintiff that any increase in price of raw material on finished items will be charged extra. The same was stated to be Clause 9 of Ex. P1. During cross-examination he admitted that SAIL in one of the main producers of steel. He did not have the knowledge if the main producers, namely SAIL increased the rates for finished items and raw material.

12. In the present case perusal of the quotation that was sent by the plaintiff reveals that while quoting their quotation it was mentioned:

"09. That if there is any increase in price done by the Main Producers/JPC at the time of delivery of Raw Material/Finished Steel, the same will be charged from you."

13. Vide letter of 21.4.1992 Ex. P2 the Municipal Corporation had called upon the plaintiff to come for negotiations. A reply was sent by the plaintiff, copy of which is 23.4.1992 Ex. P3. Vide the same the plaintiff reiterated:

"Dear Sir, With reference to your letter no. Central Stores/92/106 dt. 21.4.1992 regarding the above subject, we are giving herewith our negotiated prices and terms and conditions.

1 . No change in our rates quoted on 14.4.1992.

2. In our quotation letter at condition No. 4 regarding payment may please be read as follows:

"That 100% payment of our bills will be made within 10 days after submission of our bills, otherwise Rs. 10/- per MT per day will be charged extra and if the payment will be made at the time of delivery then special rebate of Rs. 50/- per MT will be given to you.

3. No change in our terms and conditions mentioned in our letter dated 14.4.1992."

14. Thereafter the plaintiff had again been called for negotiations and on acceptance of the plaintiff offer an agreement was arrived at between the parties, which is Ex. P8 and the same reads:-

"An agreement made between the Municipal Corporation of Delhi herein after called the Corporation on the one part and M/s Jain Rolling Mills, Mukand Nagar, Ghaziabad, UP hereinafter called the contactor on the 2nd part and whereas the contactor has agreed to carry out the supply of 1050 MT of CTD bars (tested) conforming to IS: No. 1786-85 of different dias i.e. 16mm, 20mm & 25 mm as per details given below for the said corporation on the terms and conditions given in tender and NIT no. 56 dated 5.3.92 opened on 16.4.92 and contractors is offer along with terms and conditions vide letter No. JM/MCD/Steel/Supply/92-93 dated 14.4.92 received by MCD on 16.4.92 and further negotiations dated 23.4.92 and 27.4.92 and for its due performance he has deposited Rs. 20,000/- as security vide G8 receipt No. 954060 dated 10.4.92 in Municipal Treasury. The contractor has further agreed for a deduction of 10% (Maximum Rs. 1.00 Lac) security from the running bills payable to him for the same work and failing which all the security will be forfeited to the corporation and contractor will have no objection to it."

15. It was thereafter that the plaintiff on 25.5.1992 had written to the Municipal Corporation pointing out that Govt. has allowed the main producers to enhance the rates of steel and the plaintiff was informed about the enhancement of the rates as and when the same are published and supplementary bill shall be submitted. It is not in controversy that the supply had been made and as per the rates quoted payment was made. The dispute is with respect to the supplementary bill that was submitted by the plaintiff.

16. Learned counsel for the defendant urged that the bill had been submitted by the plaintiff at the old rate and suddenly the supplementary bill had been submitted. According to him there is no proof that plaintiff purchased the said steel at the old or the new rate.

17. The contentions of the learned counsel necessarily must fail and deserve to be rejected. Reliance on behalf of the defendant was placed on Ex. D1 but it become unnecessary to ponder further because the document does not pertain to the contract in question. Therefore, it is unnecessary to go through the same.

18. Perusal of the documents on the record which are basically all admitted reveals that at the very first instance the plaintiff had pointed that if there is any increase in the prices done by the main producers/JPC at the time of delivery of raw material, the same would be charged from the Municipal Corporation. This was repeated by the plaintiff in the subsequent letter copy of which is Ex. P3 dated 23.4.1992. As already reproduced above Ex. P8 was the contract entered into between the parties and it spells in unambiguous terms that terms and conditions given in the tender and the offer that was made vide the letter of 14.4.1992 (Ex. P1) remains the same. In other words this contention that in case there is increase in the prices by the main producers of the raw material or finished steel the same will have to be paid by the defendant.

19. It is not in controversy that the steel was declared to be de-controlled item. Therefore, JPC ceased to have much say in the matter. The defendants witness even admits that SAIL is one of the main producers of the steel. If the prices is increased by the main producer necessarily as per the contact the plaintiff would be entitled to the same.

20. The plaintiff had examined the witness from the SAIL which reveals the increase in prices and the calculation has been made accordingly. The objection of the defendants counsel as already pointed above was that it is not proved that the articles were purchased from the SAIL. So far as this contention is concerned it is totally devoid of merit because the plaintiff would be entitled to the increased rates as per the contract. This would be a business profit as per agreement and therefore the plaintiff had the right to ask for the balance amount as it had been agreed between the parties. The prices as already referred to above had been quoted and on increase in the prices the plaintiff was entitled to the balance because SAIL is one of the main producer of steel supplementary bills therefore in this regard could be submitted. In that view of the matter there is no option but to hold that petitioner is entitled to balance amount claimed regarding which there was little dispute.

21. Accordingly the issue are decided in favor of the plaintiff.

22. Relief : The plaintiff has claimed interest 24% p.a. but the same must be held to be excessive. Only 12% p.a. interest would be fair and reasonable and therefore the suit of the plaintiff is decreed to a sum of Rs. 21,69,145/- with interest at 12% p.a. on the said principal amount from March 1993 when demand was made by the plaintiff till the entire amount is paid.