2019 (8) TMI 1906 - HC - Indian Laws

Seeking recall and modification of the order - Withdrawal of the condition for 24% interest by the Contractor - price escalation clause - reimbursement of amount spent in keeping watch/ward, short payment, interest and costs - suppression of documents - accountability of Corporation officials - HELD THAT - There is no doubt that the original record of the Corporation was never produced either before the arbitral tribunal or before the court when the final arguments took place. Both the tribunal and the Court were kept in the dark about crucial and relevant documents including Exhibits R1-3 and the office notings thereon. These documents were important and would have had a bearing on the decision in the disputes between the parties. While on the hand the non-placing of these records is not condonable on behalf of the Corporation, there can be no justification whatsoever, for the contractor who was aware of all the facts, not to reveal these documents/facts. The Contractor admits his signatures on the above document at points A, B, C and D. However, he denies the sentence written above point 'D' which reads - I hereby withdraw my condition for monthly payment and interest of 24% on a/c of non-payment . Thus, the Contractor's argument that the writing above Point D is not his, would not be sufficient. Even alleging that there is forgery is not sufficient. The existence of contemporaneous documents viz., negotiation letter, note sheet duly signed by the competent authority, none of which are disputed, shows that the condition was indeed withdrawn. The signatures of the officers of the Corporation on these documents is not disputed by either side - The note sheet clearly records that the Contractor had initially put the condition which was thereafter withdrawn. When parties play a fraud on the Court or deliberately suppress relevant facts and documents and further mislead the court, the argument of functus officio would not be applicable. The Court has the inherent power to recall/modify its order/judgment. For such apparent omissions in placing the true facts before the court and the arbitral tribunal, responsibility ought to be affixed on the errant officers. It is, accordingly, directed that the Central Vigilance Commission (hereinafter, 'CVC') conduct an enquiry into this matter and submit a report within three months as to who were the officers responsible for not placing the entire facts before the Arbitral Tribunal and before this Court and if the Contractor was also involved in the said records not being placed before the Court. Specific responsibility be assigned by naming the officers. The outcome of the enquiry and the recommendations of the CVC be placed before this Court within three months for further directions in the matter - the Court is convinced that the original record makes it clear that the condition of 24% interest in the event that monthly payment was not made, was clearly withdrawn. On behalf of the Contractor, it has been submitted that any reasonable rate of interest be awarded to the Contractor. However, in order to ensure that such conduct is not encouraged and to ensure the integrity of the adjudication process, it is directed that no interest shall be payable to the Contractor in the facts and circumstances of the present case. The Corporation is directed to pay a sum of Rs. 62,44,150/- without any interest. If the said payment is made within 8 weeks, no further payment would be liable to be made. If the payment is not made, simple interest @ 9% p.a. would be liable to be paid on the awarded amount from expiry of 8 weeks till the date of payment. Application disposed off.

Summary

Issues Involved:

1. Modification of Order dated 12.12.2018.
2. Withdrawal of Condition by Contractor.
3. Fraud and Misleading the Court.
4. Interest Awarded.
5. Enquiry and Accountability of Corporation Officials.

Summary:

1. Modification of Order dated 12.12.2018:
The present OMP was disposed of on 12th December 2018, but the Petitioner, through the Standing Counsel for the North Delhi Municipal Corporation, filed an application u/s 151 CPC seeking recall and modification. The case arose from a construction contract for the Corporation's zonal building in Narela, with disputes over various claims including escalation under Clause 10CC, reimbursement, short payment, interest, and costs.

2. Withdrawal of Condition by Contractor:
The Contractor had initially imposed a condition in the tender for monthly payments with 24% interest on delays. However, the Corporation discovered that the Contractor had withdrawn this condition through a letter, negotiation letter, and office note, which were not presented during arbitration or court proceedings. The Contractor admitted his signatures on the negotiation letter but denied the withdrawal note, which the Court found unconvincing.

3. Fraud and Misleading the Court:
The Court concluded that both the Contractor and Corporation failed to present crucial documents, misleading the Ld. Arbitrator and the Court. The Contractor's omission of the withdrawal of the condition constituted suppression of facts, amounting to fraud. The Court cited Supreme Court judgments in A.V. Papayya Sastry & Ors. v. Government of A.P. & Ors. and Dr. Manmohan Singh Dhaliwal v. Gurbax Singh, affirming the inherent power of the Court to recall judgments obtained by fraud.

4. Interest Awarded:
Initially, the Arbitrator awarded 18% interest, which was later modified to 12% by the Court. However, upon discovering the withdrawal of the condition, the Court directed that no interest shall be payable to the Contractor. The awarded amount of Rs. 62,48,150/- for escalation charges was to be paid within eight weeks without interest. If delayed, simple interest @ 9% p.a. would apply.

5. Enquiry and Accountability of Corporation Officials:
The Court ordered an enquiry by the Central Vigilance Commission (CVC) into the conduct of Corporation officials and the Contractor's involvement in suppressing relevant documents. The CVC was to submit a report within three months, assigning specific responsibility to the errant officers. The Court emphasized the need for a proper policy on data management and accountability within the Corporation.

Conclusion:
The Court modified its previous judgment, setting aside the interest and costs awarded, and directed the Corporation to pay the awarded amount within eight weeks. The matter was referred to the CVC for an enquiry into the conduct of the officials involved.