M/S Graphisads Private Limited v. South Delhi Municial Corporation

RAJIV SHAKDHER, J.: (ORAL)

¶1This appeal is directed against the judgment of the learned Single Judge dated 01.06.2018.

¶2Notice in this appeal was issued by a coordinate Bench of this Court on 13.08.2019, while delay in filing the appeal was condoned by the very same Bench on 06.11.2019.

¶3Although opportunity was given to file a reply to the appeal, no reply has been filed on behalf of the respondent/South Delhi Municipal Corporation ("SDMC").

¶4However, what is not in dispute, is that the appellant/Company was blacklisted on 12.06.2015.

¶5Mr Sanjay Poddar, learned senior counsel, who appears on behalf of

the respondent/SDMC, fairly concedes, that the blacklisting order does not have an end date.

¶6According to us, this is contrary to the decision rendered by the Supreme Court in Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Ltd. and Ors., (2014) 14 SCC 731.

¶7That being said, both Mr Poddar as well as Mr Nitin Mittal, who appears on behalf of the appellant/Company submit, that they are willing to move forward, and have the issue concerning outstanding dues payable by the appellant/Company resolved.

7.1 This position has been taken by the counsel for the parties, as, even if, we were to set aside the blacklisting order, on the ground that it does not have an end date, we would have to remand the matter to the respondent/SDMC for a de novo exercise.

7.2 This, according to both Mr Poddar and Mr Mittal, will keep the dispute alive.

¶8Therefore, it is in this light, that the respondent/SDMC has made the following offer, with regard to the dues payable by the appellant/Company concerning two contracts which are in issue i.e., Parking Media Contract and Street Furniture Cluster No.2 Contract.

8.1 According to the respondent/SDMC, the amounts due vis-à-vis the Parking Media Contract are as mentioned in the following table:

Table-A:

PARKING MEDIA M/s Graphisads (P) Limited DUES ABSTRACT UP TO AUGUST 2022

Period of Contract

S . N o . Name Site of Locations Principal Interest (for the period upto the period of contract

(A) Interest (for the period upto August 2022) to be referred to Arbitration

(B) Advt. Tax. From To Total Remarks 1 2 Unipole at Tilak Nagar 16,34,716 4,42,450 31,84,517 2,460

07.12.2009

06.12.2014 48,21,693 10% Increase from start of 4th Year & 5th Year 2 2 Signage at Janak Parlour to Raja Garden 18,15,194 5,72,542 37,84,168 1,980

15.05.2009

14.05.2014 56,01,342 10% Increase each year 3 10 Signage at Tilak Nagar Mkt. 4,08,977 1,53,335 9,17,034 2,460

07.12.2009

31.03.2014 (Site Cancelled) 13,28,471 10% Increase each year 4 14 Flag Signage at Tilak Nagar -63,000 - - - - - -63,000 Not Installed w.e.f. Date of allotment 5 4 Signage at Basankt Lok, Complex (Priya) and 2 Signage are Removed 10,15,779 2,34,680 20,11,242 2,460

15.05.2009

14.05.2014 30,29,481 10% Increase each year 6 2 Unipole at Vasant Lok Complex, Vasant Vihar 65,13,639 17,10,385 1,29,22,869 1,968

07.12.2009

18.11.2014 (Site Cancelled) 1,94,38,476 10% Increase from start of 4th Year & 5th Year 7 20 Flag Signage at Basant Lok -7,65,515 16,421 16,421 1,968

26.05.2010

18.11.2014 (Site Cancelled) -7,47,126 10% Increase each year

Total Amount 1,05,59,79 31,29,813 2,28,36,251 13,296

3,34,09,337

Principal Upto Contract 1,05,59,790 Interest upto Contract Period 2,28,36,251 Advertisement Tax 13,296

Total Upto Contract 3,34,09,337

Payment on Account vide G8 No.71081 dated

13.06.2018 50,00,000 Payment on Account vide G8 No.59483 dated

25.10.2021 1,41,130

Total Payment made after contract period 51,41,130

Dues against the firm upto August 2022

S. No. Dues Details Upto June 2022 Due Paid on Account Paid Balance MLF/Principal 1,05,59,790 50,00,000 1,41,130 54,18,660 Interest (A+B) 2,59,66,064 - - 2,59,66,064 Advt. Tax 13,296 - - 13,296

Total 3,65,39,150 50,00,000 1,41,130 3,13,98,020

¶9Likewise, as per the respondent/SDMC, insofar as Street Furniture Cluster No.2 Contract is concerned, the amounts payable by the appellant/Company are mentioned in the following table:

Table-B:

Street Furniture Cluster No.2, IGI Stadium & Jawaharlal Nehru Sports Complex, & Cluster No.3 R.K. Khanna Tennis Complex DUES ABSTRACT UPTO AUGUST 2022 (10,83,450/-) S. N o. Name Site of Locatio ns Contract Period Princip al at the time of Comple Interest (for the period upto the period Surcharge 5% as per terms & conditions Advt. Tax Princi pal as on date Interest for the period beyond the completion Surcharge for the period beyond the Total

tion of Contrac t of contract) upto the period of Contract of Contract to be refered to Arbitrator completion of Contract to be referred to Arbitrator Cluster No.2, IGI Stadiu m & Jawaha rlal Nehru Sports Comple x & Cluster No.3 R.K. Khanna Tennis Comple x

15.10.2010 to

28.08.2017 (contract terminated by the Department on

16.06.2017) 56,81,4 28,19,500 44,88,461 35,640 38,16 ,987 27,00,07 46,80,656 1,85,41 ,315

Total Amoun t

28,19,500 44,88,461 35,64 38,16 ,987 27,00,071 46,80,656 1,85,41 ,315

Principal as on 28.08.2017 i.e., Up to Contract Period 56,81,437 Interest as on 28.08.2017 i.e., Up to Contract 28,19,500 Surcharge @ 5% per annum as on 28.08.2017 i.e., Up to Contract Period 44,88,461 Advertisement Tax 35,640

Total 1,30,25,038

Payment paid vide G8 No. & dated

25.09.2017 10,83,450 Payment paid vide G8 No.59484 dated

25.10.2021 7,81,000

TOTAL DUES AGAINST THE FIRM Principal 38,16,987 Interest as on 28.08.2017 i.e., Up to Contract Period 28,19,500 Surcharge @ 5% per annum as on

28.08.2017 i.e., Up to Contract Period 44,88,461 Interest after 28.08.2017 27,00,071 Surcharge @ 5% per annum after

28.08.2017 46,80,656 Advt. Tax 35,640 Total 1,85,41,315

¶10It would be evident, that insofar as the details given in Table-A above are concerned, the respondent/SDMC has sought not only the payment of the principal amount, but also amounts towards interest and advertisement tax.

¶11Mr Mittal, on instructions of Mr Mukesh Gupta, Director of the appellant/Company, says that the appellant/Company would pay the principal amount, which is pegged at Rs. 54,18,660/-, as also the advertisement tax, which is crystallized as Rs. 13,296/-.

11.1 Insofar as interest is concerned, Mr Mittal, once again on instructions, says that the appellant/Company is willing to pay interest at the rate of 8% (simple), instead of 24%, as calculated by the respondent/SDMC.

¶12We are of the view, that given the fact that the dispute has remained unresolved for quite some time, and the appellant/Company has been impacted, as contended by them, on account of COVID-19, it seems both fair and just, that interest is charged at a reasonable rate, having regard to the fact that interest rates on deposits have fallen considerably.

12.1 Furthermore, as things stand today, interest rates on loans extended by banks are not as high as 24%, as claimed by the respondent/SDMC qua the appellant.

¶13Accordingly, interest will be calculated at the rate of 8% per annum (simple).

¶14As indicated above, the principal amount and the advertisement tax will be paid, as calculated by the respondent/SDMC, as shown in Table-A above.

¶15As far as the other contract is concerned, it has four components, which are, broadly, indicated in the Table-B above.

15.1 The principal amount claimed by the respondent/SDMC is Rs. 38,16,987/-. Likewise, advertisement tax amounting to Rs. 35,640/- is also claimed by the respondent/SDMC.

15.2 Besides this, the respondent/SDMC has also claimed monies towards surcharge and interest.

¶16Insofar as interest is concerned, for the very same reason as indicated hereinabove with regard to the Parking Media Contract, we are of the view that interest at the rate of 8% per annum (simple) should strike an equitable

balance, with regard to the rights of both parties.

16.1 Therefore, the respondent/SDMC will calculate interest at the rate of 8% per annum (simple).

¶17We may also note, that in this case as well, Mr Mittal, on instructions, has indicated to us, that the principal amount and advertisement tax, as shown in Table-B will be paid, along with interest, at the rate of 8% per annum (simple).

¶18Insofar as payment of surcharge is concerned, it is the submission of Mr Mittal, that it has attributes of penalty.

18.1 Mr Poddar says, that the respondent/SDMC will revisit this issue.

¶19Mr Poddar also submits, that if it is found that the surcharge has attributes of penalty, the same will be waived.

19.1 The statement made by Mr Poddar is taken on record.

¶20In case the respondent/SDMC were to conclude, that the surcharge has not been demanded on account of non-payment of dues, and therefore is payable by the appellant/Company, parties agree, that they will take recourse to the arbitration mechanism set forth in the contract, for the purpose of surcharge.

¶21Mr Mittal says, that the agreed amounts, as indicated hereinabove, both for the Parking Media Contract, as well as the Street Furniture Cluster No.2 Contract will be paid within the next six weeks.

21.1 The statement made by Mr Mittal is taken on record.

¶22Immediately upon payment of the agreed amount, the respondent/SDMC will recall the blacklisting order.

¶23Accordingly, the impugned order is set aside, given the agreement arrived at between the parties.

¶24The appeal is disposed of in the aforesaid terms.

¶25Needless to add, once the agreed amounts are paid, the blacklisting order dated 12.06.2015 will not come in the way of the appellant/Company being considered for award of contracts in future.

¶26Pending applications shall stand closed.

(RAJIV SHAKDHER) JUDGE

(TARA VITASTA GANJU) JUDGE OCTOBER 11, 2022 / tr

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 11.10.2022 + LPA 99/2019, CM APPLs.2282/2022 and 2861/2022 M/S GRAPHISADS PRIVATE LIMITED ......Appellant Through: Mr Nitin Mittal, Advocate. versus SOUTH DELHI MUNICIAL CORPORATION ......Respondent Through: Mr Sanjay Poddar, Sr. Advocate with Ms Sakshi Popli, Standing Counsel with Mr Pratish Goel, Mr Sachin Bhatt and Mr Kalyan Babu Singh, Advocates. CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)]