Delhi District Court
Yogesh Aggarwal vs Municipal Corporation Of Delhi on 11 July, 2026
CNR No. DLCT010100472025
IN THE COURT OF SHRI DEVENDRA KUMAR SHARMA:
DISTRICT JUDGE (COMMERCIAL COURT)- 03: CENTRAL
TIS HAZARI COURT (EXTENSION BLOCK) : DELHI.
CS (COMM) No. 785/2025
In the matter of :-
Yogesh Aggarwal
Sole Proprietor
M/s Yogesh Enterprises
RZ-696, Gali No.4, Main Sagarpur,
Delhi-110046.
.....Plaintiff
Versus
1. Municipal Corporation of Delhi
Through its Commissioner,
9th Floor, Civic Centre, Minto Road,
New Delhi-110002.
2. The Executive Engineer (M-I) Central Zone
Municipal Corporation of Delhi,
Arjun Nagar, Defence Colony,
Delhi-110024. [Summons not issued vide order dated
10.07.2025]
.....Defendants
Date of Institution : 09.07.2025
Date on which Judgment reserved : 07.07.2026
Date on which Judgment pronounced : 11.07.2026
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 1/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:31:53
+0530
SUIT FOR RECOVERY
JUDGMENT
1. Before this Court set to adjudicate on myriad issues
flagged on behalf of both the parties, let the Court to spell out
laconically the landscape of the pleadings.
(A) Pleadings of the Parties :-
2. This is a suit for recovery of Rs.34,85,724/- filed by
plaintiff against the defendant.
3. Succinctly stated facts of the case as set out in
the plaint are that the plaintiff is the sole proprietor of
M/s Yogesh Enterprises, a firm enrolled as Municipal Contractor
with the Defendant No.1 and is engaged in carrying out
development work for the Defendant Corporation and is also
registered under the Delhi GST Act, 2017.
4. It has been further averred in the plaint that during
the course of business, the plaintiff made a bid for tender invited
by the defendant no.2. Upon completion of required conditions at
the stage of pre-work order, the plaintiff was awarded work
orders bearing no.68, 69 and 70, all dated 18.09.2021, 84 dated
08.12.2020, 100 dated 12.11.2021, 103 and 105, both dated
15.01.2021, 132 and 133 both dated 02.11.2021, 137 dated
10.02.2021, 177 dated 27.03.2021, 186 dated 08.02.2022, 233,
240 and 243, all dated 08.03.2022 and 260 dated 16.03.2022.
The details as to when the work was to be started and completed
as per agreement and when the work was actually started and
completed by the plaintiff with respect to the work orders is
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 2/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:00
+0530
given in para 5 of the plaint.
5. It has been further averred that the final
measurement of the work done by plaintiff was completed and
recorded in the measurement books by the Defendant No.2 and
the same was accepted by the plaintiff. It has been further averred
that on the basis of measurement book, the defendant No.2 had
prepared and passed the 1st and final bill and 1st running bills in
all the work orders which were duly accepted by the plaintiff. It
has been further averred that as precondition of the award of
work orders, the plaintiff had also deposited the earnest money
and the defendant No.2 had deducted the security amount in the
passed bills of the work orders. The details of bills i.e. date of
passing, amount of passed bill, security/earnest money and
withheld amount are tabulated below:-
Sl. Work Order Date of Amount of Amount of Withheld
No. No. passing of passed (first security amount
bill and final) bill deposit in Rs.
in Rs. in Rs.
1. 68 1st 29.03.2022 4,30,510/- 66,384/- 1,000/-
running bill
2. 69 1st 29.03.2022 5,49,925/- 85,441/- 1,000/-
running bill
3. 70 1st and 27.04.2023 7,14,789/- 45,451/- -
Final bill
4. 84 1st 31.03.2021 7,01,430/- 44,751/- 1,000/-
running bill
5. 100 1st and 29.03.2022 73,034/- 9,319/- -
Final bill
6. 103 1st 15.11.2021 8,95,760/- 1,01,719/- 2,000/-
running bill
7. 105 1st 31.03.2021 4,41,526/- 85,086/- 1,000/-
running bill
8. 132 1st and 27.05.2022 2,85,280/- 33,562/- -
Final bill
9. 133 1st and 27.05.2022 3,78,913/- 44,579/- -
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 3/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:07
+0530
Final bill
10. 137 1st 31.03.2021 5,54,839/- 93,705/- 1,000/-
Running bill
11. 177 1st and 16.11.2021 96,000/- - -
Final bill
12. 186 1st 25.07.2022 6,01,528/- 71,022/- 1,000/-
Running bill
13. 233 1st and 21.10.2022 1,17,992/- 16,343/- -
Final bill
14. 240 1st and 31.07.2023 2,81,715/- - -
Final bill
15. 243 1st and 25.07.2022 2,05,990/- 23,569/- -
Final bill
16. 260 1st 14.11.2022 23,49,492/- 2,71,413/- -
Running bill
260 2nd & 21.12.2022 10,000/- - -
Final bill
6. It has been further averred that the plaintiff had
received the information regarding the work orders, running bills
and final bills by way of RTI application dated 30.10.2024. It
has been further averred that as per Clause 9 of General Terms
and Conditions of the defendants, the defendants were liable to
release payment of passed bills within a period of 6/9 months.
7. It has been further averred that plaintiff had received
various payments on various dates and the details of the same are
given in para 8 of the plaint. However, despite passing of
aforesaid bills, the defendants have failed to release the balance
payment of Rs.21,86,867/-. Thus aggrieved by the acts of
defendants, plaintiff got issued a legal notice dated 26.09.2024,
U/s 477/478 of DMC Act, through his counsel, calling upon
defendants to release payment of passed bills alongwith interest
@ 12% per annum within 60 days of the receipt of the notice. ItCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 4/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:14
+0530
has been further averred that the legal notice was duly served
upon defendants but was neither replied to nor acted upon by
defendants.
8. It is further averred that due to non-payment of the
dues by the defendants, plaintiff has been put to loss of
investment and interest. Hence, defendants are liable to pay
interest @ 12% p.a. on the entire outstanding amount of
Rs.30,37,916/- which comes to Rs.12,98,857/-. The Plaintiff had
also exhausted the remedy of Pre-Institution Mediation
proceedings as per Section 12A of the Commercial Courts Act
vide application dated 30.11.2024 which resulted in issuance of
Non-Starter Report dated 28.05.2025. Thus, aggrieved by the act
of defendants, plaintiff has filed the present suit and prayed for a
decree in sum of Rs.34,85,724/- alongwith pendente lite and
future interest @ 12% p.a. on the principal amount of
Rs.21,86,867/- from the date of filing of the suit till its
realization.
9. The plaintiff had impleaded the Executive Engineer
(M-I), Central Zone, MCD as defendant No.2 in the suit.
However, since Executive Engineer does not have any personal
liability in respect of contract executed between the plaintiff and
defendant Corporation, summons were not issued to him and
were issued to Defendant No.1/Corporation only.
10. The defendant No.1 has contested the suit by filing a
detailed written statement. By way of preliminary objections, the
maintainability of the suit has been challenged on the ground that
the suit is barred by limitation. It has been further alleged that the
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 5/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:20
+0530
work orders were awarded and completed between 2020 to 2022,
the final bills were passed on or before 2023 and the present suit
has been filed in the year 2025 i.e. after the expiry of three years
from the date when the alleged right to payment accrued. It has
been further alleged that Clause 9 of GCC 2024 expressly bars
payment of interest for any delayed payment on account of non-
availability of funds in the concerned head of account and
therefore, the plaintiff’s claim for interest @ 12% per annum is
contrary to the contractual terms and is liable to be rejected.
Another objection has been taken that the suit of plaintiff is
premature, without any cause of action, since plaintiff has failed
to comply with the conditions precedent for final payment as
stipulated under Clause 9 of GCC 2024.
11. On merits, award of work orders to the plaintiff is
admitted, however, rest of the averments have been denied in toto
as being incorrect, misleading and contrary to the record. It is
stated that actual date of completion of the work is different from
what is given by the plaintiff in the plaint and the work was
delayed. It is denied that the details of the bills and the remaining
(withheld) amount has been correctly tabulated by the plaintiff
and it is averred that the true and correct payment details, duly
communicated to the plaintiff, have been annexed with the
written statement. It has been further averred that the reliance
placed by the plaintiff on a purported, forged or incomplete
version of Clause 9 of GCC 2024 is misconceived and the clause
relied upon by the plaintiff is materially differs from the
authentic and operative Clause 9 of GCC 2024 forming part of
the executed agreement which specifically provides that in the
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 6/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:26
+0530
event of failure of the contractor to submit the final bill within
the prescribed time, the Engineer-in-Charge is empowered to
certify the amount admissible and make payment accordingly. It
has been further averred that Clause 9 further stipulates that the
final bill shall be submitted within three months of the physical
completion of work or within one month from the date of the
final certificate of completion, whichever is earlier. It has been
further averred that the Clause also provides that no further
claims shall be entertained after submission of the final bill and
that payment shall be made strictly on a queue basis, subject to
the availability of funds under the relevant head of account. It has
been further averred that the plaintiff, having failed to comply
with the mandatory condition of Clause 9, is barred from raising
any further claim, and the alleged entitlement asserted is not
maintainable either in law or on facts. It is specifically denied
that the balance amount of Rs.21,86,867/- is an admitted amount
and the defendants were under any obligation to release the same
within six or nine months as alleged. It has been further averred
that all payments due to the plaintiff, as per the verified data and
records maintained by the Defendant Corporation, have already
been released in accordance with the terms of the contract and
applicable financial rules and the allegations of non-payment and
non-compliance are baseless and misleading. It has been further
alleged that the pre-institution mediation proceedings were
initiated by the plaintiff only after the expiry of the statutory
period of three months from the date of filing of application and
with delay of nearly five months and hence the mediation
proceedings are incomplete, invalid in the eyes of law. It has
been further submitted that as per the actual payment details ofCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 7/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:33
+0530
the plaintiff, the only amount which is due on behalf of the
defendant is Rs.2,85,280/- and the same is not maintainable as
limitation for filing the claim has been exhausted. It is reiterated
that as per Clause 9 of GCC 2024, no interest shall be payable to
the contractor. Rest of the averments have been controverted on
merit and it is prayed that suit of the plaintiff be dismissed.
12. No replication has been filed on behalf of plaintiff
despite opportunity.
(B) Issues :-
13. From the pleadings of parties, following issues were
framed vide order dated 10.03.2026:-
1) Whether plaintiff is entitled to a decree for recovery
of Rs.21,86,867/- against the defendant, as prayed
for? (OPP)
2) Whether plaintiff is entitled to any interest, if so, at
what rate and for which period? (OPP)
3) Whether the suit is barred by limitation, as claimed?
(OPD)
4) Whether the suit is pre-mature for want of
submitting bills for payment by the plaintiff, as
claimed? (OPD)
5) Whether the plaintiff is not entitled to refund of
security deposit for want of compliance with Clause
17 and 45 of GCC? (OPD)
6) Relief.
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 8/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
2026.07.11
Sharma 16:32:39
+0530
(C) Evidence:- (a) of Plaintiff
14. In order to prove his case, plaintiff has examined
himself as PW1. He has reiterated the facts averred in the plaint
in his affidavit Ex.PW-1/A and relied upon following
documents:-
S.No. Details of documents Exhibit 1. Copy of Registration Certificate Ex.PW1/1 2. Copy of GST Registration Certificate Ex.PW1/2
3. Copy of work orders no.68, 69 & 70 all dated Ex.PW1/3 (Colly)
14.09.2021, no.84 dated 08.12.2020, no.100
dated 12.01.2021, no.103 and 105 both dated
15.01.2021, no.132 and 133, both dated
02.11.2021, no.137 dated 10.02.2021, no.177
dated 27.03.2021, no.186 dated 08.02.2022,
no.233, 240 and 243 all dated 08.03.2022 and
no.260 dated 16.03.2022
4. Copy of first running bill passed on Ex.PW1/4
29.03.2022 by the defendant for Work Order
No.68
5. Copy of first running bill passed on Ex.PW1/5
29.03.2022 by the defendant for Work Order
No.69
6. Copy of first & final bill passed on Ex.PW1/6
27.04.2023 by the defendant for Work Order
No.70
7. Copy of first running bill passed on Ex.PW1/7
31.03.2021 by the defendant for Work Order
No.88
8. Copy of first & final bill passed on Ex.PW1/8
29.03.2022 by the defendant for Work Order
No.100
9. Copy of first running bill passed on Ex.PW1/9
15.11.2021 by the defendant for Work Order
No.103
10. Copy of first running bill passed on Ex.PW1/10
31.03.2021 by the defendant for Work Order
No.105
11. Copy of first & final bill passed on Ex.PW1/11
27.05.2022 by the defendant for Work Order
No.132
12. Copy of first & final bill passed on Ex.PW1/12
27.05.2022 by the defendant for Work Order
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 9/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:45
+0530
No.133
13. Copy of first running bill passed on Ex.PW1/13
31.03.2021 by the defendant for Work Order
No.137
14. Copy of first & final bill passed on 16.11.2021 Ex.PW1/14
by the defendant for Work Order No.177
15. Copy of first running bill passed on Ex.PW1/15
27.05.2022 by the defendant for Work Order
No.186
16. Copy of first & final bill passed on Ex.PW1/16
21.10.2022 by the defendant for Work Order
No.233
17. Copy of first & final bill passed on Ex.PW1/17
31.07.2023 by the defendant for Work Order
No.240
18. Copy of first & final bill passed on Ex.PW1/18
25.07.2022 by the defendant for Work Order
No.243
19. Copy of first running bill passed on Ex.PW1/19
14.11.2022 by the defendant for Work Order
No.260
20. Copy of second & final bill passed on Ex.PW1/20
21.12.2022 by the defendant for Work Order
No.260
21. Copy of relevant pages of general terms and Ex.PW1/21
conditions of MCD
22. Copy of legal notice dated 26.09.2024 Ex.PW1/22 (colly)
alongwith the postal receipt
23. Non-Starter Report dated 28.05.2025 Ex.PW1/23
15. During his cross-examination, the PW1 has testified
that he had around 15 years experience in MCD and he had taken
more than 300 project from MCD. He has further testified that
there is no such payment plans in MCD. A question was put to
witness as to what is non-plan and plan-head of MCD to which
he replied that non-plan means when the work is done by the
fund of MCD and the Counsellor and Plan-head means when the
work is done from the funds of MLA and MP. He has further
testified that he had read the plaint and documents submitted inCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 10/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:32:51
+0530
the Court before signing the same and he was aware about the
agreement for the contracts awarded to him. A question was put
to him as to what is first bill and final bill as per MCD to which
he replied that after the execution of work at site by the
contractor, the concerned official of MCD prepares the bill and
the same got passed by their Higher Authorities. He has further
testified that there is running bill also in MCD and after the
execution of work at site by the contractor, the concerned official
of MCD prepares the bill but due to some formalities pending on
behalf of MCD, the first and running bill got passed by the
Higher Authorities.
16. A question was put to PW1 as to whether the bill is
prepared by the MCD or by the contractor to which he replied
that the bill is prepared by the MCD with the joint measurement
of the work. He has denied that there are any codes at the time of
assigning of the contracts and further testified that there are no
codes but there are head of accounts and again said there are
multiple head of accounts. The document Ex.PW1/4 was put to
the witness and after seeing the same, he has confirmed that the
codes are called as head of accounts.
17. The PW1 was asked as to what is withheld amount
and security amount to which he replied that due to some
formalities pending on behalf of MCD, the first and running bill
got passed by the Higher Authorities after holding specific
amount called as withheld amount and the security is the amount
of the contractor hold at the time of passing of the bill and the
same got released after 6-9 months of the completion of the workCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 11/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:01
+0530
depending upon the nature of work. When asked as to whether
he had filed any bill to the department to release the withheld
amount and security amount, the PW1 replied in negative stating
that it is the duty of the department to get it released. He had
further testified that he had not submitted any bill to the
department which is running bill or final bill.
18. The PW1 was further asked as to whether the MCD
prepares only one bill or numerous bills on contracts to which he
replied in affirmative by stating that one is running bill and
second one is final bill. He has further testified that if any
withheld amount is left, then the MCD passes the running bill
and if there is no withheld amount, then the department passes
final bill. He has further testified that if MCD withheld some
amount in the running bill, then it is due to some pending
formalities which is to be complied by the MCD. He has further
testified that no formalities got left on the part of the plaintiff to
pass the final bill after getting the running bill passed by the
department. After going through the document Ex.PW1/4, the
PW1 testified that where it is written as first and final bill but
with the pen, it got corrected in the document as first and running
bill and the said fact is in his knowledge.
19. No other witness was examined on behalf of
plaintiff and therefore, PE was closed.
(b) of Defendant:-
20. Though affidavit of examination-in-chief of
Sh.Daya Shankar, AE, MCD had been filed on behalf of theCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 12/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:08
+0530
defendant, however, defendant had failed to examine its witness
or to lead any defense evidence despite grant of opportunities.
Accordingly, vide order dated 21.04.2026, DE was closed and
matter was fixed for final arguments.
(D) Final Arguments :-
21. Arguments were addressed by Sh.Sahil Goel,
Counsel for the plaintiff and Sh. Yash Agarwal, Counsel for the
Defendant No.1. During the course of arguments, counsels for
plaintiff and defendant no.1 reiterated respective averments made
in the plaint and written statement and also referred to documents
filed on behalf of respective parties as well as evidence adduced
on record by plaintiff. Written submissions have also been filed
on behalf of the parties.
22. Counsel of plaintiff has submitted that the present
suit has been filed on the basis of number of bills which were
prepared and passed by the defendant in respect of 16 work
orders awarded by the defendant. It has been further submitted
that work in respect of all the 16 work orders was completed by
the plaintiff to the satisfaction of the concerned Engineer-in-
Charge and the plaintiff had already complied with all the terms
and conditions of work order and General Conditions of Contract
(GCC) of MCD and thereafter, the defendant prepared and
passed the bills and same were accepted by the plaintiff which
bears plaintiff signatures. It has been further submitted that from
the testimony led by plaintiff and documents relied upon by
plaintiff and proved on record by PW1, the plaintiff has proved
his case whereas the defendant has not led any defence evidence.
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 13/34 Digitally signed Devendra by Devendra Kumar Sharma Kumar Date: Sharma 2026.07.11 16:33:17 +0530
It has been further submitted that defendant has released some
payments before and after filing of the present suit, however, a
sum of Rs.6,97,881/- remained outstanding which the defendant
failed to release despite lapse of 6/9 months and the plaintiff has
been put to loss of investment and interest. It has been further
submitted that the defendant withheld the payment of the passed
bills of the plaintiff beyond reasonable time on the basis of false
pretext, therefore, the defendant are liable to pay interest @ 12%
per annum to the plaintiff on the net amount of the passed bill till
realization. It is accordingly prayed that the suit of plaintiff be
decreed on basis of admissions made by defendant.
Reliance has been placed on behalf of the plaintiff
on judgment dated 22.03.2018 passed in various RFA by Hon’ble
Ms. Justice Pratibha M. Singh of the Hon’ble High Court of
Delhi.
23. Per contra, Counsel for defendant has submitted that
the defendant has been following CPWD standards,
specifications, manuals and contractual procedures for execution
of works and settlement of bills as per notification
no.ENC/B-3/91 dated 13.08.1991 and the MCD Notice Inviting
Tender (NIT) specifically provides that the “CPWD Works
Manual/SOP” available at the time of calling of tenders will be
applicable. It has been further submitted that on 01.10.1991
department orders provide new tenders for works will be
prepared in accordance with the approved CPWD practice. It has
been further submitted that the classification of Plan and Non-
Plan expenditure stood abolished by the Government of India
w.e.f. Financial Year 2017-18 and the Union Budget 2016-17
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 14/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:25
+0530
replaced the said classification with ‘Revenue’ and ‘Capital’
expenditure and therefore, any reliance upon the erstwhile
classification of Plan and Non-Plan expenditure is misconceived
and legally unsustainable. It has been further submitted that the
as per the change in the head of the expenditure by the
Government of India, the work which is tendered by the
defendant to the plaintiff falls within the definition of Revenue
Expenditure. It has been further submitted that it is an admitted
position in the plaint that both the parties are governed by and
follow the General Conditions of Contract (GCC) and the
contractual procedure adopted by the Defendant Corporation. It
has been further submitted that the payments of bills pertaining
to work orders in question is governed by Clause 9 of the GCC,
under which the payments are released strictly on queue basis
subject to availability of funds under the concerned head of
account and clearance of previous liabilities. It has been further
submitted that Clause 17 of the GCC independently governs the
defect liability/maintainable obligations of the contractor after
completion of the work. It has been further submitted that the
plaintiff/contractor was fully aware of the payment procedure and
contractual formalities applicable to the works executed under
the CPWD/GCC procedure adopted by the Defendant
Corporation. It has been further submitted that the bills in
respect of those work orders for which the plaintiff duly
complied with the prescribed procedure, submitted complete
documents and fulfilled the required formalities were processed,
cleared and payments thereof were duly released to him.
However, the bills pertaining to works for which the plaintiff
failed to follow the prescribed procedure and did not furnish the
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 15/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:34
+0530
complete requisite documents and formalities could not be
processed or cleared by the department. Thus, any delay or non-
release of payment has occured solely on account of non-
compliance of the prescribed contractual and department
procedure by the contractor himself.
24. It has been further submitted that mere passing of a
running bill or final bill does not create an automatic enforceable
liability unless all contractual obligations are fulfilled and the
contractor proves compliance with the GCC conditions. It has
been further submitted that the plaintiff has failed to produce the
completion certificate, no dues certificate, clearance under
Clause 17 and 45 of GCC, any acknowledgment admitting final
liability by MCD. It has been further submitted that the
defendants have already released substantial payments from time
to time against various work orders and the plaintiff has failed to
reconcile the alleged outstanding amount with the official
departmental calculations. It has been further submitted that as
per the defendant only the payment of Rs.2,85,280/-, related to
the bill no.132 dated 02.11.2021 which falls under non-plan
works, is pending which is also sent to the department for the
payment. Hence, the claim is speculative, inflated and
unsupported by duly proved accounts. It has been further
submitted that as per Clause 9 of the GCC, plaintiff is not entitled
any interest whatsoever. It has been further submitted that even
after the filing of the instant suit, the bill got cleared as per the
queue basis and as per availability of the funds in the department
and the last payment was cleared by the defendant on
31.03.2026. It has been further submitted that the suit is barred
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 16/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:41
+0530
by limitation as the same has been filed in the year 2025 whereas
several work orders, bills and alleged dues pertain to the years
2020, 2021 and 22. It has been further submitted that the cause of
action, if any, accures on the date of passing of bills and expiry of
the stipulated payment period under Clause 9 of GCC and the
plaintiff cannot extend limitation merely by sending legal
notices, filing RTI applications and appropriate pre-institution
mediation. It has been further submitted that there is no
acknowledgment of liability under Section 18 of the Limitation
Act signed by the defendants within the limitation period. Hence,
claims arising out of the earlier work orders are hopelessly time
barred. It has been further submitted that the pre-institution
mediation proceedings were initiated by plaintiff on 30.11.2024
and the Non-Starter report was issued on 21.02.2025. However,
the plaintiff admittedly collected the Non-starter Report only on
28.05.2025 i.e. much beyond the prescribed period of three
months and the said conduct is contrary to the mandate and
scheme of Section 12A of the Commercial Courts Act. It has
been further submitted that unless the complete process
contemplated under GCC is exhausted, the suit cannot be
maintained and the cause of action was therefore incomplete and
premature. It has been further submitted that plaintiff has failed
to produce any documentary proof establishing compliance of
clauses 17 and 45 of GCC and therefore, he is not entitled to
refund of security deposit. It is therefore prayed that the suit of
the plaintiff may kindly be dismissed. In arguments dated
06.06.2026, it is submitted on behalf of the defendant that the
amount shown in the calculation sheet attached with the written
submissions filed on behalf of the plaintiff is the due amount asCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 17/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:50
+0530
per instructions from the defendant.
Reliance has also been placed upon judgment in
case titled as North Delhi Municipal Corporation and Ors. vs.
Shish Pal, MANU/DE/1200/2018.
25. In rebuttal, counsel for the plaintiff has submitted
that the plaintiff had already completed work pertaining to the
work orders in question long time back. The bills for payment
prepared and passed by the officials of defendant No.1 have been
accepted by the plaintiff which bears plaintiff signatures and
hence, defendant is not entitled to deprive plaintiff of his legal
dues. It is further stated that as per Clause 9 of general rules and
directions given by Hon’ble High Court in various judgments also
defendant was to make payment of the final bills within 6/9
months depending upon the quantum of the bill. It is accordingly
prayed that the suit of plaintiff be decreed.
(E) Analysis of Evidence and Findings:-
26. I have heard the learned Counsels for the parties and
have also perused the record and my issue-wise findings are as
under:-
ISSUE NO.3 :-
Whether the suit is barred by limitation, as claimed? (OPD)
27. Onus of proving this issue was on defendant. The
counsel for defendant argued that the present suit has been filed
in the year 2025 whereas several work orders, bills and alleged
dues pertain to the years 2020, 2021 and 2022.
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 18/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:33:57
+0530
28. As per clause 9 of GCC plaintiff was required to
wait for 6/9 months after passing of bill and then only cause of
action would have accrued. The bills in respect of work orders
no.84, 103, 105, 137 and 177 were passed on 30.03.2021,
15.11.2021, 31.03.2021, 31.03.2021 and 16.11.2021 respectively.
Hence, the amount due thereunder would have become payable
after 6/9 months of passing of the said bills i.e. by 01.01.2022,
16.08.2022, 01.10.2022, 01.01.2022, 17.05.2022. The limitation
of three years for filing of the suit for recovery in respect of the
bills would thus have expired on 01.01.2025, 16.08.2025,
01.10.2025, 01.01.2025, 17.05.2025. Further, The plaintiff is also
entitled to exclusion of period spent by him in pre-institution
mediation proceedings. As per Non-starter report, Ex.PW1/23,
the plaintiff initiated pre-institution mediation on 30.11.2024 and
matter remained pending there upto 28.05.2025 on which date a
non-starter report was issued.
29. Moreover, as per case of the plaintiff, part payments
in respect of principal amount and security amount of work
orders no.84, 103, 105, 137 and 177 were made by the defendant
on various dates i.e. 09.02.2024/25.10.2024, 12.09.2024/
23.06.2025, 30.10.2024/23.06.2025, 09.02.2024/28.10.2025 and
27.02.2024 respectively. Hence, the plaintiff has filed suit much
prior to expiry of period of limitation and his suit is well within
the period of limitation available to him for filing the present
suit. This is not withstanding self contradictory plea on behalf of
defendant that suit of plaintiff is barred by limitation, as averred
in written statement, and that suit of plaintiff is premature as
contended by counsel for defendant during course of arguments.
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 19/34 Digitally signed Devendra by Devendra Kumar Sharma Kumar Date: 2026.07.11 Sharma 16:34:05 +0530
This issue is accordingly decided in favour of the plaintiff and
against the defendants.
ISSUE NO.1:-
Whether plaintiff is entitled to a decree for recovery of
Rs.21,86,867/- against the defendant, as prayed for? (OPP)
AND
ISSUE NO.4:-
Whether the suit is pre-mature for want of submitting bills for
payment by the plaintiff, as claimed? (OPD)
AND
ISSUE NO.5:-
Whether the plaintiff is not entitled to refund of security deposit
for want of compliance with Clause 17 and 45 of GCC? (OPD)
30. All these issues are being taken up together as they
are inter connected.
In the present case, it is not disputed that defendant
had issued work orders, Ex.PW1/3 (Colly), to the plaintiff. The
plaintiff completed work under the work orders and the officials
of defendant no.1, including the concerned Executive Engineer,
prepared and passed the bills, Ex.PW1/4 to Ex.PW1/20, with
respect to the work orders in question.
31. It is pertinent to mention here that as per written
submissions filed on behalf of the plaintiff, after filing of the
present suit, the defendant department have released some
payments to the plaintiff and a sum of Rs.6,97,881/- remains
outstanding till date. The details of payments given by the
plaintiff alongwith his written submissions are given as under:-
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 20/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:13
+0530
S. Work Order Date of Net Amount Amount Date of Payment Net dues
No. Passing of Received receipt of outstanding
Bill payment
1. 68 dt. 14.09.21 29.03.2022 430510 430510 12.09.2024 0
Security 66384 59746 25.10.2024 6638 7368
Withheld 1000 1000
2. 69 dt. 14.09.21 29.03.2022 549925 549925 12.09.2024 0
Security 85441 76897 25.10.2024 8544 9544
Withheld 1000 1000
3. 70 dt. 14.09.21 27.04.2023 714789 714789 21.10.2025 0
Security 45451 0 45451 46451
Withheld 1000 0 1000
4. 84 dt. 08.12.20 30.03.2021 701430 701430 09.02.2024 0
Security 78651 70786 25.10.2024 7865 8865
Withheld 1000 1000
5. 100 dt. 12.01.21 29.03.2022 73034 73034 29.10.2024 0 0
Security 9319 9319 24.12.2024 0
6. 103 dt. 15.01.21 15.11.2021 895760 895760 12.09.2024 0
Security 68569 61712 23.06.2025 6857 8857
Withheld 2000 2000
7. 105 dt. 15.01.21 31.03.2021 441526 441526 30.10.2024 0
Security 68086 61277 23.03.2025 6809 7809
Withheld 1000 0 1000
8. 132 dt. 02.11.21 27.05.2022 285280 0 285280 318842
Security 33562 0 33562
9. 133 dt. 02.11.21 27.05.2022 378913 378913 03.05.2025 0 0
Security 44579 44579 17.03.2026 0
10. 137 dt. 10.02.21 31.03.2021 554839 554839 09.02.2024 0
Security 93705 84335 28.10.2025 9370 10370
Withheld 1000 1000
11. 177 dt. 27.03.21 16.11.2021 96000 96000 27.02.2024 0 0
Security 0 0 0
12. 186 dt. 08.02.22 25.07.2022 601528 601528 30.10.2024 0
Security 71022 63930 23.06.2025 7092 8092
Withheld 1000 1000
13. 233 dt. 08.03.22 21.10.2022 117992 117992 03.05.2025 0 0
Security 13043 13043 31.03.2026 0
14. 240 dt. 08.03.22 31.07.2023 281715 281715 10.10.2025 0 0
Security 0 0 0
15. 243 dt. 08.03.22 25.07.2022 205990 205990 03.05.2025 0 0
Security 17919 17919 31.03.2026 0
16. 260 dt. 16.03.22 2342492 2342492 18.01.2025 0
Security 271413 0 271413 271413
Withheld 10000 10000 18.01.2025 0
Total 9657867 current 697881
outstanding
32. Admittedly, the defendant has not raised defence
that there was any complaint or deficiency in respect of the work
done by the plaintiff and the period of defect liability has also
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 21/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:19
+0530
lapsed. As per the defendant also the payment of Rs.6,97,881/-
are still pending. Though defendant is not disputing that the
amount reflected from passed bills is liable to be paid by it to the
plaintiff, the only objection raised by defendant is that plaintiff
has failed to prove proper submission of final bills, submission of
supporting documents, completion formalities, clearance from
Engineer-in-Charge as per agreement and terms and conditions
contained in GCC, more particularly Clause 9 of GCC.
33. The first question which arises for consideration is
whether the suit is premature as alleged in the written statement.
According to the defendant it was obligatory upon the plaintiff to
submit bill(s) on his letterhead which he failed to submit and
hence the suit is premature. As regards passed bills, Ex.PW1/4 to
Ex.PW1/20, it is stated that same are internal notings of the
office of defendant which cannot be relied upon to decree the suit
in favour of the plaintiff.
34. The Hon’ble Delhi High Court in case titled as
Surgical Electronics Vs. Union of India reported in 60 (1995)
DLT 359 has held that “internal notings are only the expression
of view during the decision making process and cannot be treated
as final binding and enforceable decision.” Further, the Hon’ble
Supreme Court in case titled as Anil Sethi Auto Service Station
Vs. DDA reported in (2009) 1 SCC 180 has held that “notings in
departmental file do not have sanction of law to be an effective
order which is only an expression of view point or opinion of an
officer to be used for internal use and consideration of other
officials of the department and helps in arriving at final
decision.” Such type of internal notings are not meant for outside
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 22/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:26
+0530
exposure. When such internal noting is approved by the final
decision making authority and the order is communicated to
concerned party whose rights are affected, then only the same
can be considered.
35. The passed bills, Ex.PW1/4 to Ex.PW1/20, in
question, have been approved by AAO/AE as well as Executive
Engineer, who is authorized by Commissioner to verify and
check the bill(s). Entries in bill(s) are based upon measurement
book which contains details and particulars of work done on day
to day basis that are cross checked by the officials of defendant
Corporation after physical verification at the site. As is brought
out from the cross-examination of PW1, the bills, Ex.PW1/4 to
Ex.PW1/20, were prepared by the concerned official of
department/MCD. Admittedly, passed bills, Ex.PW1/4 to
Ex.PW1/20, bear signatures of plaintiff on it. Thus it stands
established that plaintiff/PW1 accepted bills prepared by officials
of defendant. In these circumstances, bills, Ex.PW1/4 to
Ex.PW1/20, cannot be termed as a mere internal noting and its
contents were fully brought to the knowledge of plaintiff when
entries therein were got confirmed from him and his signatures
were obtained on bills. Even otherwise, plaintiff is entitled to
obtain copy of bills from the office of defendant under RTI Act if
he so desires and thus defendant cannot claim any privilege in
respect of such alleged internal notings. This Court is supported
for this view by judgment of Hon’ble Delhi High Court in case
titled as Flemingo Duty Free Shop Pvt. Ltd. Vs. Union of India &
Ors. reported in 2012 SCC OnLine DEL 5590.
36. The counsel for defendant has relied upon judgment
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 23/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:36
+0530
in case of North Delhi Municipal Corporation Vs. Sanjeev
Kumar, RFA No. 430/2017 decided on 22.03.2018 to contend
that it was mandatory for plaintiff to submit bill(s) on his own
letterhead and hence bills, Ex.PW1/4 to Ex.PW1/20, as prepared
by officials of defendant department cannot be treated as proper
compliance of the decision passed by Hon’ble High Court. Since
plaintiff had failed to submit bill(s) in accordance with judgment
in case of North Delhi Municipal Corporation Vs. Sanjeev
Kumar (supra), the suit of plaintiff is liable to be dismissed being
premature.
37. From careful perusal of the judgment in case of
North Delhi Municipal Corporation Vs. Sanjeev Kumar (supra) ,
it is apparent that it does not mandate that plaintiff has to submit
bill(s) only on his letterhead and in his handwriting for
consideration by defendants. The signatures of plaintiff on bills,
Ex.PW1/4 to Ex.PW1/20, is sufficient to hold that bills in
question were submitted by him. Mere fact that particulars of
bills were filled up by some officials of defendant no.1 in order
to help and assist the plaintiff in its preparation and presentation
is by itself not sufficient to reject the same. Rather
signatures/acceptance of plaintiff on the bills give rise to
presumption that bills were submitted by plaintiff himself and the
fact that approval was given by officials of defendant no.1 on the
same leads to inference that there is proper compliance of
decision of Hon’ble High Court in case of North Delhi Municipal
Corporation Vs. Sanjeev Kumar (supra). Moreover, the defendant
has failed to lead any defence evidence in support of its case and
therefore, the bald plea taken on behalf of defendant that the
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 24/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:43
+0530
plaintiff has failed to submit bills and the passed bills, Ex.PW1/4
to Ex.PW1/20 are merely internal notings, is liable to be rejected.
38. It is noteworthy that in the cited decision, number of
other directions were also given to defendant corporation such as
photography, videography, maintaining of digital record etc.
which have not been complied with by the officials of defendant
after lapse of considerable time since passing of the judgment.
Thus, it does not lie with the defendant to blame plaintiff for
alleged non-compliance of the directions of the Hon’ble High
Court when defendant corporation itself has avoided to do so in
respect of directions issued to it and its officials. Equity demands
that only one party cannot be penalized for not adhering to the
guidelines because the party who seeks equity must do equity
also. Accordingly, bills, Ex.PW1/4 to Ex.PW1/20 are deemed to
have been submitted by plaintiff in terms of directions given in
the cited case and the suit of the plaintiff is not premature on this
account as alleged by defendants. The plaintiff cannot be faulted
when the officials of defendants themselves helped the plaintiff
in preparation of the bills in question. In fact in the present case
these arguments advanced on behalf of the defendant has also
become infructuous in view of the fact that during the pendency
of the present suit, defendant has release some payments to the
plaintiff as mentioned herein before.
39. Coming to issue of refund of security
deposit/earnest money, the defendant has taken a plea that
plaintiff is not entitled to refund for security for want of
compliance of Clauses 17 and 45 of GCC. In this regard, the
Hon’ble High Court of Delhi in case titled as Rajnish Yadav,
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 25/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:49
+0530
Proprietor of M/s Bharat Construction Co. vs. The North Delhi
Municipal Corporation, RFA (OS) (COMM) 1/2021 (DOD
10.01.2023) has observed as under:-
25. ………. There is no dispute that the security deposit
is refundable to the appellant/ plaintiff and the same could
be withheld only to secure MCD against any claims due to
non-performance of the statutory obligations on the part of
the appellant/plaintiff. There is no material to indicate that
the appellant/plaintiff has not cleared its due towards
labour or any other statutory levy. A considerable amount
of time has lapsed since the contract was complete.
Admittedly, no claim has been made against MCD on
account of any acts of commission or omission on the part
of the appellant/plaintiff. Denying the appellant’s/plaintiff’s
claim in this context would amount to permitting MCD to
appropriate the security amount. Admittedly, there are no
grounds for MCD to appropriate the security deposit. Thus,
the same is required to be refunded to the
appellant/plaintiff.
40. In the instant case also, nothing has been placed on
record by defendant to bring out that plaintiff has failed to clear
dues towards labour or any other statutory levy. Admittedly, no
claim has been made against defendant/MCD on account of any
acts of commission or omission on the part of plaintiff and thus,
in these facts and circumstances as well as in view of the
observations made in the judgment of Rajnish Yadav, Proprietor
of M/s Bharat Construction Co. (supra), plaintiff is also entitled
to refund of the security/earnest money qua work orders bearing
no.68, 69, 70, 84, 103, 105, 132, 137, 186 and 260. The
defendant is also under obligation to return the withheld amount
to the plaintiff.
41. In these facts and circumstances, plaintiff is held
entitled to payment of amount of Rs.6,97,881/- towards amount
of passed bills, security/earnest money and withheld amount qua
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 26/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:34:56
+0530
work orders in question, subject to payment, if any, released
during the pendency of suit out of this amount. These issue are
accordingly decided in favour of the plaintiff and against the
defendant.
ISSUE NO. 2
Whether plaintiff is entitled for interest. If yes, at what rate and
for which period? (OPP)
42. Ld. Counsel appearing for the defendant states that
as per Clause 9 of the agreement, defendant is not liable to pay
interest. On the other hand, Ld. Counsel appearing for the
plaintiff urges that since the defendant failed to make payment
within 6/9 months after passing of the bills, the defendant is
liable to pay a sum of Rs.12,98,857/- as pre-suit interest @ 12%
p.a. on the entire outstanding amount of Rs.30,37,916/-
alongwith pendente lite and future interest @ 12% per annum on
the principal amount of Rs.21,86,867/- from the date of filing of
the suit till the payment is made by the defendant.
43. In North Delhi Municipal Corporation & Anr. vs.
Sanjeev Kumar, RFA No. 430/2017 decided on 22.03.2018,
Hon’ble High Court dealt with the issues relating to clause-7, 9,
17 & 45 of the General Conditions of Contract extensively by
framing the following questions:
(i) Whether payment of the principal amount can be delayed
in view of Clause- 7 & 9 of the General Conditions of
Contract read with the amendments?
(ii) Whether the refunds of earnest money/security deposit
can be delayed in view of Clause 17 & 45 of the General
Conditions of Contract?
(iii) Whether interest is payable on delayed payments/refunds
and if so, for which period?
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 27/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:35:02
+0530
44. After dealing with all the issues extensively, Hon’ble
High Court has summarized the conclusions and findings in para
77 to 81 and same are reproduced as under:
77. The General Conditions of Contract i.e., clauses 7 and 9
which are admittedly part of the work orders issued by both
the NrDMC and the EDMC are being tested in these batch of
cases. A contract which stipulates that the consideration
would be paid in an unforeseen time in the future based on
certain factors which are indeterminable, would in effect be a
contract without consideration. Even if the contract is held to
be a valid contract, then the concept of ‘reasonableness’ has
to be read into the same. Section 46 of the Contract Act and
the explanation thereto is clear that “what is a reasonable
time is a question of fact in each case.” A Corporation which
gets works executed cannot therefore include terms in the
contract which are per se unconscionable and unreasonable
as-
a) There is no fixed time period as to when the funds would be
available;
b) There is also no fixed mechanism to determine as to when and
in what manner the head of account is to be determined and as to
how the Contractor would acquire knowledge of these two facts;
c) There is also no certainty as to how many persons are in the
queue prior to the Contractor and for what amounts;
d) There is enormous ambiguity in the receipt under the particular
heads of accounts
78. These clauses in effect say that the Contractor is left with
no remedy if the Corporation does not pay for the work that
has been executed. Such a Clause would be illegal and
contrary to law. Such clauses, even in commercial contracts,
would be contrary to Section 25 read with Section 46 of the
Contract Act.
79. The clauses do not specify an outer time limit for
payment. The expression reasonable time has to be ‘a
time’. The concept of time itself is ensconced with
specificity and precision. Clause 9 is the opposite of being
precise. It is as vague and ambiguous as it could be because it
depends on factors which are totally extraneous to the
contract, namely –
. Allotment of funds to the Corporation by the
Government;
. Allotment of funds in a particular head;
. Allotment of funds for payments who are in
queue prior to the contractor;
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 28/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:35:08
+0530
80. Thus, these factors, which are beyond the control of the
Contractor and which would govern the payment of
consideration, make the said clauses of the contract
completely unreasonable. The clauses have to thus, be read
or interpreted in a manner so as to instill reasonableness in
them.
81. By applying the above said principles, in respect of final
bills raised by Contractors for works executed, that have
been approved by the Engineer-in-Charge, the Clauses have
to be read in the following manner:
a) Reasonable time for making of payments of final bills in
respect of work orders up to Rs.5 lakhs shall be 6 months
and work orders exceeding Rs.5 lakhs shall be 9 months
from the date when the bill is passed by the Engineer-in-
Charge.
b) The queue basis can be applicable for the payments to be
made in chronology. However, the outer limit of 6 months
and 9 months cannot be exceeded, while applying the queue
system.
c) The payments are held to become due and payable
immediately upon the expiry of 6 months and 9 months and
any non-payment would attract payment of interest for the
delayed periods.
d) A conjoint reading of Clauses 7 & 9 along with the
amendment dated 19th May, 2006, clearly shows that for
the payment of bills, the contractors have to follow the
queue basis and as and when the amount is available under
the particular head of account, the amount would be
payable. The amendment does not, however, have a
condition that no interest is payable for delayed payment.
Such a condition exists only in Clause 7. Clause 9,
therefore, when read with the amendment has to mean that
the Corporation itself considers 6 months and 9 months to
be the reasonable periods for which the payments of the
final bills can be held back. Obviously, therefore, if
payments are made, whether on a queue basis or otherwise,
beyond the period of 6 months and 9 months, interest is
payable.
e) To the extent that queue basis is applied only for clearing
of payments which do not extend beyond the period of 6
months and 9 months period, it is reasonable. However, if
the queue basis is applied in order to make Contractors wait
for indefinite periods for receiving payments, then the same
would be unreasonable and would have to therefore be read
down.
f) The Security amount/Earnest money deposited would be
refundable upon the fulfilment of the conditions contained
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 29/34
Digitally
signed by
Devendra Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:35:15
+0530
in Clauses 17 and 45 of the General Conditions of Contract.
Interest would be payable on delayed payments.
(emphasis supplied)
45. Further, the Hon’ble Supreme Court while dealing
with issue of interest where the parties have agreed themselves
regarding the delay in payment in case titled as The Kerala Water
Authority & Ors. vs. T I Raju & Ors., Civil Appeal No.(s)__ of
2026 (@SLP (C) No(s). 17823/2023) DOD 09.02.2026, has held
that it is the agreement between the parties which would prevail
over the provisions of Section 34 of CPC regarding the interest in
view of the provisions under Section 3 of the Interest Act, 1978
and relevant paras are reproduced as under for ready reference:-
“4. On a reading of the aforesaid clause, it is clear that at
the time when the tender was floated for a public project, a
conscious decision was taken to commence the same,
notwithstanding the issue pertaining to the availability of
necessary funds. For this reason, clause (5) has been
introduced at the first place in the preliminary agreement.
This clause not only deals with the issue pertaining to the
belated payments, but also touches upon the consequential
interest which is to be paid in the nature of damages. This
is a clause introduced on behalf of the contractor meaning
thereby, that the contractor is not only aware of the said
clause but he is the one who introduced the same, and
hence, he is expected to quote the amount, while being
conscious of a situation pertaining to belated payments
followed by the consequential interest in the nature of
damages.
………….
6. Though the provision under Section 3(1) of Interest Act,
1978 has been taken note of by the High Court, and the
exception contained under Section 3(3) of the Interest Act,
1978 has been ignored. The object of the Interest Act,
1978 is to mandate the payment of interest to the parties in
the absence of, or any vacuum in the agreement, or where
the interest so fixed is contrary to law, being in the nature
of an exorbitant charge.
7. In other words, when the parties have agreed upon by
way of a contract executed between them, either to give
away the interest so accrued or to receive belatedCS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 30/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:35:24
+0530
payments, they are indeed governed by the terms
mentioned thereunder. Therefore clause (5) of the
agreement is settled between the parties and thus binding
upon them. There is no question regarding the appellants
being in a position to dictate the terms of the same, since
clause 5 of the agreement merely shows the nature of the
contract entered into.
8. The appellants in Civil Appeal arising out of SLP(C) No.
17823/2023 fall within the definition of ‘State’
under Article 12 of the Constitution of India, as the project
was undertaken for public purposes. The idea was to
initiate the project so that the general public would not
suffer due of lack of infrastructure, notwithstanding any
delay in the payment. Any profits in favour of the
contractor is also a governing factor to the said clause.
9. In our considered view, the High Court did not take into
consideration Section 3(3) of the Interest Act, 1978, and
thereafter, only read the clause 5 of the preliminary
agreement, contextually.
10. Much reliance has been placed by the learned Senior
counsel appearing for the respondents on Section 34 of the
Code of Civil Procedure, 1908 (for short ‘CPC‘). Section
34 of the CPC merely speaks about the rate of interest to be
applied and, therefore, sub-section (5) cannot be interpreted
to have an overriding effect on Section 3(3) of the Interest
Act, 1978.”
46. Applying the ratio in the matrix of the case at hand,
the law laid down in case titled as the Kerala Water Authority &
Ors (supra) is squarely applicable to the facts of the present case
where parties have also agreed regarding the terms of belated
payment. Thus, in view of the agreed terms, the defendant is
liable to make payment of interest in terms of Clause 9 of GCC.
47. Further, in the present case, no detailed calculation
has been given in the pleadings or in the evidence. The sole
ground for payment of interest has been taken that the amount
was not paid within 6/9 months from the date of passing of the
bills. However, in the entire pleadings, there is no mention of
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 31/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:35:47
+0530
any date of submission of any of the bills by himself but the date
has been given of the preparation of the bills by the defendant.
48. The defendant has challenged the aforesaid claim on
the ground that no details has been mentioned i.e. the period for
which the interest amount has been sought. Thus, admitted fact
is that there is demand of interest regarding the amount of
Rs.21,86,867/- which includes not only the amount of bills but
also the security deposit and withheld amount. Thus, I do not find
any substance in the plea of Counsel for the defendants that even
after expiry of period of six/nine months as the case may be,
defendants shall not be liable to pay interest when it has been
agreed between the parties themselves.
49. The period of 6/9 months since passing of bills have
already expired. Since by not making the payment in time, the
defendant deprived the plaintiff to utilize the amount, thus
defendant is liable to compensate the plaintiff by paying interest
on the due amount. Admittedly, no rate of interest was agreed
between the parties and it is also undisputed fact that the
transaction between the parties was commercial in nature.
50. In the present case, therefore, in absence of any
other clear and cogent evidence, the date of demand for interest
cannot be calculated precisely and there is specific provision
under Order VII Rule 2A of CPC which provides that in the
pleadings not only the rate of interest and total interest amount,
but from the date from which it is claimed and the date to which
it is calculated and the daily rate at which interest accrues after
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 32/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
Sharma 2026.07.11
16:36:01
+0530
that date must be pleaded. However, in the present case plaintiff
has failed to file any such calculation chart.
51. Therefore, from the evidence available on record, as
discussed hereinabove, the plaintiff has been able to prove his
case on preponderance of probability for payment of simple
interest in terms of Clause 9 of GCC on account of delayed
payment of his bills Ex.PW1/4 to Ex.PW1/20 till the date of
actual payment in terms of the clause of contract @ 8% per
annum and upon the bill amount which is still unpaid @ 6% per
annum from the date of filing of the suit till the final realisation
of the unpaid bills amount as the interest amount of 12% p.a.
claimed by plaintiff, appears to be on higher side as in case of
North Delhi Municipal Corporation Vs. Sanjeev Kumar, RFA No.
430/2017 decided on 22.03.2018, interest amount of 8% p.a. only
was awarded on delayed payment.
R E L I E F:-
52. In terms of foregoing observations, the suit is partly
decreed for a sum of ₹6,97,881/- in favour of the plaintiff and
against the defendant Corporation. The plaintiff is also entitled to
simple interest in terms of Clause 9 of GCC on account of
delayed payment of his bills Ex.PW1/4 to Ex.PW1/20 till the date
of actual payment in terms of the clause of contract @ 8% per
annum and upon the bill amount which is still unpaid @ 6% per
annum from the date of filing of the suit till the final realisation
of the unpaid bills amount.
53. The defendant will further pay the full costs of the
suit and additionally Rs.1,000/- spent by the plaintiff in DLSA for
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 33/34
Digitally signed
Devendra by Devendra
Kumar Sharma
Kumar Date:
2026.07.11
Sharma 16:36:11
+0530
invoking pre-institution mediation.
54. Decree sheet be prepared accordingly.
File be consigned to record room after due
compliance.
Digitally signed
Dictated and announced Devendra by Devendra
Kumar Sharma
in the open Court on Kumar Date:
11th July, 2026. Sharma 2026.07.11
16:36:27 +0530
(DEVENDRA KUMAR SHARMA)
District Judge (Commercial Court)-03
Central, Tis Hazari Courts, Delhi.
CS (COMM) No. 785/2025 Yogesh Aggarwal Singh Vs. Municipal Corporation of Delhi & Anr. Pg. No. 34/34
