M/s Graphisads Private Limited vs South Delhi Municipal Corporation

RAJIV SHAKDHER, J.: (ORAL)

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

Notice 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.

Although 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”).

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

Mr 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.

According 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.

That 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.

Therefore, 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.

Likewise, 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:

It 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.

Mr 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/-.

We 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.

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

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

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

Insofar 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.

We 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).

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

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

In 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.

Mr 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.

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

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

The appeal is disposed of in the aforesaid terms.

Needless 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.

Pending applications shall stand closed.