Full Judgement
Delhi High Court
Delhi Metro Rail Corporation Ltd vs Ms Parasvnath Developers Ltd on 9 May, 2023
Neutral Citation Number: 2023:DHC:3095
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 25.04.2023
Date of decision: 09.05.2023
+ CS(COMM) 463/2022 & I.A. 10691/2022
DELHI METRO RAIL CORPORATION LTD ..... Plaintiff
Through: Mr.Tarun Johri, Mr.Vishwajeet
Tyagi, Ms.Ankur Gupta, Advs.
versus
MS PARASVNATH DEVELOPERS LTD ..... Defendant
Through: Mr.Rajat Juneja, Mr.Anmol
Kumar, Advs
JUDGMENT
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA I.A. 15283/2022
1. This application has been filed by the defendant under Order VII Rule 11 (a) and (d) of the Code of Civil Procedure, 1908 (hereinafter referred to as the „CPC‟) seeking rejection of the plaint, primarily on the submission that the Suit is barred by Limitation and in terms of Sections 73(3) and 74 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the „Act‟). CASE OF THE PLAINTIFF IN THE PLAINT
2. To appreciate the challenge of the defendant, it would be essential to take note of the averments made in the plaint.
3. It is the case of the plaintiff that pursuant to a Notice Inviting Tender for construction of three (3) blocks of staff quarters i.e. Block A, B & C, with a combined capacity of 144 dwelling units, at Mundka Depot for Phase-II of Delhi MRTS Project (hereinafter referred to as Signature Not Verified Digitally Signed By:SUNIL Signing Date:10.05.2023 13:37:32 CS(COMM) 463/2022 Page 1 of 10 Neutral Citation Number: 2023:DHC:3095
the „Project‟), the defendant was awarded the said work vide Letter of Acceptance dated 27.05.2009 for a total contract value of Rs.19,86,85,437.51. The project was taken over by the plaintiff from the defendant on 05.10.2012, 10.11.2012 and 03.12.2012 for Block A, B and C respectively. The flats constructed by the defendant were allotted and taken over by the employees of the plaintiff between March to May 2013, and around 140 families started residing in the Project. Immediately after occupation of the flats by the residents, a large amount of seepage problem was discovered in all the three (3) blocks. In the meantime, on 18.06.2014, the Completion Certificate was issued by the plaintiff stating the date of completion to be 15.02.2013, for a total value of Rs. 25,02,70,420.07/-. The Defect Liability Period got over on 14.02.2014.
4. The plaintiff states that on 09.12.2014, the plaintiff informed the defendant about visible cracks on the structural members of the building towers being noticed within a period of two years from the date of completion of the building. The plaintiff finally appointed a Committee to investigate the reasons for the worsening condition of the residential blocks. The Committee vide its report dated 20.06.2015, revealed the deficiencies in the work, including the fact that the chloride content in the concrete was very high compared to the permissible limit. The Committee recommended that a complete and thorough assessment on retrofitting design be done with the help of a competent and expert Structural Consultant and remedial measures be taken.
5. On 20.06.2015, the plaintiff engaged M/s Sri Ram Institute for carrying out investigations by conducting various technical tests to
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ascertain the strength of the structure built by the defendant. M/s Sri Ram Institute, on 27.05.2015, submitted its report, which again pointed out various construction deficiencies in the Project. The plaintiff, thereafter, issued a legal notice dated 24.09.2015 to the defendant pointing out the structural defects noticed and demanded a sum of Rs.13,68,87,646/- from the defendant as damages.
6. The plaintiff, on 20.07.2015, also appointed M/s Epicon Consultants Pvt. Ltd. for carrying out the detailed structural assessment of the buildings and suggest further action. M/s Epicon Consultants Pvt. Ltd., in November, 2015, after examination and inspection of the Project inter-alia reported that the chloride content at various locations of reinforcement was more than 10 times the allowable limit for the same. The report also, while providing remedial measures, stated that the presence of excessive chloride is a permanent defect which is irreversible.
7. On 10.02.2016, a Conciliator was appointed for settlement of the disputes between the parties. By a Deed of Settlement dated 04.07.2016, the parties entered into a settlement whereby the defendant agreed to pay to the plaintiff an amount of Rs.4,11,75,690/- towards the repairs of the structure and the lease charges of the employees.
8. The plaintiff asserts that after entering into the above settlement, the plaintiff appointed M/s Cembond Constructions Pvt. Ltd. for execution of the repair works, retrofitting, and miscellaneous civil works in the Project, for a total contract value of Rs.5,94,09,084.61/-. The repair work was carried out by M/s Cembond Construction Pvt. Ltd between 20.09.2016 to 30.06.2018,
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based on the recommendations of the M/s Epicon Consultants Pvt. Ltd. The repair work was completed on 30.06.2018, and the possession of the Project was taken over by the plaintiff. The Completion Certificate was issued on 29.04.2019 to M/s Cembond Construction Pvt. Ltd. The employees again shifted back to these flats in May, 2019. However, on 31.07.2020, it was noticed that the signs of distress in all the Blocks of the Project had once again started developing, despite such extensive repairs carried out in the Project. The condition of the Block A, B and C of the staff quarters was found to be really precarious and serious. On 05.07.2021, the plaintiff decided to get all the flats vacated at Block B immediately to carry out urgent repairs. On 29.09.2021, the residents of Block A and C were also directed to vacate the flats.
9. Mr.Anil Kumar Sharma, Former Spl. Director General, CPWD was thereafter appointed by the plaintiff as an Independent Consultant for determining the cause of distress in all the structural members. The Independent Consultant, on 01.10.2021, submitted his preliminary report pointing out various inherent and latent defects in the construction. Vide his subsequent report dated 29.10.2021, the Independent Consultant opined that the only permanent remedy is dismantling the structure and reconstructing the same.
10. The plaintiff again got certain repair work conducted at Block B of the Project.
11. The plaintiff filed the present Suit claiming that the repair work in the building is still going on and the actual cost of such repair will be available with the plaintiff only after the completion of the said repair in respect of all the three Blocks. The plaintiff has reserved its
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right to alter, amend and modify its claims on receipt of the final expenditure details in respect of the repairs.
12. The plaintiff claiming that the defects were latent and embedded defects in the structure which could not have been noticed earlier and because of which the building blocks became completely inhabitable, filed the present suit claiming damages in form of cost of evacuation of the employees; for repair/strengthening and removal of defects of the building blocks; and for refund of the amount paid by the plaintiff to the defendant for construction of the Project. The plaintiff in total claims an amount of Rs.45,50,76,656/- alongwith pendent lite and future interest at the rate of 18% p.a. from the defendant.
13. As far as the cause of action for filing of the present suit is concerned, the plaintiff asserts as under:
"43. That the cause of action for filing the present suit firstly arose on 31.07.2020, when the Plaintiff noticed the signs of distresses in all the blocks of the Project. It also arose on 08.10.2021 when the independent consultant submitted its preliminary report to the Plaintiff clearly concluding various latent defects in the residential blocks constructed by the Defendant. It further arose on 29.10.2021, when the consultant concluded that permanent remedy is dismantling the structure and reconstruct as per best construction practices including quality of material and water to be used in re construction as per provisions of IS:456 and such associate BIS standards. It further arose on 02.11.2021, when the Plaintiff had issued a legal notice upon the Defendant and further arose on 02.12.2021, when the Defendant denied its liability towards the Plaintiff. The cause of action is still valid and is subsisting."
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SUBMISSIONS OF THE LEARNED COUNSEL FOR THE DEFENDANT
14. The learned counsel for the defendant/applicant submits that the alleged latent defects being known to the plaintiff at least with the report of the M/s Epicon Consultants Pvt. Ltd in November, 2015, and the plaintiff, thereafter, entering into a conciliated Settlement Deed with the defendant on 04.07.2016, the present Suit claiming further damages from the defendant for the same defects is not maintainable. He submits that a conciliated Settlement Deed between the parties is binding on the parties in terms of Section 73(3) of the Act. He submits that the status of such Settlement Deed is of an Arbitral Award, as provided in Section 74 of the Act. He submits that, therefore, the plaintiff cannot maintain the present suit on the basis of the same cause of action that had resulted in the execution of the conciliated Settlement Deed dated 04.07.2016 between the parties.
15. He further submits that the present suit would be barred by limitation inasmuch as the cause of action for filing of the present suit had arisen at least in November, 2015 with the report of the M/s Epicon Consultants Pvt. Ltd, which inter-alia had opined that the chloride content in the building is more than 10 times of the permissible limit of the same. He submits that the present suit is based on the same allegation of the excessive chloride content, and having been filed in April, 2022, would therefore be barred by limitation. SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PLAINTIFF
16. On the other hand, the learned counsel for the plaintiff submits that the Settlement Deed dated 04.07.2016 would not bind the
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plaintiff. He submits that the conciliation proceedings were carried out between the parties dehors the agreement between the parties, as there was no provision in the original agreement between the parties for such conciliation proceedings to be undertaken. He further submits that at the time of the Settlement Deed dated 04.07.2016, the plaintiff was of the opinion that the defects pointed out by the consultant can be repaired. The Settlement Deed was executed on this basis. It is only later when the new Independent Consultant opined that the building would need to be demolished, that a fresh cause of action arose in favour of the plaintiff, based whereupon, the present suit has been filed. He submits that, therefore, the Settlement Deed dated 04.07.2016 cannot be considered as a bar on the filing of the present suit.
17. On the question of limitation, placing reliance on the judgment of the Supreme Court in Shakti Bhog Food Industries Ltd. v Central Bank of India & Arn, (2020) 17 SCC 260, he submits that for the purposes of Article 113 of the Limitation Act, 1963, the period of limitation has to be considered from each cause of action and not the "first cause of action". He submits that, therefore, the report of the latest Consultant appointed by the plaintiff would give rise to a fresh cause of action to the plaintiff, and the suit has been filed within the period of limitation of such cause of action.
18. He further submits that even otherwise, the issue of limitation being a mixed question of law and fact, cannot be a ground for rejecting the plaint under Order VII Rule 11 of the CPC. He submits that the exact impact of the latent defects came to be known to the plaintiff only with the latest report of the Consultant and, therefore,
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the present Suit has been filed within the period of limitation. In support he places reliance on judgments in Sparham-Souter & Anr. v. Town and Country Development (Essex) Ltd. & Anr., [1976] Q.B. 858 and Invercargill City Council v. Hamlin., [1996] 2 WLR 367. ANALYSIS AND FINDINGS
19. I have considered the submissions made by the learned counsels for the parties.
PRINCIPLES GOVERNING ORDER VII RULE 11 CPC
20. At the outset, it need only be stated for the record that it is a well settled principle of law that while dealing with an application under Order VII Rule 11 of the CPC, only the averments made in the plaint and the documents produced alongwith the plaint are required to be seen. The defence of the defendant cannot even be looked into. Whether the plaintiff will ultimately succeed in the suit or not on merits is not relevant to be considered at the stage of considering the application under Order VII Rule 11 of the CPC.
21. In the present case, as noted hereinabove, the plaintiff has pleaded a cause of action to file the present suit on the basis of the alleged report dated 29.10.2021, of the alleged Consultant. Whether the plaintiff would succeed in its claim or not, cannot influence the Court at this stage.
EFFECT OF SETTLEMENT DEED
22. The plea of the the learned counsel for the defendant based on the Settlement Deed dated 04.07.2016 arrived at in the conciliation proceedings between the parties, which inter-alia also contains Clause
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7 providing that the parties would not raise any claim whatsoever in the future so far as the project agreement is concerned, cannot be a ground for rejecting the plaint by invoking the provision of Order VII Rule 11 of the CPC. Though it is correct that in terms of Section 73(3) of the Act, when the parties sign the Settlement Agreement, it shall be final and binding on the parties and persons claiming under them respectively, and in terms of Section 74 of the Act, the Settlement Agreement shall have the same status and effect as if it is an Arbitral Award on the agreed terms rendered by an Arbitral Tribunal under Section 30 of the Act, the plaintiff, for the present, is not challenging the said conciliated Agreement but is claiming that in spite of such Agreement, it can maintain the present suit because of the subsequent developments. The effect of the subsequent developments on the Settlement Agreement and in spite of the Settlement Agreement, though prima facie appears attractive and with substantial merit, would have to be seen at the time of the adjudication of the Suit. At present, it cannot be said that merely because of the Settlement Agreement, the plaint does not disclose a cause of action for filing of the suit and, therefore, the plaint is liable to be rejected. ISSUE OF LIMITATION
23. On the question of the suit being barred by limitation, it is to be remembered that the issue of limitation ordinarily would be a mixed question of law and facts. In Shakti Bhog Food Industries Ltd. (supra), the Supreme Court has held that for the purposes of Article 113 of the Limitation Act, 1963, it is when the right to sue accrues that the time for filing of the suit begins to run, and not when the right to
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sue "first" accrues. In the present case, the plaintiff has averred that the right to sue accrued in favour of the plaintiff on the report dated 29.10.2021 by the Consultant. The paragraph in the plaint detailing the cause of action has been reproduced hereinabove. Keeping the same in view, again, while finding prima facie merit in the submission of the learned counsel for the defendant that the defects being known to the plaintiff since November, 2015, the suit may be barred by limitation. But at presently, it cannot be said that the suit is ex facie barred by limitation, so as to reject the plaint under Order VII Rule 11 of the CPC.
24. In view of the above, I do not find any merit in the present application. The same is dismissed.
25. It is however made clear that any observation made in the present order is only for the purposes of the present application and shall not be considered as a final opinion on the issues raised by the defendant or the plaintiff.
CS(COMM) 463/2022 & I.A. 10691/2022
26. The parties shall file a Joint Schedule of Documents within a period of two weeks from today.
27. List before the learned Joint Registrar (Judicial) on 22nd May, 2023.
NAVIN CHAWLA, J.
MAY 09, 2023/Arya/KP
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