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Judgment
Rajiv Shakdher, J
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.
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.
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.
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. No.
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
1
Principal Upto Contract
1,05,59,790
2
Interest upto Contract Period
2,28,36,251
3
Advertisement Tax
13.296
Total Upto Contract
3,34,09,337
1
Payment on Account vide G8 No.71081 dated
13.06.2018
50,00,000
2
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
1
MLF/Principal
1,05,59,790
50,00,000
1,41,130
54,18,660
2
Interest (A+B)
2,59,66,064
-
-
2,59,66,064
3
Advt. Tax
13.296
-
-
13.296
Total
3,65,39,150
50,00,000
1,41,130
3,13,98,020
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:
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 Locations
Contract Period
Principal at the time of
Completion of Contract
Interest (for the period upto
the period of contract)
Surcharge 5% as per terms &
conditions upto the
period of Contract
Advt. Tax
Principal as on
date
Interest for the period beyond the
completion of Contract to be
refered to Arbitrator
Surcharge for the period
beyond the completion of Contract to be
referred to
Arbitrator
Total
1.
Cluster No.2, IGI Stadium & Jawahalal Nehru Sports Complex & Cluster No.3 R.K. Khanna Tennis Complex
15.10.2010 to 28.08.2017 (contract terminated by the Department on 16.06.2017)
56,81,4 37
28,19,500
44,88,461
35,640
38,16,987
27,00,071
46,80,656
1,85,41,315
Total Amount
28,19,500
44,88,461
35,640
38,16,987
27,00,071
46,80,656
1,85,41,315
1
Principal as on 28.08.2017
i.e., Up to Contract Period
56,81,437
2
Interest as on 28.08.2017
i.e., Up to Contract
28,19,500
3
Surcharge @ 5% per
annum as on 28.08.2017 i.e., Up to Contract Period
44,88,461
4
Advertisement Tax
35.640
Total
1,30,25,038
1
Payment paid vide G8 No.
358 & 359 dated 25.09.2017
10,83,450
2
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
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/-.
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.
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.
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.
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.
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.
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.
16.1 Therefore, the respondent/SDMC will calculate interest at the rate of 8% per annum (simple).
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.
18.1 Mr Poddar says, that the respondent/SDMC will revisit this issue.
Mr 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.
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.
21.1 The statement made by Mr Mittal is taken on record.
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.