w w w . L a w y e r S e r v i c e s . i n

Sh. Sushant Rastogi v/s M/s. Reliant Infosys Pvt. Ltd.

    RFA No. 103 of 2004
    Decided On, 01 March 2007
    At, High Court of Delhi
    For the Appellant : Jagdeep Kishore, Advocate. For the Respondent: Dipender Kumar, Advocate.

Judgment Text
Swatanter Kumar, J.

1. M/s. Vaibhav Interiors, a sole proprietorship concern through its Proprietor Mr. Sushant Rastogi filed a suit for recovery of Rs.5 lacs along with interest @ 18% per annum with pendente lite and future interest against the sole defendant M/s. Reliant Infosys Pvt. Ltd. This suit was dismissed by the learned trial court vide its judgment and decree dated 27.11.2003 giving rise to the present Regular First Appeal.

2. The appellant averred in the plaint that the respondent (defendant in plaint) had appointed M/s. Sandeep Geeta and Associates Pvt. Ltd., who are architects, Engineers and Interior consultants, for renovating their office in Chandigarh. The said party has its office in Delhi. In March 2000, M/s. Sandeep Geeta and Associates Pvt. Ltd. approached the plaintiff on behalf of the respondent-company to get the work of furnishing done at Chandigarh and after discussion, the estimated cost was stated to be Rs.17,24,000/- for doing the work. It is the case of the appellant that the negotiations took place at Delhi and one Tejender Singh, General Manager and Mr. Shaun Walsh, M.D. of the Defendant-company had participated in the discussions and negotiations of the plaintiff and M/s. Sandeep Geeta and Associates Pvt. Ltd. The work was done by the appellant and some payments were made by the defendant-company to the appellant. However, a sum of Rs.5,44,176.35 remained due and payable by the respondent to the appellant. The appellant served a legal notice dated 31.3.2001 upon the respondent and having failed to recover the payment, he filed a suit.

3. The suit was contested by the respondent, who raised various preliminary objections as well as contested the suit on merits. According to the respondent, there was no relationship of principal and agent between the respondent and the said Architect firm and there was no privity of contract between them and as such they could not be held liable for the claimed amount. In the written statement filed, they also took up the plea that no bills were directly raised upon the respondent by the appellant. The arrangement of contracting, execution of the work to the appellant was proposed by the architects and in their sole discretion, they had chosen the plaintiff/appellant as contractors. It is further stated that the defendant/respondent had no role to play in the plaintiff being chosen as the contractors. Reference was also made to certain consented terms between the Architect and the appellant/plaintiff.

4. In view of the above pleadings between the parties, the trial court vide its order dated 26.8.2002 framed the following issues: -

?1. Whether there is no privity of contract between the parties? OPD

2. Whether this court has no territorial jurisdiction to entertain and adjudicate the present suit? OPD.

3. Whether the suit of the plaintiff is bad for misjoinder of necessary parties? OPD

4. Whether the plaintiff has no cause of action for filing the present suit? OPD

5. Whether the plaintiff is entitled to the suit amount as claimed? OPD

6. Whether the plaintiff is entitled to interest, if so, at what rate and for what period? OPP

7. Relief.?

5. Considering the documentary and oral evidence produced by the parties, the Court answered issue no.1 and other issues in favour of the respondent and against the plaintiff-appellant and dismissed the suit. The findings recorded by the learned trial court can usefully be referred to at this stage:-

?16. Admittedly, no document had been executed by the defendant in favour of the plaintiff. It is also the say of the plaintiff that the work had been given to him by architect of the defendant. The estimates as agreed upon between the parties is Ex.PW1/1. This estimate Ex.PW1/1 does not bear the stamp of the defendant company. It does not bear any date. It is neither addressed to the defendant nor is on the letter head of the defendant. It was suggested to the witness (plaintiff) that this document is a forged and fabricated document. The plaintiff had asserted that it was signed by DGM of the defendant company. However, the defendant had suggested to the plaintiff that it does not bear the signatures of DGM. In these circumstances, it was for the plaintiff to establish that it did bear the signatures of DGM. The plaintiff admitted that he is unaware of the fact as to whether the DGM had any authority or not to sign on behalf of the defendant. He (plaintiff) did not get the said estimate confirmed from the defendant by a separate letter. I am reproducing a very important admission of the plaintiff. It reads as under:-

?It is correct that I did not address any such letter because I did not have any direct relationship with the defendant company. The defendant company never issued any work order in my favour. The work was issued to me by architect.?

17. In view of this particular admission of the plaintiff, it can be said that the defendant had no direct contract with the plaintiff. The defendant had taken the services of the architects to get the renovation done. As per the case of the plaintiff himself, he had been contacted by the architect to get the renovation done. In the absence of the contract between the plaintiff and the defendant, the plaintiff cannot seek the relief from the defendant directly. I put it in a different way. Had the defendant filed a suit against the plaintiff for incompletion of the work or for damages, the plaintiff himself would have raised this very plea.?

6. The learned Trial Court answered the issue of territorial jurisdiction in favour of the appellant/plaintiff while the issues no.1 and 3 were answered against him and in favour of the respondent/defendant. Having answered these two issues against the appellant/plaintiff, the learned Trial court also concluded that issues no. 4 to 7 are consequently decided against the appellant. Issue No. 1: -

7. The first and foremost question that arises for consideration in the present appeal is with regard to the issue no.1. Obviously, if there was no privity of contract between the appellant and the respondent, the appellant would have no cause of action against the respondent. From the afore-stated discussion, it is clear that the learned Trial Court has hardly discussed the documentary and oral evidence placed on the record. It has, in fact, even ignored the pleadings between the parties. Unnecessary emphasis upon the cross- examination of the witnesses, while ignoring the examination-in-chief of the witnesses, the affidavits filed by way of evidence and the exhibited documents, would result in incorrect findings of fact assailable in law. In the plaint, the appellant had specifically pleaded that they had done the work for the respondent at the instance of M/s. Sandeep Geeta and Associates Pvt. Ltd., the architect, and that a meeting was held with Mr. Tejender Singh, General Manager and Sh. Shaun Walsh, M.D. of the respondent where the things were finalised and in furtherance to which the work was executed. It was further pleaded that the bills were verified by the Architects and were paid partially by the respondent. In support of these averments the appellant had produced documentary as well as oral evidence. PW1, Sushant Rastogi, had stated that the estimate, Ex. PW1/1 was given to the respondent and it had the signatures of Mr. Tejender Singh, General Manager, at points C,D and E of the said exhibit. The lay-out plan was exhibited as Ex.PW1/3 and the work was exhibited as Ex.PW1/2 which was issued by the architect. The payment of the bills were made and received by the respondent and the same have been exhibited as Ex. PW1/5, PW1/6, PW1/7 and PW1/8. Even the TDS Certificate, Ex. PW1/9 was issued by the respondent to the appellant. All this was stated by way of evidence in the affidavit Ex. PW1/A to which the documents were annexed and exhibited. In the cross-examination, PW1 fairly stated that no work was done at Delhi but was done at Chandigarh in respect of the office of the respondent. He specifically denied the suggestion that the terms of the settlement were finalised between the architect and the defendant no.1 had not participated in those negotiations. He also stated that he had no letter from the defendant but the letters were written by the Architect.

8. Ex.PW1/D1 was addressed to Mr. Shaun Walsh, Director of the respondent, wherein it was stated that ?the work was completed to your satisfaction at the premises in Chandigarh? and they were personally handed over to Sh. Tejender Singh on 9.10.2000. Along with this letter Ex. PW1/1 was annexed, which at different points indicated above, had the signatures of Sh. Tejender Singh. Ex. PW1/2, a letter written by the architect to the appellant stated ?work order for interior furnishing and civil work for Reliant Infosys Pvt. Ltd., Corporate Office, Shop No. 7, Sector-20D, Chandigarh? which clearly shows that the work was being allotted for the respondent and not on behalf of the architect. All the bills, copies of which have been placed on record as Ex.PW1/4 were submitted directly to the respondent. Ex.PW1/10, the certificate issued by the architect on 18.8.2000 reads as under:-



This is to certify that M/s. Vaibhav Interiors, 342 Nilgiri Apartment, Alanknada, New Delhi has completed the Interiors, furnishing and civil works. Comprising of False ceiling, Partitions, Flooring wall cabinets, computer workstations, Officers Table and chairs for Relient Infosys Pvt. Ltd., Corporate Officer, Sco-7, Sector 20, D, Chandigarh with total amount 18,89, 176.35 (Rupees Eighteen Lacs Eighty Nine Thousand One Hundred Seventy Six and Paise Thirty Five only) within the stipulated time frame.

The works is found to be our entire satisfactions. We wish them all success for their future.

Thanking you and assuring you of our best services at all times.

Yours faithfully,




9. Ex.PW1/8 clearly provided the details of the payments received by the appellant from the respondent directly and the balance amount which remained to be paid. Ex.PW1/11 was a notice issued to the respondent by the counsel for the appellant on 31.8.2001, which was replied to by the appellant vide Ex.PW1/14. The cumulative reading of the notices and the replies do not indicate that the respondent ever took up the plea of no privity of contract between the parties. On the contrary, in reply to the notice, Ex.PW1/14 it was stated that the terms of the contract were agreed both by the architect as also the contractor, who had to abide by those terms during the operation of the contract. Various breaches were indicated, particularly the delay in completion of the work which caused loss of profit and market inflation. These documents substantially support the plea taken by the appellant. Besides the averments made in the reply to the notice served by the appellant, Ex. DW1/4 a document obviously produced and proved by the defendant, also refers in detail to the work done by the plaintiff and points out certain defects in allotment of works to and completion by the appellant. This refers to the brief history of the project and specifically notices that the respondent had appointed M/s. Sandeep Geeta and Associates Pvt. Ltd., consulting architect for designing their corporate office in Chandigarh who in turn had appointed the appellant. It is also noticed that the contract between the appellant, respondent and the architect was not formalized as per normal trade practice. The following extract of Ex.DW1/4 can be usefully referred to at this stage:-


The consulting architects have ignored the following contractual obligations and this has resulted in substantial loss to the employer:-

a) The architects are supposed to generate fair and perfect competition through the process of invitation of tenders to achieve competitive rates of various items of work but in this case they allowed the contractors to work on the basis of the rates projected in their preliminary estimate.

b) Had the architects worked out rate analysis of all the items systematically, the single tender system could not have inflicted financial injury on to the client (to the tune of Rs.8.00 lakh).

c) The architects should have fixed an earnest money deposit, a performance bank guarantee, a time limit of completion, and penalty on account of liquidated damages for delay beyond the stipulated time or time duly extended.

d) The architects should have guided the client about the importance of the general terms/conditions normally applied to the contracts for achieving scheduled completion target and to check the tendencies of the contractors to dilly-dally.

e) Conditions regarding total retention money, retention percentage, virtual completion, defects liability period, payment of retention money after the expiry of defects liability period etc. should have been incorporated to administrate the project smoothly and unambiguously.

f) The architects should have helped the client in executing formal contract agreements between the client and the contractors to pin-point legalities and to guard him/them from probable exploitation or harassment at the hands of the contractors.

g) The architects should have recorded measurements of all the items executed in a measurement book (MB) in the presence of the representatives of the client and the contractors duly signed by all the three parties to avoid any confusion regarding the measurements. This exercise itself would have helped in computing true quantities of various items and thus could have saved the client from the embarrassment of over payment.

h) The deduction of retention money out of the running bills of the contractors would have increased the stake of the furnishing contractors and thus they could not have dared to ignore the defects notified for rectification.

i) The architects should have recorded all the defects and further communicated the same to the contractors for rectification rather than showing haste in clearing the final bill of the contractors without resorting to checking the measurements and rates payable.

j) The architects should have prepared ?AS COMPLETED DRAWINGS? and supplied the same to the client for any reference to the service routes in future to obviate delays in locating faults and generate well organised working.

k) In the final bill the architects have not recommended the deduction of income tax at source (TDS) and thus it is the risk of the client if the contracting agency fails to honour its tax liability.?

10. This voluminous documentary evidence supports the statement made by the appellant in the affidavit.

11. For the reasons best known to the respondent they chose not to produce the architect, who was admittedly engaged by them. He had signed and verified the final bill submitted by the appellant for the completed work. What exactly transpired between the respondent and the architect engaged by them was known to these two persons only and the same has not been placed on the record of the court file. On the contrary another architect, Mr. Surya Kant, DW1, was produced in the witness box, who claimed to be the architect who had conducted the audit of the work done at the corporate premises of the respondent at Chandigarh and gave his report. He specifically stated in his cross-examination that he was not aware of what was the rate quoted by the appellant to the defendant or the architect. DW2, Shaun Walsh, also admitted in his cross-examination that he had met the appellant few weeks after the commencement of the work by the architect. Prior to that he was out of the country for a period of one month. He also stated that Tejender Singh was aware of the entire subject matter and he was not conversant with these things. Again for the reasons best known to the respondent, even Mr. Tejender Singh, choose not to step into the witness box. The witnesses also admitted that it may be correct that before starting the work, an estimate Ex.PW1/1 was given to the Company and the same was received by Tejender Singh. The following statement of this witness, in his cross-examination, certainly indicates that there was an understanding of the schedule of working and payment between the parties:-

?It is incorrect to suggest that out of the total amount of Rs.13,95,000/- paid to the plaintiff, a sum of Rs.25000/- was towards the work done by the plaintiff at my residence. I have not made any payment to the plaintiff for the work done at my residence. I do not remember as to who had actually paid the cash amount reflected in Ex.DW2/P3 to the plaintiff.?


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. The learned trial court has not adverted itself to the above documentary and oral evidence and in fact, there is no deliberation on this very material issue. On the own saying of the respondent, the architects were appointed to get the work completed, who in turn had appointed the appellant with whom the respondent had a meeting and had even done the work, not only at their Chandigarh office but at the residence of DW2 as well. The plea of no privity of contract between the parties thus, cannot be sustained by this Court. 13. Equally unsustainable is the finding of the learned Trial Court that the suit was bad for misjoinder of necessary parties. In fact, there is no discussion whatsoever, under all other issues and they have been determined by the trial court merely on the basis of its findings recorded on the issue relating to privity of contract. Absence of any discussion, appreciation of evidence and incorrect assumptions of law renders the judgment questionable in law. It is obligatory upon the learned Trial Court to completely discuss the evidence led by the parties and record its findings on each issue in terms of the scheme of the Code of Civil Procedure. 14. For the reasons afore-recorded, we would set aside the judgment and decree of the learned trial court dated 27.11.2003 and would remand the case to the learned trial court directing it to record its findings on the basis of the evidence already recorded. It would also record its findings on all the other remaining issues and thereafter dispose of the suit in accordance with law. We would appreciate if the learned Trial Court disposes of the suit as expeditiously as possible. The findings of this Court shall be confined to issue no.1 only. 15. Accordingly, the appeal stands disposed of. However, in the facts and circumstances of the case, we leave the parties to bear their own costs.