MCD's Own Lapses Bar It From Withholding Dues: Delhi High Court Upholds ₹1.01 Crore Decree In Favour Of Contractor

The Delhi High Court has dismissed an appeal filed by the Municipal Corporation of Delhi (MCD) against a decree of over ₹1.01 crore passed in favour of a contractor, holding that the civic body could not withhold payments when delays were caused by its own lapses.

A division bench of Justices Nitin Wasudeo Sambre and Anish Dayal observed,

“The appellant themselves created the situation wherein impediments arose due to their failure to remove the trees which affected the smooth execution of the contract. In such an eventuality and for failure to remove the trees for which the appellant was duty-bound to take action, it is not open for the appellant to blame the respondent for not executing the entire contract within the stipulated time.”

The Court was hearing an appeal against the Commercial Court judgment allowing the Respondent-contractor's claim for payment of approved running bills relating to a school construction project undertaken for MCD.

MCD had contended that the Respondent was responsible for delays in execution of the work and was thus not entitled to the amounts claimed. It relied on clauses of the General Conditions of Contract (GCC) to justify withholding of payment.

Rejecting the submissions, the High Court noted that the Commercial Court had, after appreciation of evidence, rightly concluded that the delays were attributable to MCD itself— which not only failed to clear the hindrances within the work period but also failed to maintain the hindrance register.

“If we look into the documents which are in the form of intradepartmental communications between the appellant and the Forest Department and the Horticulture Department, it is apparent that the appellant was under obligation to remove the trees and there is inordinate delay on the part of the appellant in moving the appropriate proceedings with Forest Department and Horticulture Department for removal of the trees,” it said.

The Court further observed that it is not the case of the MCD that the running bill was false or that the work itself was not executed.

In such circumstances, the Court dismissed the appeal and affirmed the decree directing MCD to pay ₹1.01 crore along with applicable interest to the Respondent.

Appearance: Mr. Tushar Sannu, Standing Counsel for MCD with Ms. Rajbala & Mr. Umesh Kumar, Advs. with Mr. Sunil Kumar-AE, MCD in person; Mr. Avinash Trivedi & Mr. Rahul Aggarwal, Advs. for Respondent

Case title: MCD v. M/S Ram Niwas Goel

Case no.: RFA(COMM) 677/2025

Click here to read order