In a regular first appeal filed before the Delhi High Court under Section 96 of the Code of Civil Procedure, 1908 (CPC) by the National Power Training Institute (NPTI) against a judgment and decree dated 03-09-2021 by ADJ-02, New Delhi, whereby an application filed by NPTI under Order XXXVII, Rule 3(5), CPC seeking leave to defend was dismissed and the suit was decreed for a sum of Rs. 59,12,458/- along with pendente lite and future interest at 6% per annum, a Single Judge Bench of Justice Neena Bansal Krishna set aside the impugned judgment and granted NPTI the leave to defend.
The Sunehari Bagh Builders Pvt. Ltd. (respondent) had filed a civil suit under Order XXXVII of CPC seeking recovery of Rs. 64,76,146/- together with pendente lite and future interest.
NPTI, functioning under the Government of India, floated a tender on 20.12.2010 for the renovation of hostel rooms and associated facilities at NPTI-NR, Badarpur. Sunehari Bagh participated in the process, and was awarded the contract for Rs.61,72,140/-. A formal agreement dated 17.02.2011 was executed with a twelve-month completion duration ending on 16.02.2012. Sunehari Bagh commenced work, and measurements were periodically recorded by NPTI officials in departmental measurement books, specifically measurement book nos. 2, 46, and 48.
Based on these records, Sunehari Bagh asserted that an amount of Rs. 64,76,146/- became payable, including running account bills and a refundable security deposit. Relying upon an internal working committee report dated 24.10.2011 that undertook sample verification, Sunehari Bagh sought the release of payments. When the payment remained unreleased, the respondent issued a Section 80 CPC notice on 31.05.2014 and subsequently instituted a Civil Suit under Order XXXVII CPC for recovery.
Upon service of summons, NPTI filed an application seeking leave to defend, raising several principal defenses. It was alleged that the suit was barred by limitation since the cause of action arose in 2011 but the suit was instituted only on 15.10.2014. NPTI argued that the suit was not maintainable under summary proceedings of Order XXXVII CPC due to disputed contractual obligations, disputed measurements, and disputed valuation requiring detailed evidence. Further, NPTI also alleged that Sunehari Bagh suppressed material information regarding prior arbitration proceedings in its tender documents, failed to produce original bills, and illegally obtained an advance payment of Rs.9,00,000/- prohibited by Clause 20 of the tender conditions.
NPTI asserted collusion between Sunehari Bagh and the Deputy Director, who allegedly lacked authority to approve rate enhancements and extra items. NPTI relied on a departmental discrepancy report prepared pursuant to an Office Order dated 08.01.2015 and a subsequent committee report dated 27.01.2015. These subsequent records noted significant anomalies, showing renovation in only 22 rooms, unverified hidden items, and an assessed work valuation of just Rs. 12,28,627.14/-, meaning the released payment of Rs.21,26,608/- already exceeded the actual work value. Prior to the adjudication of the leave to defend application, an Order VII Rule 11 CPC rejection application was dismissed, and the court observed that limitation involved mixed questions of law and fact to be considered independently on merits.
Thereafter, the matter went to the Supreme Court wherein it was clarified that neither orders passed in the earlier proceedings nor the dismissal of SLP would stand in the way of the application seeking leave to defend. Subsequently, the ADJ decided the said application and concluded that a sum of Rs. 59,12,458/- remained payable to Sunehari Bagh. Aggrieved, NPTI filed the present appeal.
The Court perused the records and found that while measurement books and the initial internal working committee report supported Sunehari Bagh’s case, NPTI’s defense was not confined to a bare denial of liability. It was noted that the existence of competing departmental records, such as the subsequent discrepancy report and the committee report showing a starkly contrasting valuation of approximately Rs. 12,28,000/- against Sunehari Bagh’s claim of over Rs.79,00,000/-, raised bona fide disputes.
The Court said that determining which reports accurately represented the work executed at the site fell within the domain of trial. Further, it was found that the plea of limitation, with bills from 2011 and a suit filed in late 2014, constituted a mixed question of fact and law that required evidence for proper adjudication. The Court stated that the impugned judgment failed to adequately address the effect of the subsequent discrepancy report and the committee report.
The Court determined that NPTI raised substantial and bona fide triable issues regarding correctness of work, legality of enhancement of rates, officer’s authority, and maintainability of suit. Concluding that the defense was not sham, illusory, or a mere attempt to evade liability, the Court set aside the trial court’s judgment and decree dated 03.09.2021.
The application under Order XXXVII Rule 3(5) CPC was allowed, granting NPTI the leave to defend and directing its written statement to be taken on record. Finally, the matter was remanded to the learned Trial Court for adjudication in accordance with law, directing the parties to appear before the learned ADJ, South-East, Saket Courts, New Delhi, on 09.07.2026 to lead evidence.
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