Holding the Delhi Development Authority (DDA) guilty of dereliction of duty in the termination of a construction contract for abandonment of work, the Delhi High Court has dismissed its appeal, leaving it with no option but to pay a compensation of Rs.1 crore to a construction company for the damages it suffered due to inaction on its part.

The DDA had filed the appeal against a Single Bench judgment upholding the award of compensation by an arbitrator. The arbitrator had awarded a compensation of Rs.33 lakh to the construction company, Messrs G. S. Luthra. The contractor had to complete the construction by May, 1982, but it continued till 1984 and remained in suspended animation till 1987 when the DDA terminated the agreement.

The Court noted that the contract continued to be in operation even after the construction stopped without any objection from the DDA.

The Court also said the DDA did not give a reasonable time to the contractor before terminating the contract.

Dismissing the appeal, a Division Bench of the Court comprising Justice Vikramjit Sen and Justice Siddharth Mridul said: “The more important aspect that arises is why was there total inaction on the part of the DDA between the years 1984 and 1987. If the contractor had abandoned the work, there was no need to issue the termination order after several years in 1987. If the work was not to be continued, then a timely decision ought to have been taken certainly before…..1984.''

“Dereliction of duty or sheer negligence on the part of DDA has resulted in the loss of Rs.33,00,000 as far back as in September, 1993, expended towards construction up to 1984. Interest on this amount has been awarded at the rate of 12 per cent per annum which has been reduced to 9 per cent by the learned Single Judge. Considering that two decades have elapsed from the date of the award, this liability will now have mounted to around ‘1,00,00,000,” the Bench noted.