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South Delhi Municipal Corporation vs. MSV International Inc.

First Appeal from Order (Original Side, Commercial) · 2026:DHC:7972-DBDecided 16 Sept 2026New Delhi Bench
FAO(OS) (COMM) 144/2018CNR: DLHC011554132018
Justice Avneesh Jhingan · Justice Manmeet Pritam Singh Arora

Background

MSV International had been engaged by the erstwhile Municipal Corporation to prepare a master plan for dairy farm waste management in Delhi. After the Corporation terminated the contract and blacklisted MSV, alleging delay in submitting the final report, an arbitrator held that MSV had actually completed the work within the extended deadline and was entitled to the balance payment. The Corporation's challenge to this award was dismissed by a single judge, leading to this appeal.

Decision Breakdown

The Division Bench found no fault with the arbitrator's finding that the final report had, in fact, been submitted within time, noting the Corporation had never specifically denied receiving it, only vaguely stated the covering letter was "not found in MCD record." It further held that the Corporation could not show any contract clause entitling it to demand a refund merely because the project was later shelved, especially since it had itself extended the completion deadline around the same time it claimed to have scrapped the project. The Bench also noted that under the contract's own terms, a report is deemed accepted if no specific objection is raised within 90 days, which the Corporation never did.

Lesson Learnt

A public body cannot escape payment for completed consultancy work simply by later cancelling the project, unless the contract specifically allows recovery in such circumstances, and failing to formally object to submitted work within a contractually specified period can be treated as acceptance of that work.

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