Telangana High Court
M/S Gammon Engineers And Contractors ... vs The Government For State Of Telangana on 20 January, 2025
Author: B. Vijaysen Reddy
Bench: B. Vijaysen Reddy
THE HONOURABLE SRI JUSTICE B. VIJAYSEN REDDY
WRIT PETITION No.4849 OF 2024
ORDER :
This writ petition is filed seeking to declare the action of respondent No.2 - the Superintendent Engineer, Irrigation Circle No.1, Nagarkurnool, in issuing the letter bearing Lr.No. SE/Irrigation/C.1/NGKL/OT1/AE1/Lift.3/261M dated 24.11.2023, as being illegal and arbitrary and contrary to the Clause No.1.44 of the agreement and consequently direct respondent No.3 to release the security deposit of Rs.10,00,00,000/- (Rupees ten crores only) to the petitioner.
2. Petitioner - M/s. Gammon Engineers & Contractors Private Limited is a company engaged in the business of carrying out various infrastructure and several contracts works on behalf of the Government of Telangana and other State Governments. In the tender process floated by the respondents, petitioner was declared successful bidder and was awarded work of execution of Stage - III Pumping Station (5X30 MV) of Kalwakurthy Lift Irrigation Scheme near Gudupally Gattu balancing reservoir near Gowreddipalli 2 Village, Gandipet Mandal, Mahabubnagar District (for short, 'Project'). In furtherance thereof, petitioner entered into agreement No.10/EPCMGJLIP/2005-06 dated 28.09.2005 (for short, 'Agreement') with Project Administrator & Superintendent Engineer, Mahatma Gandhi Lift Irrigation Project i.e., respondent No.2.
3. It is stated that as per Clause 1.44 of the General Conditions (Instructions to bidders) (for short 'GTC') an amount of Rs.100 million rupees i.e., Rs.10,00,00,000/- (Rupees ten crores only) has to be deposited by the petitioner towards security deposit by way of demand draft in favour of Pay and Accounts Officer (PAO), Mahabubnagar. Petitioner was obligated to deposit the said amount to PAO or respondent No.2. The said amount will be released after one year of completion of contract period including the operation and maintenance period, to the bidder. The Clause 1.44 of the GTC reads as under:
"a) 1. At the time of signing the agreement as per ITB3, the successful bidder shall furnish Security Deposit for a sum of Rs.100 Million (Rupees One Hundred Millions Only) by way of D.D. drawn from any nationalized Bank in favour of PAO, 3 Mahaboobnagar or bank Guarantee in favour of the Project Administrator & Superintending Engineer, NKLI Circle, Mahaboobnagar valid for a period of one year after completion of contract period including O&M period. EMD of successful bidder will be returned after furnishing of Security Deposit or adjusted towards security deposit."
4. It is stated that petitioner submitted representation dated 23.06.2022 to respondent No.3 - the Executive Engineer, Irrigation Division No.3, Nagarkurnool, to issue completion certificate for the Project under Engineering, Procurement and Construction (EPC) Turnkey System. Accordingly, respondent No.3 issued completion certificate dated 29.07.2022 vide Lr.No.EE/IRRIGATION /DNNo.3/NGKL/LIFT 3/DB/568M stating that petitioner - company has completed the work in all aspects including the operation and maintenance period by 21.08.2021. Thereafter, respondent No.3 addressed a letter dated 19.10.2022 to petitioner - company vide Lr.No.EE/IRRIGATION/DNNo.3/NGKL/LIFT-3/BD/686/1M requesting to prepare inventory of Pump House Materials, Drawings, Spares, Tools & Kits and handover the site as per the original EPC and subsequent agreement, conditions and norms 4 stipulated in the agreement to M/s. ESSVEE Infrastructures, Hyderabad. Accordingly, petitioner has handover the Pump spares, Testing Equipment tools and tackles of Pumping Station of the Project to M/s. ESSVEE Infrastructures, Hyderabad.
5. It is submitted that as per the Clause 1.44 of GTC, petitioner furnished bank guarantee at the time of Agreement and later requested respondent No.3 to receive cash of Rs.10 crores towards the security deposit from the running bill amount. Accordingly, respondent No.3 recovered Rs.10,00,00,000/- and released the bank guarantee of Rs.10,00,00,000/- in favour of Axis Bank Limited Credit Management Centre, Green Lands, Begumpet Road, Hyderabad, and addressed letter dated 06.08.2022 vide Lr.No.EE/IRRIGATION/DN-3/NGKL/SUPDT/LIFT-3/575M. It is contended that petitioner filed representation dated 26.08.2023 to release the security of Rs.10,00,00,000/- as work entrusted to the petitioner - company was completed including the operation and maintenance by 21.08.2021. Petitioner furnished work completion certificate dated 29.07.2022 issued by respondent No.3 along with representation dated 26.08.2023 to respondent No.3 requesting for 5 release of security deposit. Respondent No.3 forwarded the representation dated 26.08.2023 of petitioner - company to respondent No.2. Respondent No.3 issued letter vide Lr.No.SE/ Irrigation/C.1/NGKL/OT1/AE1/Lift.3/261M dated 24.11.2023 stating that as per the Clause 3.5.9 it is not possible to release the security deposit of Rs.10,00,00,000/- without dropping the Audit paras/objections.
6. When the matter was listed for admission, Mr. S. Rahul Reddy, learned Special Government Pleader, representing learned Additional Advocate General for respondents opposed the grant of interim order and sought time to get instructions. After giving reasonable opportunity of hearing, this Court has passed order on 11.03.2024, which reads as under:
"When the matter was taken up for hearing on 23.02.2024, Mr. S. Rahul Reddy, learned Special Government Pleader, representing learned Additional Advocate General, requested for time to get instructions. The matter was again listed on 26.02.2024 and again request was made by the learned Special Government Pleader for adjournment.
Today, when the matter is listed, learned Special Government Pleader submitted that counter is under 6 preparation and the same will be filed in a few days. He submitted that the bills submitted by the petition towards completion of the work are being reconciled and decision will be taken shortly on the request of the petitioner for returning the security deposit amount of Rs.10,00,00,000/- (Rupees Ten Crore only).
Learned counsel for the petitioner submitted that the subject contract awarded to the petitioner vide Agreement No.10/EPC/MGJLIP/2005 dated 28.09.2005 for MGKLI Lift- III execution of Stage-III Pumping Station (5x30 MW) of Kalvakurthy Lift Irrigation Scheme has been completed. Learned counsel referred to work completion certificate issued by the respondent No.3 vide Lr.No.EE/Irrg/Dn.No.3/ Ngkl/Lift.3/DB dated 29.07.2022. Learned counsel submitted that as per clause 1.44 of the General Terms and Conditions, the security deposit shall be released to the contractor after one year of the completion of the contract period including operation and maintenance.
Learned counsel for the petitioner asserted that the respondents have not raised any issues with regard to operation and maintenance and the question of conciliation of the amount as submitted by the learned Special Government Pleader does not arise.
In view of the fact that the work completion certificate is issued on 29.07.2022 and one year period also expired therefrom, there shall be interim direction to the respondents to forthwith release the security deposit amount of Rs. 10,00,00,000/- (Rupees Ten Crore only) to the petitioner, 7 preferably, within a period of ten (10) days from the date of receipt of a copy of this order.
List on 08.04.2024."
7. Later alleging non-compliance of the order 11.03.2024 passed by this Court, petitioner filed C.C. No.681 of 2024. During the course of hearing, it was informed by Mr. S. Rahul Reddy, learned Special Government Pleader representing learned Additional Advocate General for respondents that petition has been filed to vacate the order dated 11.03.2024 and requested this Court to take up the vacate petition before hearing the contempt case. As per his request, the contempt case is taken up along with vacate petition.
8. In the counter affidavit along with vacate petition filed by respondents it is stated that the execution of Project on EPC basis is one of the packages of MGKLI Scheme. The Government had accorded the administrative sanction for Rs.1500 Crores vide G.O.Ms.No.65. This work of Execution of Stage-III Pumping Station was technically sanctioned for Rs.695 crores vide PAR No.16/MGJLIP/2005-2006 dated 26.09.2005 and entrusted to petitioner - company vide Agreement dated 28.09.2005 for 8 Rs.631,98,81,000/- (Rupees six hundred thirty-one crores ninety eighty lakhs eighty-one thousand only) on EPC Basis. It is submitted that as per clause 1.44 of GTC, the amount of security deposit of Rs.10,00,00,000/- will be released after one year of completion of contract period including operation and maintenance period to the bidder.
9. It is submitted that the according to the instructions contained in G.O.Ms.No.94 I&CAD Department dated 01.07.2003, an amount equivalent to 1% Estimated Contract Value (EMV) shall be collected from all participating bidders towards Earnest Money Deposit (EMD) and successful bidder shall pay balance EMD of 1.5% of contract value at the time of conclusion of the Agreement. The Government while issuing guidelines for prioritized projects under EPC system vide Memo.No.5217/Reforms/06 dated 23.02.2006 also made clear that as per rules, EMD is collected at 2.5% of the value of the contract and an amount of Rs.5,79,97,025/- was not collected from the petitioner (15,79,97,025 - 10,00,00,000 = 5,79,97,025/-).
9
10. In the counter of the respondents it is stated the following paras of MGKLI Lift-III were printed in the Controller Audited General Performance Audit report for the year 2009-10 which reads as under:
"Para No.2.2.6.4:
1) The Earthwork excavation for surge pools and pump houses:- All the lift packages envisaged construction of surge pools and pump houses which inter alia involve earthwork excavation. Audit noticed that during execution there was substantial reduction in the earthwork quantities. As such No reduction in payments to contractors despite reduction in earth work quantities, undue benefit to contractor at Rs. 39.08 Crores.
2) Delivery mains (Pipeline):- Similarly, there were reduction in the length of delivery mains as against the estimated length with attendant adverse consequences, No reductions in payments to contractors despite reduction in pipeline quantities excess in Rs. 42.53 Crores.
3) Tunnel:- In respect of tunnel woks under lift-IlI package audit noticed that the amounts scheduled for payment to the contractors was far in excess of the amounts they would be eligible, considering the estimated cost and overall tender percentages quoted by them, amounts scheduled for payment to contractors were far in excess of the amounts payable Rs.54.42 Crores.
Para No.2.2.7.2:
1) Clause relating to collection of EMD:- As per prevailing orders an Earnest Money deposit (EMD) of Rs.15.80 crores was to be collected at 2.5 percent on the agreement value of rs.631.99 crore. However, the NIT 10 of Lift -III package prescribed collection of Rs.10 crores as EMD. This led to short collection of security of Rs.5.80 crores.
JLIP -2 LAR 421/06-07:- Major Irregularities Section-A:- Para No. 1(A), Short collection of EMD Rs.5,79,99,025/-. Thereafter the agency was filled W.P. No.443/2009 in Hon'ble A.P. High Court Hyderabad. The Hon'ble High court of Andhra Pradesh, Hyderabad was disposed the case on 28.8.2009 and stated that as such there is no short recovery of EMD as per the original terms and conditions of contract with the agency. The Accountant General, Hyderabad has advised that address the Public Accounts Committee of Telangana State legislature.
Para No.1(B) In correct inclusion of LS Provision resulting to extra benefit to contractor of Rs.607.20 Lakhs. The latest action taken report is awaited from the Accountant General, Hyderabad.
Para No.1(C) Short recovery of VAT Rs.11.49 Lakhs. The short recovery of VAT Rs.11,48,527/- had recovered in Running Account Bill No.142nd & part vide C.B. Voucher No.96 Dt.16.09.2023. The latest action taken report is awaited from the Accountant General, Hyderabad. JLIP -2 LAR 414/07-08:-Major Irregularities.
Section:-A:- Para No.1. Savings due to change in designs non- accrual to Government account Rs.19.21 Crores.
Section:-B:- Para No.II. Unintended benfit to the agency due to the agency due to inclusion of central excise duty on electro mechanical Equipment in the IBM Rs.4428.59 Lakhs.
Para No.III:- Non recovery of cess under the Building and Other construction works welfare cess Act, 1996 (Cess Act) Rs.2,31,52,682/-. The EPC agency was filed W.P.No.19995 of 2010 in the Hon'ble High Court Hyderabad. The Hon'ble High Court was issued interim stay as 11 there shall be interim stay of deduction of any amounts towards labour cess from the current bills of the petitioner. In view of the above a counter was filed in Hon'ble High Court Hyderabad by the Superintending Engineer/MGJLIP, Circle, Mahabubnagar vide letter No. DEE1/Lift-3/338/M, Dt.22.9.2010. The Judgement is awaited.
Para No.IV:- Short recovery of NAC @0.25% on the work executed since LS XXV part Bill in LS XXV & part bill paid on 04.02.2008, Rs.5,79,596/- and short recovery of seigniorage charges by Rs.2000/- the recovery of NAC 0.25% for Rs. 5,79,596 instead of Rs.5,73,596/- and short recovery of seignoirage charges by Rs. 2000/-had recovered in RA bill No.142 & part bill and paid vide C.B. Vocher No.96 Dt. 16.09.2023. The latest action taken report is awaited from the Accountant General, Hyderabad."
11. It is submitted that as per the Clause 1.26.6 of GTC with regard to income tax, surcharge on income tax if any, and any other corporate tax, the employer shall not bear any tax liability in respect of the contracts irrespective of the mode of contracting and the bidder (whether domestic or foreign) shall be liable and responsible for payment of such tax. As per Clause No.3.3 of GTC employer reserves right to recover the amount from the contract performance guarantee, if required and as per the Clause No.1.15.3(f), deductions such as income tax, works contract tax and other taxes and 12 recoveries shall be deducted from time to time as per the orders issued by the Government.
12. A reply affidavit has been filed by the petitioner to the counter affidavit of the respondents contending that audit objections of Section-A:- Para No.1(A) about short collection of EMD of Rs.5,79,99,025/- was dropped by the Accountant General (AG), Hyderabad, as per the order passed by this Court in W.P. No.443 of 2009. The audit objection regarding Para No.1(B) about the incorrect inclusion of LS provision resulting in extra benefit to the contractor to an amount of Rs.607.20 lakhs was also dropped by the AG, Hyderabad, and the same was informed to respondent No.3 by letter dated 19.01.2024.
13. It is submitted that Para 1(C) of the short recovery of VAT of Rs.11.49 lakhs was also dropped by the AG, Hyderabad, and the same was informed to respondent No.3 by letter dated 19.01.2024. The objection of Section-A:-Para No.1 savings due to change in designs non-accrual to the Government account of Rs.19.21 crores is incorrect. The work was awarded to petitioner - company on EPC 13 is for a sum of Rs.631,98,81,000/- (Rupees six hundred and thirty one crores ninety eight lakhs eighty one thousand only) and as per the said contract, the petitioner is bound to complete the work and hand over the Project to respondents, hence, the objection taken by AG about saving of Rs.19.21 crores is incorrect.
14. In so far as, Section:-B:-Para No.II, the unintended benefit due to agency inclusion of Central Excise Duty (CED) on Electro Magnetic Equipment (EME) in the Internal Bench Marking (IBM) is Rs.4428.59 lakhs. It is stated that as per the respondents the estimate in the IBM for the Project covered by the Agreement dated 28.09.2005 is Rs.63955.16 crores which includes an amount of Rs.25423 lakhs towards EME and sum of Rs.1713 lakhs towards 22 KV switch yards, while arriving at IBM value. The department has also included element of CED of 16.32% on both the items totalling to Rs.4428.59 lakhs.
15. It is stated that petitioner has no knowledge about IBM as the respondents did not put the same in the public domain. Petitioner quoted tender at Rs.631,98,81,000/- which is 1.18% less than the 14 value of work in the tender document. It is submitted that Government of India, Ministry of Finance, Department of Revenue, issued notification dated 08.01.2004 (for short 'notification 14 of 2004') and as per the said notification, the excise duty/customs duty was exempted for the water supply projects in the public interest. In accordance with the said notification, the District Collector, Mahabubnagar, issued a certificate exempting the EME imported from other countries and accordingly the exemption was granted. However, petitioner has not received the said exemption from the respondents. Hence, respondents are not entitled to state that petitioner has got unintended benefit of Rs.4428.59 lakhs. The Central Government has issued notification 14 of 2004 on 08.01.2004 and petitioner entered into Agreement on 28.09.2005 and as on date of agreement there is no CED on equipment utilised for water projects. Contrary to the notification 14 of 2004, the respondents have included CED on IBM estimates and demanding the said amount from the petitioner is illegal.
16. It is submitted that W.P. No.19995 of 2010 was filed by the petitioner to declare the action of respondents therein in not 15 including the 1% towards labour cess in respect of the works allotted to the petitioner under the Agreement dated 28.09.2005 and payments made on 26.06.2007 by revising the estimates as per U.O. Note No.4763/PES.F8/(A1)06-4 dated 28.02.2008 as illegal and consequential direction to respondents therein to include 1% labour cess entrusted to the petitioner under the Agreement. This Court by the order dated 01.05.2024 disposed of the said writ petition directing the respondents therein to verify the bills of the petitioner and if corresponding amount is included in the estimate towards 1% labour cess, respondents therein can deduct upon the verification, if respondents therein found that the corresponding amount is not included in the estimates, respondents therein shall not take any steps to deduct the amount/recover the amount from the petitioner towards the labour cess. As respondents have not included the labour cess in the estimates, they are not entitled to collect Rs.2,31,52,682/- in view of the order dated 01.05.2024 passed by this Court in W.P. No.19995 of 2010.
17. It is submitted that as per Para No.IV short recovery of NAC @ 0.25% totalling to Rs.5,79,596/- and short recovery of 16 seigniorage charges by Rs.2000/-, the said paragraph was dropped by the AG, Hyderabad, and the same was intimated to respondent No.3. The office of the Accountant General (Audit) Telangana, Hyderabad, addressed letter dated 18.07.2024 to respondent No.3 informing that as per the records no paras pertaining to the Project are pending with Public Accounts Committee (PAC).
18. Heard Mr. Ashok Reddy Kanathala, learned counsel for the petitioner and Mr. S. Rahul Reddy, learned Special Government Pleader representing learned Additional Advocate General for respondents, and perused the material on record.
19. Learned counsel for the petitioner submitted that tender was awarded to the petitioner for Rs.631,98,81,000/-. It is an EPC contract and based on the estimated value of the contract i.e., Rs.695 crores quoted by the respondents, petitioner has quoted 1.18% less and the tender was awarded to petitioner - company. The estimated value of the contract is prepared in consultation with various stakeholders and departments concerned. Learned counsel submitted that bidder goes by the estimated value and no bidder 17 while submitting his bid scrutinizes minute aspects like exemptions and grants given by the Central Government. What matters is the estimated value of contract. Petitioner has completed the contract and handed over the entire Project to respondents. The terms of the contract cannot be deviated after work completion certificate is issued by respondent No.3 in terms of the Agreement dated 28.09.2005. After completion of one year, as per Clause 1.44 of the general terms and conditions, petitioner is entitled to receive the security deposit of Rs.10,00,00,000/- and action of respondents in not releasing the security deposit is arbitrary, unreasonable and malafide in nature.
20. Learned counsel submitted that the contract was awarded to the petitioner in the year 2005 and it was completed in all aspects including the operation and maintenance on 21.08.2021. Only when the interim order dated 11.03.2024 was passed by this Court, respondents in order to overreach the said order have set up a false plea of unintended benefits, as an afterthought. The action of respondents is contemptuous, and they are liable to be punished. Learned counsel submitted that Clause 1.44 of GTC is binding on 18 the respondents and Clause 3.5.9 (Discharge) of the Agreement which is related to final settlement cannot be invoked by them.
21. Learned Special Government Pleader representing learned Additional Advocate General for respondents submitted that the work completion certificate issued to the petitioner - company was not in accordance with the Clause 3.15.10 of GTC. As per the audit objections, amount of Rs.4375.25 lakhs have to be deducted which is paid in excess to the petitioner in the running bills and the amount of Rs.10,00,00,000/- deposited by the petitioner as EMD is deducted towards part liability of the petitioner. It is submitted that letter vide Lr.No.EE/Irr.Div-3/AB/NGKL/MGKLI-III/291M dated 26.04.2024 was issued by respondent No.3 to the petitioner, wherein, petitioner was informed that it has availed exemption on Electro-Mechanical work by inclusion of CED in the IBM which resulted in the unintended benefit of Rs.4375.25 lakhs. The amount of Rs.10,00,00,000/- is available with respondents and petitioner was directed to remit excess amount in the running bills totalling to Rs.23,93,25,000/- (Rupees twenty-three crores ninety three lakhs 19 and twenty five thousand) under the Clause 3.15.10 by way of demand draft in favour of respondent No.3.
21. Learned Special Government Pleader submitted that Clause 1.44 of GTC has to be read with Clause 3.15.10 and also Clauses 3.15.8 and 3.15.9 and merely because completion certificate was issued, petitioner cannot be granted relief.
The Clause 3.15.10 reads as under:
"3.15.10 Final Payment The Employer's Representative shall issue to the Employer, with a copy to the Contractor, the Final Payment Certificate within a reasonable time after receiving the Final Statement and written discharge in accordance with Sub-Clause 3.15.8 and 3.15.9, stating:
(a) the amount which is finally due and,
(b) After giving credit to the Employer for all amounts previously paid by the Employer and for all sums to which the Employer is entitled, the balance, if any, due from the Employer to the Contractor or from the Contractor to the Employer as the case may be.
If the Contractor has not applied for a Final Payment Certificate in accordance with Sub-Clauses 3.15.8 and 3.15.9, the Employer's Representative shall request the Contractor to do so. If the Contractor fails to make such an application within a reasonable time, the Employer's Representative shall issue the Final Payment Certificate for such amount as he considers to be due." 20
23. The Clause 3.15.8 of GTC deals with manner in which application for final payment shall be made by the contractor and Clause 3.15.9 provides that the contractor shall submit discharge acknowledging receipt of full and final payment. It is amply clear, Clause 3.15.10 of GTC can be invoked by the respondents within reasonable time after receiving final statement and written discharge in accordance with the Sub-Clauses 3.15.8 and 3.15.9 by giving details of the amount finally due and for all sums to which the employer is entitled, the balance, if any, due from the employer to the contractor or from the contractor to the employer. It is not the case of respondents, more particularly respondent No.3 that final payment certificate is not issued to the petitioner. Be that as it may, the contract was completed in the year 2021, work completion certificate was issued to the petitioner on 29.07.2022. One year has elapsed thereafter and in all fairness, respondents ought to have returned the deposit as per Clause 1.44 of GTC. Till writ petition was filed and interim order dated 11.03.2024 was passed by this Court there was no whisper about the alleged amounts due to the 21 respondents and the so called unintended benefits received by the petitioner.
24. According to the learned Special Government Pleader, the respondents are entitled to recover the tax/customs benefit availed by the petitioner as per the Clause 1.26.5 and 1.26.6 of the GTC which reads as under:
Clause 1.26.5 If any statutory levies like custom duty and port charges in case of Imported Goods, Sales Tax, Excise Duty and Surcharge in case of Domestic Goods are imposed in respect of the goods contracted to be supplied on or after the date of contract and before the expiry of the contractual date, such imposition or variation in levis shall be to be employer account, and any variation on account of imposition of or variation in statutory levies on goods contracted to be supplied occurring after the expiry of the original contractual delivery date shall be to the Supplier's account.
Clause 1.26.6 As regards the Indian Income tax, surcharge on Income Tax if any and any other Corporate Tax, the employer shall not bear any tax liability in respect of the contracts irrespective of the mode of contracting. The bidder (whether domestic or foreign) shall be liable and responsible for payment of such tax, if attracted under the provision of law.22
As per Clause 1.26.5, custom duty, sales tax etc, are to be levied on the employer - respondents for the goods supplied on or after date of the contract and before the expiry of contractual date. After expiry of contractual delivery date, statutory levies have to be paid by the contractor - petitioner. The said clause cannot be pressed into service by the respondents. It is because respondents have not paid any customs duty or sales tax. They claim that customs duty exemption is availed by the petitioner, thereby, petitioner has received unintended benefit. The learned Special Government Pleader has not pointed out any clause in the agreement or general terms and conditions whereby the term "unintended benefit" is defined and recovery can be made in that regard. Respondents having kept silent for several years, without raising any objection, have come up with this afterthought plea for extraneous reasons.
The terms of the contract have been consciously and duly entered into by the parties. The contract was successfully completed by the petitioner which was duly acknowledged by the work completion certificate dated 29.07.2022 issued by respondent No.3. Thus, the action of respondent authorities in trying to deviate from the terms 23 of the agreement and ignoring work completion certificate dated 29.07.2022 and taking objection as an afterthought is arbitrary and unreasonable and violative of Article 14 of the Constitution of India.
It is settled law "an act to be done in a particular manner has to be done in that manner only". The disputes arising out of statutory or commercial contracts are amenable to writ jurisdiction when the action of respondents is arbitrary, discriminatory and unreasonable, in view of the judgments of the Hon'ble Supreme Court in Surya Constructions v. State of Uttar Pradesh 1, ABL International Limited v. Export Credit Guarantee Corporation of India Limited 2 and Whirlpool Corporation v. Registrar of Trademarks 3. In the above factual backdrop, the petitioner has made out a case for indulgence of this Court as the respondents have arbitrarily and unduly withheld the security deposit without any bonafide reasons.
25. It is relevant to point out that after lapse of two (2) years upon completion of the Project, letter dated 26.04.2024 was addressed by 1 2019 16 SCC 94 2 2004 3 SCC 533 3 1998 8 SCC 1 24 respondent No.3 to the petitioner for recovering alleged unintended benefits accrued to the petitioner. According to the respondents, the objection with regard to unintended benefit of Rs.4428.59 lakhs (due to inclusion of excise duty on electromechanical equipment in IBM) was taken in the Audit Report of the year 2009-10. There is no explanation as to why action was not taken on such report for about 15 years, since then. In the letter No.AG(AU)/TS/AMG- II/ES-I(Reports)/PAC/2024-25/18 dated 18.07.2024 filed along with the reply affidavit of the petitioner, it is clarified by the Office of the Accountant General (AUDIT) that "no paras relating to the work "Execution of Stage-III Pumping station (5X30MW) Mahatma Gandhi Kalwakurthy Lift Irrigation Scheme Near Gudipallygattu near Gouridevipally (V), Gopalpet (M), Mahabubnagar District" are pending with Public Accounts Committee (PAC)." There is no rebuttal to said letter by the learned Special Government Pleader, which in any case cannot form the subject matter of this case for the reasons stated in the preceding paragraphs.
26. Hence, without expressing any opinion on the letter dated 26.04.2024 issued by respondent No.3 - the Executive Engineer, 25 Irrigation Division No.3, Nagarkurnool, the writ petition is allowed and respondents are directed to release security deposit of Rs.10,00,00,000/- (Rupees ten crores only) to the petitioner, within a period of three (3) weeks from the date of receipt of a copy of this order. It is made clear respondents are at liberty to go ahead with the enquiry pursuant to the notice dated 26.04.2024 issued by respondent No.3, in accordance with law. There shall be no order as to costs.
As a sequel thereto, miscellaneous applications, if any, pending in the writ petition stand closed.
______________________ B. VIJAYSEN REDDY, J January 20, 2025.
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