The Andhra Pradesh High Court has reiterated that writ petition in contractual matters is maintainable if filed for arbitrary withholding of Contractual Payments by State or its subjects.
The single-judge bench of Justice Battu Devanand held that when the State or its instrumentalities fails to act legally within reasonable period to make payment, it infringes the fundamental rights.
Brief Facts of the Case
The writ petition has been filed for declaration of the action of the Respondents in not releasing the bill amount of Rs.15,92,859/- for the work executed by the petitioner namely as illegal, arbitrary, malafide, unjust, irresponsible, contrary to the principles of natural justice and consequential direction to the respondents to release the said bill amount with interest forthwith.
Learned Counsel for the petitioner submitted that since the petitioner completed the work long back and bill was prepared and approved on 08.02.2019, till date the bill amount was not released and the Respondents are dragging on the issue.
In the counter-affidavit, the Respondent submitted that the work was completed by the petitioner and handed over to the user Department and bill was not paid saying that due to non-availability of funds.
It was further submitted that their Corporation is only an executing agency to look after the civil construction and to monitor the quality of the work with the approved structural designed and drawings and submitted the bill for payment to the value of the work done to the contract through CFMS online portal. It was averred that due to paucity of funds, this executing agency is unable to send the bill to the scrutiny authority (PAO) and held at executing agency only.
It was further contended on the respondent's behalf that the bill is already raised several times through CFMS portal and waiting for release of funds and when the funds availability is ensured by the Director of B.C. Welfare, the bill will be uploaded in CFMS for processing the payment in favour of the petitioner. It was due to the non-availability of funds, that the CFMS are not allowing uploading of bill in the portal.
He pointed ourt that the petitioner executed the agreement for the works with a condition precedent that all the subject issues shall be raised before an Arbitrator or before the competent civil court as an alternative mode of dispute settlement. He alleged that the petitioner suppressed material facts and submitted that the Writ Petition cannot be entertained in contractual matters.
On the other hand, the learned counsel for the petitioner contended that the writ petition is maintainable on the issue of privity of contract. He further submitted that in the absence of any dispute with regard to the execution of work within stipulated period as per the agreement, it is the legal duty of the respondents to clear the bill and make payment. Once the respondents failed to pay the amount to the petitioner after execution of work to the satisfaction of the respondents, this Court can entertain the Writ and direct the respondents to make payment, he submitted.
High Court's Observation
The Court rejected the contention of the Respondents that the Petitioner has to avail alternative remedy as per the terms and conditions of the Agreement to approach the arbitrator and the petitioner is not entitled for interest in view of the condition of waiver of interest in the Agreement in view of the admitted facts of this Case that the respondents themselves violated the terms and conditions of the Agreement by not clearing the bill of the petitioner for abnormal period from the date of submission of the bill.
The Court opined that when the State or its instrumentalities failed to act legally within reasonable period to make payment to the petitioner for the works executed by her and infringed the fundamental rights of the petitioner, we hold that the Writ Court is having jurisdiction to entertain the claim of the petitioner.
It referred to Abl International Ltd. & ANR Vs. Export Credit Guarantee Corportion of India Limited & Ors, 2003 Latest Caselaw 655 SC to holdf that not releasing the amount for which the petitioner is legitimately entitled is nothing but depriving the rights of the petitioner.
"Due to illegal action of non-payment of the amount promptly by clearing the bill submitted by the petitioner after execution of works, the petitioner could not feed and look after the welfare of her family properly, she could not make payment to employees/workers and she could not make payments to the material procured and she has to pay interest for the debts incurred by the petitioner for execution of works. Due to this situation, petitioner‟s respect and dignity in the society will be deteriorated. As such, the petitioner‟s right to life with respect and dignity will be defeated which is violative of Article 21 of the Constitution of India."
The Court noted that there is no fault on the part of the petitioner and the respondents are responsible for the said delay in making payments to the petitioner for which she is legally entitled and thus deserves to be compensated for the loss.
Read Judgement Here:
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