Lipi Sarkar vs West Bengal Industrial ...
2022 Latest Caselaw 4177 Cal

                      IN THE HIGH COURT AT CALCUTTA
                                Civil Appellate Jurisdiction
                                   APPELLATE SIDE

Present:

The Hon'ble Justice Tapabrata Chakraborty
                 &
The Hon'ble Justice Raja Basu Chowdhury

                                     MAT 499 of 2019
                                             +
                      IA No.: CAN 1 of 2019 (Old No.: CAN 5665 of 2019)

                                        Lipi Sarkar
                                         - versus -
                            West Bengal Industrial Infrastructure
                             Development Corporation & Others


For the Appellant           :       Mr. Pratik Dhar,
                                    Mr. Pappu Adhikari.



For the Respondents         :       Mr. Prabal Mukherjee,
                                    Mr. Amit Kumar Nag,
                                    Mr. Abhishek Nag.



Hearing is concluded on     :       15th June, 2022.



Judgment On                 :       13th July, 2022.




Raja Basu Chowdhury, J.

1. The present intra-Court mandamus appeal has been preferred

challenging an order dated 25th February, 2019 passed in W.P. 22509 (W) of

2018 by which the learned Single Judge refused to the grant the reliefs, as

prayed for, observing that the matter involves disputed questions of fact and

that the parties would be at liberty to avail of their respective remedies, in

accordance with law before the appropriate forum.

2. The appellant assails the aforesaid order inter alia on several

grounds. It is the appellant's case that the appellant participated in an e-

Tender for Green Power Solar Photo Voltaic Plant and energy efficient LED

luminaries and emerged to be successful. A work order was issued on 1st

July, 2016 and subsequently a contract was executed between the appellant

and the West Bengal Industrial Infrastructure Development Corporation Ltd.

(hereinafter referred to as the Corporation) on 11th July, 2016. To comply

with the terms of the tender the appellant deposited earnest money to the

tune of Rs. 10,57,249/-. According to the appellant the work was

commenced on 8th July, 2016 and the same was duly completed on 15th

November, 2017. The total value of work executed by the appellant was

Rs.5,27,30,252/-. As per the terms of the contract, the Corporation had

from time to time deducted 10% from the total value of bills, payable to the

appellant and the said sum so deducted along with the earnest money

deposit to a tune of Rs. 10,57,249/- made up the security deposit amount of

Rs. 51,47,546/-.

3. The appellant says that as per clause 17 of the conditions of

contract, the Corporation was obliged to refund the aforesaid amount of

Rs.51,47,546/-.which constituted the security deposit amount, including

earnest money deposit. Since the Corporation failed to refund the security

deposit including the earnest money, the appellant submitted several

representations but the same did not evoke any response and as such the

appellant was constrained the file the writ petition on 12th November, 2018.

4. The appellant says that when the matter came hearing, the

advocate representing the Corporation had orally submitted before the

Hon'ble Court that during pendency of the writ petition and before expiry of

the defect liability period, various issues have been pointed out to the

appellant, which the appellant was required to rectify for the Corporation to

release the security deposit but the appellant failed. The appellant says that

the learned Single Judge only on the basis of the aforesaid submission

refused to interfere, observing that the said issues involved disputed

questions of fact.

5. The appellant says that the learned Judge erred in law in not

appreciating that the writ petition did not involve any disputed question of

fact and there was a specific clause, being clause no. 17 of the 'conditions of

contract', which provided for security deposit refund.

6. According to Mr. Dhar, learned senior advocate representing the

appellant, the work in respect of the contract was completed on 15th

November, 2017 and despite expiry of 3 months therefrom, the completion

certificate was not issued by the Corporation. The said certificate was

belatedly issued on 8th August, 2018, however, confirming that the work had

been completed as per tender specifications and schedule of works and that

as such all allegations contrary to the same are an after-thought.

7. Relying upon the payment certificate dated 8th August, 2018, Mr.

Dhar submits that the Corporation had passed six several R.A. Bills

including a Final Bill and from each such bill an aggregate amount of Rs.

40,90,297/- was deducted towards security deposit. As per payment

certificate the date of final payment was 28th February, 2018 but the

appellant's account was actually credited on 14th March, 2018. He then

takes this Court to the general conditions of the contract and refers to

clause marked as SD Refund. The said clause reads as follows:

"SD Refund 75% (seventy five percent) of Security Deposit will be released after three months from the date of successful completion of work towards the satisfactory performance in favour of the iinstallation including handing over. Balance 25% (twenty five percent) will be released after 12 months i.e. from date of handing over which covers expiry of 1 (one) year maintenance period."

8. Mr. Dhar submits that as per general terms and conditions of the

contract relating to refund of security deposit read with the completion

certificate and the payment certificate both dated 8th August, 2018, the

Corporation was under an obligation to refund 75% of the security deposit

after 3 months from the date of successful completion of the work.

9. According to Mr. Dhar, the learned Single Judge failed to perceive

such admitted position and therefore ought not to have relegated the parties

to any other authority for the purpose of producing evidence.

10. He submits that the learned Judge erred in law in not

appreciating that Corporation never raised any dispute within a period of 3

months from the date of completion of work i.e. 15th November, 2017 or at

least within 3 months from the date of issuance of completion certificate and

as such the Corporation had no authority in law to withhold the security

deposit of the appellant. This aspect has been completely overlooked by the

learned Judge.

11. Drawing our attention to a letter dated 19th November, 2018, he

submits that after receipt of the copy of the writ petition, such letter was

issued, in an attempt to unjustly withhold the security deposit. A perusal of

the said letter would clearly demonstrate that the same was issued as and

by way of an after-thought raising new grounds with the sole intent to

frustrate the writ petitioner's claim. Such action is most unbecoming of a

statutory body.

12. He points out that subsequent to dismissal of the writ petition, the

Corporation most illegally issued a letter dated 15th January, 2020 so as to

justify the illegal withholding of security deposit by seeking to forfeit the

same. Such purported forfeiture is bad in law. The grounds on which

forfeiture of security deposit has been sought to be effected are grounds

which have been introduced beyond the defect liability period and as such

this Hon'ble Court should disregard the letter dated 15th January, 2020 and

direct refund of the entire security deposit.

13. According to Mr. Dhar the learned Judge ought to have

appreciated that the appellant's right to receive the security deposit

emanates from the tender document itself and the Corporation cannot act

arbitrarily in denying such legitimate right. Proceeding on such premise, the

learned single Judge ought to have directed the Corporation to release the

security deposit of the appellant. In support of his arguments Mr. Dhar has

placed reliance upon the judgments delivered in Unitech Limited and Ors -Vs.-

Telangana State Industrial Infrastructure Corporation (TSIIC) and Ors reported in

2021 SCC OnLine 99; Real Estate Agencies -Vs. - State of Goa and Ors., reported in

(2012) 12 SCC 170; B. R. Ramabhadriah -Vs. - Secretary, Food and Agriculture

Department, Andhra Pradesh and Ors. reported in (1981) 3 SCC 528; Anil Kumar

Sau -Vs. - The State of West Bengal and Ors. in W.P.S.T. No.190 of 2009 and Smt.

Gunwant Kaur and Ors -Vs. - Municipal Committee, Bhatinda and Ors., reported in

(1969) 3 SCC 769.

14. Per contra, Mr. Mukherjee learned senior advocate appearing for

the respondents submit that the authority to withhold the security/contract

deposit flows from the terms and conditions of the tender document itself.

The Corporation is otherwise authorized in law to withhold security deposit

and in support of such contention, he places reliance upon clause 19B and

of the conditions of contract.

15. According to him it was the obligation of the appellant as

contractor to make payment of the labourers employed by the appellant in

connection with execution of the aforesaid contract. The Corporation had

received complaints from a group of workers employed by the appellant.

Such complaints relate to non-payment of workers' dues. On 27th March,

2018 a complaint was lodged against appellant with regard to the non-

payment of dues of the labourers. The appellant committed breach of

contractual terms by defaulting in payment of labour dues and payment of

wages.

16. On the question of issuance of completion certificate, Mr.

Mukherjee submits that there is no scope to indicate in the prescribed

format of completion certificate, with regard to performance of installations

and as such nothing could be indicated in the completion certificate with

regard to performance of installations. In support of such contention, he has

placed reliance upon the averments made in paragraph 4 sub-paragraph (m)

and (o) of the affidavit-in-opposition filed on behalf of the Corporation. He

has in fact attempted to make out a case that notwithstanding issuance of

completion certificate, it was well within the authority of the Corporation to

inter alia claim that the appellant had acted in breach of the contract and

had failed to discharge its obligations under the contract.

17. Mr. Mukherjee next places reliance upon various paragraphs of

the affidavit-in-opposition and submits that inspection was carried out on

4th December, 2018 at two of the Growth Centres wherein it was detected

that the installations made by the appellant under the said contract were

not functioning and although the appellant was called upon to attend the

inspection and cure the defects, the appellant refused to be present at the

inspection. In this context, reliance has been placed upon a notice dated

15th December, 2018.

18. On the issue of forfeiture, Mr. Mukherjee contends that

Corporation has a right to forfeit the security deposit, and its right of

forfeiture is subject to adjudication by the arbitral tribunal and that the

contract between the parties provides for adjudication of disputes by

arbitration. In answer to our query, Mr. Mukherjee, however, informed us

that till date no step has been taken by the Corporation for having, the

aforesaid issues raised by them, adjudicated. According to him it is for the

appellant to seek adjudication through arbitration.

19. He submits that refund of security deposit would require

computation through an enquiry and this Court ordinarily would not

embark upon such enquiry. Reliance has also been placed on clause 25 of

the terms and conditions of contract to demonstrate that the parties have

been provided alternate dispute redressal mechanism through arbitration.

Forfeiture is for the purpose of securing the workers' dues and as such no

relief can be granted to the appellant and the learned judge has rightly

dismissed the writ petition and no interference is called for. However, if this

Court is of the view that the order impugned cannot be sustained, the

matter should be sent back on remand, as the respondents did not get

opportunity to use any affidavit before the first Court.

20. Records would reveal that in the stay application, an order was

passed by a coordinate Bench of this Court on 25th June, 2021 directing the

Corporation to deposit 75% of the security deposit aggregating to Rs. 39

lakhs (approx.) with the learned Registrar-General, Appellate Side within a

period of three weeks. Challenging the said order, the Corporation preferred

a Special Leave Petition which was disposed of by an order dated 16th July,

2021 modifying the interim direction issued by the High Court to the effect

that if the appeal filed by the respondent before the High Court succeeds,

the Corporation shall pay the entire dues, including interest, if any, within

ten days from the date of order so passed by the High Court.

21. We have heard the parties, we have considered the documents and

the materials on record, we have also taken note of the fact that the

Corporation was given an opportunity to use an affidavit before the

Appellate Court and the same also forms part of the paper book. The writ

petition was preferred praying for refund of the security deposit including

earnest money. However, no interest had been claimed.

22. We find that the respondents themselves have issued a completion

certificate. Although Mr. Mukherjee attempted to make out a case that the

completion certificate has been issued in prescribed format and as such

there was no scope to indicate the performance of installations in the

completion certificate, we are, however, not impressed by such submissions.

It is not the case of the Corporation either, that the work had not been

executed or the work had not been completed as per tender specification. On

the contrary, we find that the completion certificate categorically identifies

that the work has been completed as per tender specifications and as per

schedule of works. The same leaves no room for any contrary view.

23. We also find from the payment certificate, which is at page 321 of

the paper book, that a sum of Rs. 40,90,297/- has been deducted from the

running bills including the final bill of the appellant on account of security

deposit. We also find from the records that a sum of Rs. 10,57,249/- has

been paid by the appellant towards earnest money and the said figure as per

the contractual terms also add up to the security deposit.

24. We find that the 'conditions of contract', as relied on by the parties,

provides that 75 % of the security deposit is refundable on the expiry of 3

months after issuance of the certificate, final or otherwise, of the completion

of work. The said clause read with the general terms and conditions on

security deposit refund, which is at page 156 of the paper book, in no

uncertain terms provide that 75% of the security deposit would be released

after 3 months from the date of successful completion of work towards

satisfactory performance of installation including handing over. The balance

25% will be released after 12 months i.e. from the date of handing over

which covers expiry of 1 (one) year maintenance period. Admittedly, the

completion certificate has been issued. The said certificate creates a right in

favour of the appellant to seek refund of 75% of the security deposit after 3

months from date of issuance of such certificate.

25. We have carefully scrutinised the records of the case. There is no

contemporaneous document on record prior to filing of the writ petition to

substantiate the claim of the Corporation that the appellant had not

addressed the complaints or that the installations were not functioning. On

the contrary we find that the Corporation had issued the completion

certificate long after the work had been completed and installations handed

over to them. In ordinary course, the Corporation only upon satisfying

themselves that work had been executed as per the tender had caused such

certificate to be issued. The purported notice dated 5th December, 2018

forming Annexure "U" to the affidavit-in-opposition of the Corporation had

been issued subsequent to service of the writ petition affirmed on 12th

November, 2018. The purported inspections referred to in the affidavit in

opposition had taken place more than a year after the work had been

completed by the appellant.

26. In the instant case, Mr. Mukherjee the learned senior advocate

representing the Corporation has claimed that forfeiture of security deposit

was for securing the claim of labourers and/or workers employed by the

appellant. He has also referred to certain complaints in support of his claim.

We are afraid that the terms and conditions of the tender/contract do not

authorise the Corporation to either withhold or forfeit security deposit on

such ground. We further find that the Corporation has failed to quantify the

loss suffered.

27. According to the Mr. Mukherjee loss can only be quantified

through arbitral proceedings. We find that the Corporation has not referred

the dispute to arbitration. On the contrary, the Corporation has simply

purported to forfeit the security deposit. The Corporation is only interested

to retain the security deposit without having any intention to have such

issues adjudicated. The matter has been hanging fire for more than five

years now. Although ordinarily where an arbitral clause exists, a writ

petition is not entertained. However, the presence of the arbitral clause is

not an absolute bar to entertain a writ petition. The remedy available under

Article 226 of the Constitution of India also cannot be denied simply

because the Corporation chooses to raise certain disputes, without taking

any steps to have the same adjudicated through arbitration. In the given

facts, referring the parties to arbitration would be travesty of justice.

28. We find that the work has duly been executed by the appellant

and such fact stands corroborated through the completion certificate.

We also find that at the first instance after expiry of 3 months from the date

of issue of the completion certificate, it was obligatory on the part of the

Corporation to release the security deposit at least to the extent of 75%. The

same has not been done. On contrary after disposal of the writ petition the

Corporation has purportedly issued a letter of forfeiture dated 15th January,

2020 forfeiting the security deposit. The said letter dated 15th January,

2020, which is at page 353 of the paper book, does not indicate that the

forfeiture was on account of securing the workers' dues, which according to

Mr. Mukherjee, is yet to be quantified. Mr. Dhar has, however, submitted

that there is no claim of the workers.

29. We find that no real opportunity to show cause was issued prior to

the decision adopted to forfeit the security deposit. We have already held

that the Corporation cannot be permitted to dispute the due completion of

the work by the appellant, belatedly and contrary to the terms of the

completion certificate. Once the Corporation acknowledges issuance of

completion certificate, all disputes as regards completion of work obliterates.

The Corporation was duty bound to act reasonably and with fairness. We

find that the Corporation has acted arbitrarily and contrary to principles of

natural justice. No notice preceded the forfeiture. No opportunity of hearing

was provided. No steps were taken by the Corporation for years to have the

matter referred to arbitration.

30. For the reasons discussed above, we set aside the order dated 25th

February, 2019 passed by the learned Single Judge in W.P. 22509 (W) of

2018 and direct the Corporation to refund of the entire security deposit

amount of Rs. 51,47,546/- to the appellant. As already directed by the

Hon'ble Supreme Court, the said amount shall be paid by the Corporation to

the appellant within ten days from date.

31. The appeal and the connected application are, accordingly,

disposed of.

32. There shall, however, be no order as to costs.

33. Urgent Photostat copy of this judgment if applied for, be given to

the parties, as expeditiously as possible, upon compliance of formalities in

that regard.

(Raja Basu Chowdhury, J.) (Tapabrata Chakraborty, J.)