Madras High Court
M/S.Mecon Limited vs The Government Of Tamil Nadu on 8 January, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
W.P(MD)No.25242 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 06.01.2025
PRONOUNCED ON : 08.01.2025
CORAM
THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN
W.P(MD)No.25242 of 2023
and
W.M.P(MD)No.21430 of 2023
M/s.Mecon Limited,
Represented by its General Manager,
89, South End Road,
Basavanakudi,
Bangalore – 560 004. ... Petitioner
Vs
1.The Government of Tamil Nadu,
Represented by its Principal Secretary to Government,
Municipal Administration and Water Supply
Department and Chairman,
TWAD Board,
Chennai – 600 009.
2.The Managing Director,
TWAD Board,
31, Kamarajar Salai,
Chepauk,
Chennai – 600 005.
3.The Chief Engineer (EE),
TWAD Board,
Ganesh Nagar,
Mattuthavani Bus Stand,
Madurai.
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1/14
W.P(MD)No.25242 of 2023
4.The Executive Engineer (EE),
TWAD Board, RWS, Division,
Ex-Serviceman Building,
1st Floor, Collectorate Complex,
Ramanathapuram,
Tamil Nadu – 623 501. ... Respondents
PRAYER: Writ Petition filed under Article 226 of Constitution of
India, to issue a writ of Mandamus directing the TWAD board to
permit the petitioner to raise an invoice for the work done under the
Contract Agreement signed on 18.12.2019 and consequently direct
the TWAD Board to make payments which are due for the
completed services to the petitioner within a reasonable period to
be determined by this Court.
For Petitioner : Mr.N.Dilip Kumar
For R – 1 : Mr.S.Shanmugavel
Additional Government Pleader
For RR 2 to 4 : Mr.B.Vijay Karthikeyan
ORDER
This Writ Petition has been filed by the petitioner for a
direction directing the respondents to permit the petitioner to raise
an invoice for the work done under the contract agreement dated
18.12.2019 and disburse the payments which are due for the
completed services.
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2.The petitioner is a public sector company undertaking
under the Government of India. It is a frontline engineering,
consultancy and contracting organization, offering a full range of
services required for setting up projects from concept to
commissioning. While being so, the respondents were entrusted
with the development of Water Supply and Sewerage facilities in the
State of Tamil Nadu, except in the Chennai Metropolitan
Development areas. The petitioner was being the lowest bidder in
the auction, the respondents had accepted the petitioner as the
qualified tender and issued a work order dated 15.11.2019 and the
contract agreement was signed on 18.12.2019. As per the
agreement, the consultancy services to conduct a demand study,
pre-feasibility studies including environmental feasibility,
preparation of a detailed project report, detailed engineering and
bid documents for the Installation of 4.00 MLD capacity
containerized sea water reverse osmosis desalination plant at
Narippaiyur in Ramanathapuram District including the operation and
maintenance of the plant and allied units for a period of 5 years
from the date of installation. The total value of the contract was
1.16 crores. The completion of the project was 3 months from the
date of the agreement. The payment details as per the contract
agreement are as follows:
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Sl.No. Schedule Payment
1.0 On submission and acceptance of 20% of contract
inception report with a detailed amount
work plan
2.0 On submission and acceptance of 25% of contract
the interim report amount
3.0 On submission and acceptance of 25% of contract
detailed project report and after amount
technical sanction
4.0 On submission and acceptance of 25% of contract
the final report along with the final amount
bid document and approved by the
Board
As per the contract, upto 95% of the payment will be made
to the consultant on submission and acceptance of the final
report. The balance amount of 5% will be retained as a
Performance Guarantee which will be paid to the consultant
(without interest) after obtaining approval from the funding
agency/concerned authority for approval of DPR.
3.Accordingly, the inception report was submitted to the
respondents dated 19.12.2020 followed by the interim report dated
18.02.2020. As per Clause No.4.4 of the contract agreement, the
Review Committee has to furnish necessary comments within a
period of 7 days from the date of submission of the report and
acceptance of the final report within 10 days. The petitioner also
submitted reminders dated 22.01.2020 and 18.02.2020. The
petitioner was advised by the notices dated 04.03.2020 and
09.03.2020 to obtain Coastal Regulation Zone clearance before
finalization of the DPR and bid document. Thereafter, the petitioner
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submitted a revised inception report. The Review Committee
submitted comments on the inception and interim report during
COVID-19. Therefore, the petitioner requested the respondents to
extend the time of the contract till 30.12.2020. It was granted on
06.07.2020 valid up to 30.12.2020 and further extension was also
granted on 17.03.2021 up to 30.09.2021 and on 12.04.2022 valid
up to 30.09.2022. The petitioner submitted a detailed project
report. Subsequently, after the completion of environmental studies,
the reports were prepared and submitted to The Tamil Nadu
Pollution Control Board, Ramanathapuram for Coastal Regulation
Zone clearance on 28.09.2022. While being so, by the
communication dated 17.11.2022, the respondents suspended the
project citing administrative reasons. Further, by the communication
dated 17.08.2023, the entire contract itself was closed by the State
Level Technical Committee by its meeting dated 03.11.2022 for the
preparation of a new multi-Village scheme for Ramanathapuram
District with the river Cauvery as source by including all the 117
rural habitations in Kamuthi Union of Ramanathapuram District.
Accordingly, the respondents decided to call upon the project of
desalination itself. Therefore, the petitioner submitted a
representation requesting to finalize its due i.e., release of 5%
withheld amount for the already released payment amounting to Rs.
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3,67,886.00/- and also to allow the petitioner to raise the invoice
against the third milestone amounting to Rs.34,34,980.00/- and
also to release the Bank Guarantee to the tune of Rs.2,61,000.00/-.
4.The learned counsel appearing for the petitioner would
submit that as per Clause 2.9.1(f) of the contract agreement, if the
client, in its sole discretion and for any reason whatsoever decides
to terminate the contract, the termination can be invoked.
Therefore, by invoking Clause 2.9.1 of the contract agreement, the
respondents informed the petitioner to furnish consent for the
termination of the contract as per Clause 2.9.1(f) of the contract
agreement. Further, the petitioner was requested not to initiate any
further activities related to the contract work and furnished the
work done details as on date by communication dated 17.11.2022.
Therefore, the petitioner is entitled to raise invoice for the work
already done ie., on submission and acceptance of the detailed
project report and after technical sanction, the petitioner is entitled
for a further 25% of the contract work.
5.Heard the learned counsel appearing on either side
and perused the materials placed before this Court.
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6.On perusal of the counter-affidavit filed by the second
respondent and on the submissions made by the learned counsel
appearing for the respondents 2 to 4 would reveal that the
petitioner was issued work order and entered into a contract
agreement dated 18.12.2019 to conduct pre-feasibility studies
including environmental feasibility, preparation of detailed project
report, detailed engineering including processing for sanction and
bid documents for the installation of 4.00 Million Litres per Day
capacity containerized Sea Water Reverse Osmosis Desalination
plant at Narippaiyur Union in Ramanathapuram District including the
operation and maintenance of the plant and allied units for a period
of 5 years. The said project was crucial for providing potable water
to drought hit 117 habitations of Kamuthi Union in
Ramanathapuram District. The petitioner was given 90 days time to
complete the project. However, subsequently, on three occasions,
the petitioner was granted extensions only based on the petitioner's
request. According to the respondents, the petitioner failed to
submit the inception report and interim report within the stipulated
time frames. The final revised inception report and interim report
were submitted on 18.03.2021. Accordingly, the payment was
released for stages 1 and 2. As per the inception report, the
petitioner had faced challenges in demarcating the Coastal
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Regulation Zone concerning the 4.00 Million Litres per Day Sea
Water Reverse Osmosis Plant. Therefore, the respondents by their
minutes of the meeting dated 05.02.2020 identified certain remarks
in the inception report and accordingly instructed the petitioner to
complete the entire work on or before 17.03.2020. Even then, the
petitioner delayed the work. As per the contract agreement, the
petitioner has to obtain all clearances including Coastal Regulation
Zone clearance. However, the detailed project report of the Sea
Water Reverse Osmosis Desalination Plant at Narippaiyur was
received on 17.03.2022 that too without the necessary field data.
Further, the petitioner failed to provide a complete Environmental
Impact assessment study, including impact assessments, as
required. Finally, the petitioner submitted the final revised inception
report for stage 1 on 18.03.2021. Only after clearance from the
Coastal Regulation Zone, a detailed project report can be
proceeded. Further, the petitioner was also informed by the Tamil
Nadu Pollution Control Board that the proposed 4.00 Million Litres
per Day Containerized Sea Water Reverse Osmosis Desalination
plant at Narippaiyur falls under non-permissible activity as per
Coastal Regulation Zone Notification, 2011. Therefore, the failure on
the part of the petitioner to obtain Coastal Regulation Zone
clearance in a timely manner, the State Level Technical Committee
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of Tamil Nadu Water Supply and Drainage (TWAD) Board deferred
the proposal. Therefore, the third milestone payment could not be
released due to various reasons, including the deferred detailed
project report and technical sanction. Therefore, the issues involved
in this Writ Petition are disputed questions of facts and they cannot
be gone into in this Writ Petition that too under Article 226 of the
Constitution of India.
7.In this regard, the learned counsel appearing for the
respondents 2 to 4 relied upon the Judgment of the Hon'ble
Supreme Court of India reported in AIR 2024 SC 2855 in the case
of Municipal Committee Katra and others Vs. Ashwani Kumar,
wherein it is held as follows:
“22.Furthermore, the relief which was sought by
the respondent in the writ petition was purely by way of
damages. By no stretch of imagination, such relief could have
been subject matter of extra ordinary writ jurisdiction of the
High Court under Article 226 of the Constitution of India. The
quantification of the damages would require entering into
disputed questions of facts and hence, the High Court ought to
have relegated the writ petitioner(respondent herein) to the
competent Court for claiming damages, if so advised.
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23. Law is well settled that disputes arising out of
purely contractual obligations cannot be entertained by the
High Court in exercise of the extra ordinary writ jurisdiction. In
the case of Union of India and Ors. v. Puna Hinda reported in
(2021) 10 SCC 690, this Court held as follows:
“24. Therefore, the dispute could not
be raised by way of a writ petition on the disputed
questions of fact. Though, the jurisdiction of the
High Court is wide but in respect of pure
contractual matters in the field of private law,
having no statutory flavour, are better adjudicated
upon by the forum agreed to by the parties. The
dispute as to whether the amount is payable or not
and/or how much amount is payable are disputed
questions of facts. There is no admission on the part
of the appellants to infer that the amount stands
crystallised.”
Therefore, in the absence of any acceptance of joint survey
report by the competent authority, no right would accrue to the
writ petitioner only because measurements cannot be
undertaken after passage of time. Maybe, the resurvey cannot
take place but the measurement books of the work executed from
time to time would form a reasonable basis for assessing the
amount due and payable to the writ petitioner, but such process
could be undertaken only by the agreed forum i.e. arbitration
and not by the writ court as it does not have the expertise in
respect of measurements or construction of roads.”
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8.The above Judgment is squarely applicable to the case
on hand since the contractual obligations cannot be entertained in
the Writ Petition exercising the extra-ordinary writ jurisdiction under
Article 226 of the constitution of India.
9.The learned counsel appearing for the petitioner also
relied upon the Judgment of the Hon'ble Supreme Court of India
reported in (2008) 3 SCC 440 in the case of Food Corporation of
India and another Vs. Seil Limited and others, in which the
Hon'ble Supreme Court India held that contractual disputes
involving public law elements are amenable to writ jurisdiction.
Though the dispute is related to the public law element in this Writ
Petition the contractual obligations cannot be entertained by way of
Writ Petition. Therefore, the Judgment relied upon by the petitioner
is not helpful to the case on hand.
10.That apart, as per the contract agreement Clause 8
says about 'Settlement of Disputes'. Accordingly, in order to ensure
a dispute redressal mechanism, a Committee headed by the
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Managing Director / Joint Managing Director and consisting of
Engineering Director, Tamil Nadu Water Supply and Drainage Board
and Engineering Director, CMWSS Board as Member, will comprise
the 'Disputes Redressal Committee' for each package in order to
resolve any disputes between the client / Engineer-in-charge
concerned and the consultants. In the event of non-settlement of
any dispute by the Disputes Redressal Committee, the parties are at
liberty to approach the jurisdictional civil Court for appropriate
relief. Therefore, the direction sought for in this Writ Petition cannot
be considered and the Writ Petition itself is liable to be dismissed.
Accordingly, this Writ Petition is dismissed. There shall be no order
as to costs. Consequently, connected Miscellaneous Petition is
closed.
08.01.2025
NCC : Yes / No
Index : Yes / No
Internet : Yes
ps
https://www.mhc.tn.gov.in/judis
To
1.The Government of Tamil Nadu,
Represented by its Principal Secretary to Government,
Municipal Administration and Water Supply
Department and Chairman,
TWAD Board,
Chennai – 600 009.
2.The Managing Director,
TWAD Board,
31, Kamarajar Salai,
Chepauk,
Chennai – 600 005.
3.The Chief Engineer (EE),
TWAD Board,
Ganesh Nagar,
Mattuthavani Bus Stand,
Madurai.
4.The Executive Engineer (EE),
TWAD Board, RWS, Division,
Ex-Serviceman Building,
1st Floor, Collectorate Complex,
Ramanathapuram,
Tamil Nadu – 623 501.
https://www.mhc.tn.gov.in/judis
G.K.ILANTHIRAIYAN, J.
ps
Order made in
08.01.2025
https://www.mhc.tn.gov.in/judis
