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
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,
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
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
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
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,
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
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/-).
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
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
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
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
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
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
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
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
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
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
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."
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
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.
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
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
2019 16 SCC 94
2004 3 SCC 533
1998 8 SCC 1
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,
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.
MS
