1.1. Petitioner - Joint Venture of M/s. Raghava Constructions and M/s PLR Private Projects Private Limited was awarded the work under the Palamuru Lift Irrigation Scheme (Package 2) - Formation of Anjanagiri Reservoir at Narlapur Village, Kollapur Mandal, Mahabubanagar District (Project), pursuant to the proceedings dated 01.04.2016 issued by the Commissionerate of Tenders, Government of Telangana. The tender submitted by the petitioner for a value of Rs.762,11,11,150/- (0.20% less than the estimated contract value) was accepted. Respondent No.6-Superintending Engineer issued a Letter of Award, dated 07.04.2016, awarding the Project to the petitioner. Pursuant thereto, a joint venture agreement dated 19.02.2016 was executed between the JV partners, and a Power of Attorney dated 09.05.2016 was executed in favour of M/s RCIPL to act on behalf of the JV as the lead partner. The petitioner and respondent No.6 (on behalf of the Governor of Telangana) executed Articles of Agreement, dated 01.06.2016, for execution of the Project on the basis of the terms and conditions contained in the Instructions of Bidders, General Conditions of Contract and Special Conditions of Contract.

1.2. The case of the petitioner is that as per Clause 40 of the General Conditions of Contract, payments should have to be released to the contractor for the finished work based on the measurements recorded in the measurement book by the respondents. Clause 40.2 provides that intermediate payments shall be released to the extent of 92½ % of the value of work done and the balance 7½ % of the value of work shall be retained till completion of the Project. Further, Clause 68 of Preliminary Specifications to A.P. Detailed Standard Specifications (PS to APDSS) provides that intermediate payment will be made within fourteen days from the date of certification of the bill.

1.3. According to the petitioner, the Project was delayed due to the delay in acquisition of land and delay in handing over of the land by the respondents. That due to such delay on the part of the respondents, the estimated costs of Project have also increased to Rs.1448.64 Crores as recorded in the proceedings dated 17.08.2021 issued by respondent No.3 and consequential sanction was accorded by respondent No.3 through G.O.Rt.No.300 dated 10.08.2021. It is stated that the respondents themselves have acknowledged that the Project has been delayed due to delay in land acquisition and have granted extension of time vide Memo dated 12.04.2023 for completion of Project till 30.06.2023 without levying any liquidated damages. In the recommendation of the State Level Standing Committee dated 23.02.2023, time was extended for completion of the Project as the delay was not attributable to the petitioner.

1.4. It is stated that the petitioner has carried out substantial works thereafter to the tune of Rs.324,84,80,890/- under Bill Nos.34, 35 and 36, but no payments have been released by the respondents.

1.5. That under Bill No.34 submitted by the petitioner on 04.08.2022 for work done to the tune of a gross amount of Rs.147,04,51,939/-, the work done was duly certified on the same day and an amount of Rs.126,73,61,654/- was certified to be released to the petitioner for the work done after deducting the retention amount and applicable taxes. Thereafter, the petitioner submitted Bill No.35 on 13.09.2022 for a gross amount of Rs.40,17,99,350/- and the same was also certified on the same date and an amount of Rs.38,77,37,939/- is admittedly payable to the petitioner. The petitioner also submitted Bill No.36 on 04.03.2023 for work done to the tune of a gross amount of Rs.137,62,29,601/- and the same was duly certified and the petitioner is admittedly entitled to receive an amount of Rs.124,04,83,200/-.

1.6. It is stated that the petitioner has completed the work and payments are admittedly due for the already completed work amounting to Rs.289,55,82,793/-. From the portal maintained by the Government for infrastructure projects being undertaken in the State of Telangana, amounts covered by Bills No.34, 35 and 36 are admittedly payable and Token Nos.23129290, 30403168 and 60323676 respectively have been generated for the said bills. Generation of token number indicates that the bill is immediately due and payable. The only act pending for the respondents is to physically release the amounts due to the petitioner covered by the bills.

1.7. The petitioner addressed the letter dated 11.04.2023 to the respondents stating that the work under the project is almost completed and bills in excess of Rs.362.00 crores are pending since August 2022. Bill No.37 submitted for Rs.41,59,13,929/- towards the work that has already been completed has not yet been certified. It is stated that the petitioner has mobilized huge resources and secured loans from the banks to carry out the works. The petitioner would service its debt obligations and continue to pump in resources for completion of the project based on the release of timely payments as contemplated under the contract. The Andhra Pradesh Standard Specifications, which are incorporated into the contract through reference, clearly require payments to be released within 14 days from the date of certification. Bill No.34 has not been released even after expiry of more than eight (8) months from the date of certification of the bill. The action of the respondents severely impacted liquidity of the petitioner and the same would impact progress of the work for completion of the project.

2. The case of the respondents is that the petitioner and respondent No.6 entered into Lump sum Contract Agreement No.7/PRLIS/2016-17 dated 01.06.2016 for “Formation of Anjanagiri Reservoir at Narlapur Village, Kollapur Mandal, Mahabubnagar District.” Since the petitioner could not complete the work within the agreement period, he was granted extension of time. The petitioner submitted three (3) bills and the same were forwarded to respondent No.8 and are pending for want of budget clearance. The subject matter relates to contractual obligation, as such, the writ petition is not maintainable. The General Conditions of the contract appended to the Articles of Agreement mandate the method and manner in which the claims have to be settled. Clause 23.2 of the agreement relates to Settlement of Claims. As per the said clause, the petitioner has to approach the Civil Court for the claims above Rs.50,000/-, as such, the writ petition is not maintainable.

3. Heard Mr. D. Prakash Reddy, learned senior counsel, appearing for Mr. Mohammed Omer Farooq, learned counsel for the petitioner, and Mr. J. Ramachander Rao, learned Additional Advocate General appearing for the respondents, and perused the material on record.

SUBMISSIONS :

4.1. The learned senior counsel appearing for the petitioner submitted that there is no dispute whatsoever with regard to payment under Bill Nos.34, 35 and 36 which have been certified. There is no denial in the counter affidavit of the respondents about certification and admitted payments to be made. It is submitted that there are no disputed questions of fact involved in this writ petition and hence it is maintainable.

4.2. The learned senior counsel relied on the decisions of the Hon’ble Supreme Court in Surya Constructions v. The State of Uttar Pradesh 1 (2019) 16 SCC 794 , [LQ/SC/2019/458] ABL International Limited v. Export Credit Guarantee Corporation of India Limited (2004) 3 SCC 553 and Century Spinning and Manufacturing Company Limited v. The Ulhasnagar Municipal Council (1970) 1 SCC 582 [LQ/SC/1970/91] and also the decision of the High Court of Andhra Pradesh in Katta Chinna Kotaiah v. The State of Andhra Pradesh .

4.3. The learned senior counsel further submitted that it is unfair on the part of the respondents in not releasing the admitted payments to the tune of Rs.700.00 Crores and the same is not in the public interest as, in fact, the subject contract is an ongoing project. It is of general knowledge that the contractors raise finances and loans, and pay installments towards loans; and if the bills are not released, the petitioner would face severe financial crisis. It is settled law that writ jurisdiction can be invoked even in contractual matters. In the instant writ petition, action of the respondents is tainted with mala fides and arbitrariness and the petitioner has no other efficacious remedy except invoking writ jurisdiction.

5.1. Per contra, the learned Additional Advocate General appearing for the respondents - State submitted that the petitioner is trying to enforce contractual obligations which is not permissible in writ jurisdiction. Once work is awarded, the parties are governed by the contract and the writ jurisdiction is excluded. The dispute falls within the realm of private law jurisdiction. All rights whatsoever claimed by the petitioner flow from contractual obligation. There is no dispute for adjudication under Article 226 of the Constitution of India. Further, there is no decision which is in challenge before this Court. The matter involves interpretation of terms of the contract and the same cannot be adjudicated in a writ petition. The dispute herein essentially involves settlement of claims, as such, the petitioner has to approach civil Court.

5.2. The learned Additional Advocate General relied on the following decisions of the Hon’ble Supreme Court and other High Courts:

1. Tata Cellular v. Union of India (1994) 6 SCC 651 [LQ/SC/1994/685]

2. State of U.P. v. Bridge & Roof Company (India) Limited (1996) 6 SCC 22 , [LQ/SC/1996/1309] and

3. Jagdish Mandal v. State of Orissa. (2007) 14 SCC 517 [LQ/SC/2006/1265]

DISCUSSION :

7. It is not the case of the respondents that there is any default on the part of the petitioner in performance of its obligations under the subject contract. Thus, only contention of the learned Additional Advocate General that it needs to be examined is whether the matter involves interpretation of terms of contract and the petitioner can approach this Court for release of payments when the parties are governed by the terms of the contract, more particularly, Clause 23.2 of the contract relating to settlement of claims.

8. Clause 23 - Settlement of disputes of the contract reads as under:

"SETTLEMENT OF CLAIMS :

Settlement of claims for Rs.50,000/- and below by Arbitration.

All disputes or differences arising out of or relating to the Contract shall be referred to the adjudication as follows:

a) Claims up to a value of Rupees 10,000/-. Superintending Engineer, ------------.

b) Claims above Rs.10,000/- and up to Rupees 50,000/-. Another Engineer - in - Chief / Chief Engineer ---------------.

The arbitration shall be conducted in accordance with the provisions of Indian Arbitration and Conciliation Act 1996 or any statutory modification thereof.

The arbitrator shall state his reasons in passing the award.

c) Claims above Rs.50,000/-.

All claims of above Rs.50,000/- are to be settled by a Civil Court of competent jurisdiction by way of civil suit and not by arbitration.

The contractor shall make a reference for adjudication under these clauses within six Months from the date of intimating the contractor of the preparation of final bill or his having accepted payment whichever is earlier.”

9. In reply, the learned senior counsel appearing for the petitioner submitted that writ jurisdiction is maintainable whenever action of respondents suffers from arbitrariness. There is no dispute as such which needs to be adjudicated. The State being the employer is bound to act in a fair and transparent manner. As the payments to be released covered by Bill Nos.34, 35 and 36 are admitted, relegating the petitioner to civil law jurisdiction would be unjust and unreasonable.

10.1. In Surya Constructions (Supra 1), the Hon’ble Supreme Court held as under:

“3. It is clear, therefore, from the aforesaid order dated 22.03.2014 that there is no dispute as to the amount that has to be paid to the Appellant. Despite this, when the Appellant knocked at the doors of the High Court in a writ petition being Writ Civil No.25126/2014, the impugned judgment dated 02.05.2014 dismissed the writ petition stating that disputed questions of fact arise and that the amount due arises out of a contract. We are afraid the High Court was wholly incorrect inasmuch as there was no disputed question of fact. On the contrary, the amount payable to the Appellant is wholly undisputed. Equally, it is well settled that where the State behaves arbitrarily, even in the realm of contract, the High Court could interfere Under Article 226 of the Constitution of India [ABL International Ltd. And Anr. V. Export Credit Guarantee Corporation of India Ltd. And Ors.’(MANU/SC/1080/2003 : 2004 (3) SCC 553)].

4. This being the case and the work having been completed long back in 2009, we direct the Uttar Pradesh Jal Nigam to make the necessary payment within a period of four weeks from today. Given the long period of delay, interest at the rate of 6 per cent per annum may also be awarded.”

10.2. In ABL International Limited’s case (Supra 2), the Hon’ble Supreme Court held as under:

“8. As could be seen from the arguments addressed in this appeal and as also from the divergent views of the two courts below one of the questions that falls for our consideration is whether a writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality, by an aggrieved party.

9. In our opinion this question is more res integra and is settled by a large number of judicial pronouncements of this Court.

... ... ...

... ... ...

29. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition :-

(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable.

... ... ...

... ... ...

38. What is disputed is the obligation of the first respondent to cover the risk of non-payment of consideration by cash in US currency on the ground that the risk covered by the first respondent is a risk arising out of non-supply of goods by the barter method only.

39. In our opinion, this limited area of dispute can be settled by looking into the terms of the contract of insurance as well as the export contract, and the same does not require consideration of any oral evidence or any other documentary evidence other than what is already on record. The claim of the contesting parties will stand or fall on the terms of the contracts, interpretation of which, as stated above, does not require any external aid.”

10.3. In Century Spinning and Manufacturing Company Limited’ case (Supra 3), the Hon’ble Supreme Court held as under:

“15. Mr. Gokhale appearing on behalf of the Municipality urged that the petition filed by the Company apparently raised questions of fact which in the view of the High Court could not appropriately be tried in the exercise of the extra-ordinary jurisdiction under Article 226. But the High Court has not said so, and on a review of the averments made in the petition this argument cannot be sustained. Merely because a question of fact is raised, the High Court will not be justified in requiring the party to seek relief by the somewhat lengthy, dilatory and expensive process by a civil suit against a public body. The questions of fact raised by the petitioner in this case are elementary.”

10.4. In Katta Chinna Kotaiah’s case (Supra 4), the High Court of Andhra Pradesh at Amaravati held as under:

“The Apex Court and this Court in catena of decisions held that when there is non-payment of the undisputed bills, the same is violative of Articles 14 and 16 of the Constitution of India. The counsel for the petitioner rightly placed reliance on the decision of the Apex Court in Surya Constructions Vs. State of Utter Pradesh and others, following the judgment in ABL International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd. Cited supra. In view of the Apex Court judgment, the contention of the learned Government Pleader that the writ petition is not maintainable before this Court could not be countenanced. The bills of the petitioner dated 13.3.2019 are admitted by the respondents and forwarded for payment after due measurements and obtaining quality control and the Vigilance report. Hence, the authorities are estopped from stating that the bills are submitted without executing the works. On the mere ground of pendency of Vigilance report, payment cannot be stopped. Accordingly, there shall be a direction to the respondents to pay the bill amount of Rs.8,08,828/- to the petitioner within a period of six weeks from the date of receipt of copy of this order.”

10.5. In Tata Cellular’s case (Supra 5), the Hon’ble Supreme Court held as under:

“75. In Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141, 154], Lord Brightman said :

"Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made.

* * *

Judicial review is concerned, not with the decision, but with the decision-making process. Unless that restriction on the power of the court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power."

In the same case Lord Hailsham commented on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in the following terms :

“This remedy, vastly increased in extent, and rendered, over a long period in recent years, of infinitely more convenient access than that provided by the old prerogative writs and actions for a declaration, is intended to protect the individual against the abuse of power by a wide range of authorities, judicial, quasi-judicial, and, as would originally have been thought when I first practised at the Bar, administrative. It is not intended to take away from those authorities the powers and discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (p. 1160).”

In R. v. Panel on Takeovers and Mergers, ex p Datafin plc [(1987) 1 All ER 564], Sir John Donaldson, M.R. commented :

“An application for judicial review is not an appeal.”

In Lonrho plc v. Secretary of State for Trade and Industry [(1989) 2 All ER 609)], Lord Keith said:

“Judicial review is a protection and not a weapon.”

It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits of the decision under appeal. In Amin, Re [Amin v. Entry Clearance Officer, (1983) 2 All ER 864], Lord Fraser observed that :

“Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made.... Judicial review is entirely different from an ordinary appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer.”

82. ... ... ...

‘I have very few illusions about my own limitations as a judge and from those limitations I generalize to the inherent limitations of all appellate courts reviewing rate cases. It must be remembered that this Court sees approximately 1262 cases a year with five judges. I am not an accountant, electrical engineer, financier, banker, stock broker, or systems management analyst. It is the height of folly to expect judges intelligently to review a 5000 page record addressing the intricacies of public utility operation.’ ”

10.6. In Bridge & Roof Company (India) Limited’s case (Supra 6), the Hon’ble Supreme Court held as under:

“16. ... ... ... Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. ... ... ...”

... ... ...

... ... ...

20. ... ... ... Just because the interpretation of orders made under Section 7-D or Section 8-D(1) may also fall for consideration while construing the terms of the contract does not convert the controversy into a public law issue. It is yet a matter within the realm of private law and, therefore, outside the purview of the writ petition. The arbitrator under the contract or the civil court, as the case may be, can go into and decide both questions of fact as well as questions of law.

21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy – in this case, provided in the contract itself – is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognised situations. As pointed out above, the prayer for issuance of a writ of mandamus was wholly misconceived in this case since the respondent was not seeking to enforce any statutory right of theirs nor was it seeking to enforce any statutory obligation cast upon the appellants. Indeed, the very resort to Article 226 – whether for issuance of mandamus or any other writ, order or direction – was misconceived for the reasons mentioned supra.”

10.7. In Jagdish Mandal’s case (Supra 7), the Hon’ble Supreme Court held as under:

“22. ... ... ... The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

OR

Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”

11. In Tata Cellular’s case (Supra 5) and Jagdish Mandal’s case (Supra 7) case, the issue involved was rejection of tenders of the writ petitioners. In Bridge & Roof Company’s case (Supra 6), the dispute was regarding deduction of certain amounts by State of U.P from the bill of the writ petitioner company. The issue involved therein was about the sales tax liability and taking note of rival contentions, the Hon’ble Supreme Court held that the parties are governed by terms of contract. It was also observed by the Hon’ble Apex Court that the reduction of statutory liability on account of change of law within the meaning of Sub-Clause (4) of Clause 70 of the contract is not a matter to be agitated in the writ petition as held in paragraph Nos.16 and 17 in Bridge & Roof Company’s case. This Court does not have any hesitation in holding that the said judgements are not applicable to the facts of the present case, which do not involve any disputed question of facts.

12. In the light of the pleadings and arguments referred to above, it is clear that there is no dispute with regard to amounts payable under Bill Nos.34, 35 and 36. It has been held by the Hon’ble Supreme Court from time to time that writ jurisdiction per se cannot be denied merely because the dispute arose out of a commercial contract as held in Surya Constructions’ case (Supra 1), ABL International Limited’s case (Supra 2) and Century Spinning and Manufacturing Company Limited’s case (Supra 3). In Surya Constructions’ case (Supra 1), the Hon’ble Supreme Court granted relief to the petitioner therein taking note of the fact that bills payable to the petitioner were undisputed. In the instant case, the petitioner stands on a better footing as the bills of the petitioner are not only admitted but also certified. As observed above, in the present case there is no dispute as such between the parties. The only issue is with regard to release of payment under Bill Nos.34, 35 and 36 by the respondents - State. No explanation is forthcoming from the respondents as to why the amounts covered by Bill Nos.34, 35 and 36 cannot be released. According to the respondents, Bill Nos.34, 35 and 36 are pending for want of budgetary clearance. On the face of it, action of the respondents is arbitrary, unreasonable and unjust and the same cannot be countenanced.

13. The contention of the learned Additional Advocate General that the petitioners have to approach civil Court even for payment of admitted bills runs contrary to the settled legal proposition. This Court would also look into the public interest involved. The project, as informed by the learned counsel on either side, is an ongoing project and the bills worth of hundreds of crores are kept pending for no reason and there is every possibility of non-release of payment impacting the ongoing project and the same would not be in public interest. Even for this reason, this Court holds that the petitioner has made out a case warranting interference in writ jurisdiction. Further, as there is inordinate delay in release of payments covered by the subject bills by the respondents to the petitioner without any justification, in the opinion of this Court, the respondents are liable to pay penal interest. However, as against the claim of 18% per annum sought by the petitioner, this Court holds that the respondents are liable to pay penal interest at 9% per annum.

RESULT :

14. Accordingly, the writ petition is allowed directing the respondents to release the payments covered by Bill Nos.34, 35 and 36 to the petitioner with interest at 9% per annum within a period of fourteen (14) days from the date of receipt. No order as to costs.

15. As a sequel thereto, miscellaneous applications, if any, pending in the writ petition stand closed.