M/S Jarnail Singh Contractor vs. District Level Micro And Small Facilitation Council Ludhiana And Another

Held

The Court disposed of the writ petition by granting liberty to the petitioner to approach respondent No.2 (General Manager Telecommunication, Chandigarh) with all requisite documents, including proof of Employees Provident Fund contributions and payment of all statutory dues. The Court directed respondent No.2 to take a decision on the petitioner's entitlement to the release of the bank guarantee within a period of two months from the submission of the application and documents. If the petitioner's claim was found to be duly established, the respondents were directed to release the undisputed amount towards the bank guarantee within four weeks thereafter. The Court did not make a definitive finding on the petitioner's entitlement to the release of the bank guarantee, leaving it to the respondent to decide after reviewing the submitted documents.

Facts

The petitioner, M/s. Jarnail Singh Contractor, filed a writ petition seeking the release of a bank guarantee furnished in favour of Bharat Sanchar Nigam Limited (BSNL). The bank guarantee, dated 24.11.2014, was provided for work executed for laying PLB Pipes in Sialba Majri Block, District SAS Nagar, and Chandigarh. The petitioner contended that the work was satisfactorily completed. BSNL, the respondent, opposed the release, stating that the bank guarantee was withheld due to the petitioner's failure to furnish proof of deposit of Employees Provident Fund and clearance of statutory liabilities such as GST and Service Tax, as stipulated in the agreement. The petitioner initially disputed this but later agreed to approach BSNL with all required documents for a decision.

Key Issues

1. Whether the petitioner is entitled to the release of the bank guarantee furnished for the execution of work, considering the dispute over the submission of statutory dues and provident fund deposits? (Mixed question of law and fact, relating to contract terms and statutory compliance). Petitioner's contention: The petitioner argued that the work was satisfactorily executed and that the bank guarantee should be released. While initially disputing the respondent's claims, the petitioner ultimately conceded and sought liberty to approach the respondent with all necessary documents for a decision in a time-bound manner. Respondent's contention: BSNL argued that the bank guarantee was withheld because the petitioner had failed to provide proof of deposit of Employees Provident Fund and had not cleared statutory liabilities, including GST and Service Tax, as required by the agreement.