Arava Naga Venkata Rama Rao vs. The State Of Andhra Pradesh

Held

The Court held that the non-payment of admitted dues by the respondents was arbitrary and required intervention. Citing previous directions in similar cases, including a learned Single Judge's order in W.P.No.10038 of 2021 and batch, the Court directed the respondents to release the principal amount of Rs.78,63,784/- to the petitioner. Regarding interest, the Court directed payment at the rate of 6% per annum, referencing a Division Bench judgment in Writ Appeal No.724 of 2021 and batch dated 12.10.2023. The payment was to be made within six weeks of receiving a copy of the order. The Court also clarified that it would be open for the petitioner to pursue a claim for a higher rate of interest in an appropriate forum. The issue of 12% GST was not explicitly addressed in the final holding, nor was the petitioner's claim for 24% interest fully granted, with the Court opting for 6% based on precedent.

Facts

The petitioner, Arava Naga Venkata Rama Rao, a contractor, filed a writ petition challenging the respondents' failure to pay final bills totaling Rs. 78,63,784/- for works executed under various agreements between 2018 and 2022. The petitioner sought payment of the principal amount along with 12% GST and 24% interest from the completion date of the respective works. The respondents, represented by the Government Pleader for Irrigation, admitted the claim but stated that payment could not be made as a Letter of Guarantee (LOG) had not been released. The petitioner argued that the non-payment was arbitrary and high-handed, violating constitutional rights.

Key Issues

1. Whether the respondents' failure to release payment for completed works, despite admitting the petitioner's entitlement, is arbitrary and violative of constitutional principles, requiring intervention by this Court under Article 226 of the Constitution of India? Petitioner's arguments: The petitioner contended that the non-payment of admitted dues was arbitrary and high-handed, necessitating judicial intervention. They relied on previous judgments of this Court, including a learned Single Judge's order in W.P.No.10038 of 2021 and batch, which held similar non-payments as arbitrary and requiring prompt clearance. The petitioner also sought payment of the principal amount, 12% GST, and 24% interest. Respondents' arguments: The respondents, through the Government Pleader for Irrigation, admitted the petitioner's claim but explained that payment was contingent on the release of a Letter of Guarantee (LOG). They assured that payments would be made once the LOG was released.