M/S. Arrow Constructions Limited vs. The State Of Andhra Pradesh

Held

The Court noted the petitioner's grievance that payments for completed work were not being released, which hindered the completion of the balance work. It also acknowledged the respondent corporation's submission that they were ready to consider the petitioner's case by allowing them to complete the balance work as per the terms and conditions of the agreement. Given the respondent corporation's willingness to adhere to the agreement's conditions, the Court found no necessity to issue specific directions to the corporation regarding the contract's execution. Instead, the Court disposed of the writ petition with the consent of both parties, issuing the following directions: (i) The petitioner was directed to file an undertaking before the concerned authority, specifying the period within which the pending project work would be completed and to make a claim for the amount entitled for the completion of work. (ii) Upon receipt of the undertaking and claim, the respondent corporation was directed to release the entitled amount to the petitioner in terms of the agreement and to issue proceedings permitting the petitioner to complete the balance work. The Court did not expressly leave any issue undecided.

Facts

The petitioner, engaged in infrastructure works under an agreement dated September 12, 2018, filed a writ petition challenging the termination of their contract and the non-release of bills amounting to Rs. 14,93,930/- (including GST) for work done until December 31, 2022. The petitioner also sought the refund of Rs. 43,49,223/-, comprising Rs. 1,80,500/- (ECV), Rs. 4,73,542/- (EMD under Bank Guarantee), and Rs. 12,85,497/- (Security Deposit). The termination notice was issued on December 26, 2022, by the respondents. Following a court order, the petitioner submitted a representation, which was disposed of by the respondents on September 8, 2023. The respondents agreed to consider the petitioner's request to complete the balance work as per the original agreement, provided the petitioner was willing. However, the petitioner contended that the balance work could not be completed without the release of payments for completed work.

Key Issues

1. Whether the respondent authorities acted illegally and arbitrarily in terminating the contract and withholding payments for completed work, thereby preventing the petitioner from completing the remaining contractual obligations? (Question of law and fact, concerning contract law and administrative action). Petitioner's Arguments: The petitioner argued that the respondent authorities illegally terminated the contract and withheld payments for work already completed. They contended that unless the outstanding bills for completed work were released, they would be unable to undertake and complete the remaining balance of the project. The petitioner relied on the fact that the work was concluded as per the contract up to December 31, 2022, and the termination was without assigning any valid reason. Revenue/State's Arguments: The respondent authorities, represented by the Standing Counsel for A.P.Rajiv Swagruha Corporation Limited, argued that the termination notice was issued because the petitioner had not come forward to complete the balance work. They further submitted that, pursuant to the court's directions, they had passed orders on the petitioner's representation, agreeing to consider the petitioner's case in terms of the agreement and allowing them to complete the work if they accepted the terms. They prayed for appropriate orders in light of this development.