M/S.Sri Lakshmi Narasimha Traders vs. The State Of Andhra Pradesh

Held

The Court held that while the petitioner's supplies were indeed delayed beyond the stipulated period of 60 to 75 days as per the agreement, the acceptance and utilization of goods by the respondent departments did not preclude the GCC from levying penalties. The Court noted that the agreement specifically provided for penalties for delayed supplies, and the rates of items supplied with delay were to be calculated after deducting such penalties. However, the Court also observed that the objection from the respondent departments was solely regarding the non-levy of penalties for delays, not the petitioner's entitlement to the amounts claimed in toto. Therefore, in the interest of justice, the Court directed an ad-hoc payment of Rs.14,00,00,000/- to GCC within eight weeks, from which GCC could deduct service charges and statutory deductions before paying the petitioner within three weeks. GCC was also directed to constitute a committee to examine the delays and submit a report, after which further action would be taken. If the entire exercise was not completed within the stipulated time, the balance amount of Rs.2,27,17,861/- was to be paid to the petitioner with interest at 6% p.a. from the date of the order.

Facts

The petitioner, M/s. Sri Lakshmi Narasimha Traders, filed a writ petition seeking release of Rs.16,27,17,861/- for supplies made to hostels and residential institutions run by the Social Welfare and Tribal Welfare Departments. The petitioner entered into an agreement with the Girijan Cooperative Corporation Ltd. (GCC) on March 29, 2019, for the supply of shoes and socks. The petitioner supplied the goods between 2019 and 2021 and submitted invoices and delivery challans to GCC. GCC, in turn, requested the Social Welfare and Tribal Welfare Departments (respondents 5 and 6) to release the payments. Despite numerous representations, the payments remained uncleared. The respondents argued that penalties for delayed supplies should be deducted as per the agreement. The petitioner contended that the goods were accepted without objection and utilized, and that the delay was not attributable to them.

Key Issues

1. Whether the respondents are justified in withholding payment to the petitioner on the grounds of delayed supplies, despite acceptance and utilization of the goods, considering the terms of the agreement dated March 29, 2019, between the petitioner and the Girijan Cooperative Corporation Ltd. (GCC)? Petitioner's arguments: The petitioner argued that there were no complaints regarding the quality or quantity of supplies, and the goods were accepted and utilized without objection. They contended that the justification for withholding payment based on alleged delays was a pretext to avoid payment. The petitioner also pointed to the refund of EMD and security deposit by GCC as evidence of satisfaction with the supplies. They relied on the fact that bills were processed without raising issues of delay initially. Respondents' arguments: The respondents (Social Welfare and Tribal Welfare Departments) contended that the agreement provided for the imposition of penalties in case of delays in supplies. They argued that the petitioner's supplies were delayed beyond the stipulated period of 60 to 75 days from the agreement date. They maintained that the acceptance of goods and Quality/Quantity Certificates did not preclude GCC from imposing penalties as per the agreement conditions.