M/S Karvy Data Management Services LTD vs. The State Of Andhra Pradesh

Held

The Court held that the cause of action for the writ petition arose from the non-payment of amounts due under a concluded contract. The respondents had disputed the balance payment of Rs. 21,19,54,283/- and had filed an affidavit supporting their claims. While an admitted amount of Rs. 17,73,07,560/- was paid as per an interim order, significant deductions were made by the respondents towards penalties for dysfunctional devices, invoices raised without purchase orders for IRIS devices, security deposit for device functionality, and recurring expenses for data charges due to non-functioning devices. The Court found that these deductions could not be deemed illegal without an inquiry into the agreement's terms and conditions, which is beyond the scope of a writ court. Citing Supreme Court and High Court precedents, the Court concluded that a writ petition is not the appropriate remedy when disputes arise from non-payment under a concluded contract, and parties should be relegated to common law courts or arbitration as agreed upon. Therefore, the Writ Petition was dismissed, and the petitioner was granted liberty to pursue remedies under the agreement.

Facts

The petitioner, a successful bidder, entered into an agreement with the 4th respondent (Government of Andhra Pradesh) on November 18, 2016, for the supply of 67,000 devices (Notebooks, Tablets, AEBAS) on an annuity model. The petitioner supplied devices in two phases, with payments to be made quarterly. The Government released significant amounts over several financial years. However, the petitioner claims an outstanding balance of Rs. 21,19,54,283/- for invoices raised from March 5, 2019, to March 5, 2021. The Government disputed certain payments due to dysfunctional devices, non-maintenance, and system upgrades, leading to deductions and withholding of payments. The petitioner filed a writ petition seeking payment of the outstanding balance, including GST, which they had paid.

Key Issues

1. Whether the Writ Court has the jurisdiction to adjudicate disputes arising from a concluded contract concerning the non-payment of bills, particularly when the respondents have raised disputes regarding the performance and terms of the agreement? Petitioner's argument: The petitioner contended that the non-payment of outstanding approved invoices within the stipulated period as per the agreement is illegal and arbitrary. They argued that they had paid Goods and Services Tax (GST) on the invoice amounts and that deducting these amounts from pending bills was unlawful. They relied on Supreme Court and High Court judgments to support their claim for payment. Revenue/State's argument: The respondents argued that admitted bill amounts were paid, but the disputed amounts could not be paid due to the petitioner's non-compliance with the agreement's terms and conditions, including the supply of dysfunctional devices and failure to upgrade versions. They asserted that subsequent authorities have a statutory obligation to verify bills before payment of public money and that strict financial guidelines must be followed. They contended that for payment of disputed amounts, the parties must approach an Arbitrator as per the agreement, making the writ petition not maintainable.