Psk Engineering Construction And Co vs. National Projects Construction Corporation Limited & Anr.

Facts

The Petitioner, PSK Engineering Construction and Co., filed a writ petition seeking directions for payment of outstanding amounts totaling Rs. 4,16,36,417/- for construction work executed for the National Projects Construction Corporation Limited (Respondent No. 1) and its client, Rajiv Gandhi National Institute of Youth Development (Respondent No. 2). The Petitioner also sought the return of Fixed Deposit Receipts and Security Deposits. The work was completed to the satisfaction of the respondents, and the final RA bills were raised on 03.04.2021. The Petitioner challenged Clause 37 of the contract, which stipulated that payments to the contractor were contingent upon NPCC receiving corresponding payments from the client, and that any delay in such payments would not entitle the contractor to compensation or interest. The Petitioner argued this clause was arbitrary and violative of Article 14 of the Constitution. The respondents did not file a formal reply, but their counsel appeared.

Held

The Court held that the Petitioner could not challenge Clause 37 of the contract after voluntarily entering into it with full knowledge of its terms. The Court cited Apex Court judgments in 'Haryana Urban Development Authority v. State of Haryana' and 'Cauvery Coffee Traders v. Hornor Resources (International) Co. Ltd.' to emphasize that the doctrine of unequal bargaining power does not apply to commercial contracts and that parties cannot approbate and reprobate. The Court found no coercion or misrepresentation. Furthermore, the Court held that for recovery of money under a contract, the appropriate remedy is a civil suit, not a writ petition, particularly when disputes regarding defects require evidence. Therefore, the writ petition was dismissed.

Key Issues

1. Whether Clause 37 of the contract, which makes payment to the contractor contingent on the respondent receiving payment from the client and disentitles the contractor to interest for delays, is arbitrary and violative of Article 14 of the Constitution of India, as argued by the Petitioner? The Petitioner contended that the clause creates an unequal bargaining power and is unjust. 2. Whether a writ of mandamus is the appropriate remedy for recovery of money due under a contract, as sought by the Petitioner? The Petitioner sought directions for payment and release of securities. The Respondents, through their counsel, argued that for recovery of money under a contract, the appropriate remedy is a civil suit, especially when there are disputes regarding defects requiring evidence.