M/S Niranjan Lal Agrawal vs. Coal INDIA Limited

Facts

The Appellant, M/s Niranjan Lal Agrawal, was awarded a work contract by South Eastern Coal Field Limited (SECL) under tender No.SECL/BSP/CMC/17/524. The Appellant completed the work satisfactorily and received a Work Completion Certificate on July 5, 2016. The Appellant submitted a final bill for Rs. 1,03,13,737/-. However, SECL withheld payment and the release of a Fixed Deposit Receipt (FDR) arranged by the Appellant as performance security. SECL cited instructions from GST/Central Excise authorities to withhold payment due to the Appellant's alleged tax liabilities. SECL also pointed to a separate terminated work order (tender No.SECL/BSP/CMC/17/610) where the Appellant allegedly caused a loss of approximately Rs. 6 crores, for which recovery proceedings were initiated. The Appellant filed a writ petition seeking disbursement of the amount due and release of the FDR. The Single Judge dismissed the writ petition, citing disputed questions of fact.

Held

The Court held that the claim for the final bill amount under tender No.SECL/BSP/CMC/17/524 could not be adjudicated in writ proceedings due to disputed questions of fact, particularly concerning the alleged losses from the separate terminated work order. The Appellant was directed to pursue an appropriate remedy before a civil court for this claim. However, regarding the FDR, the Court found that it was provided solely as performance security for tender No.SECL/BSP/CMC/17/524. Since the work under this tender was completed satisfactorily, the purpose of the FDR was fulfilled. The Respondent-Company was not justified in retaining the FDR to offset alleged losses from a different contract. The Court noted the Respondent-Company's inconsistent submissions and casual conduct in dealing with the matter. The Court modified the Single Judge's order to direct the Respondent-Company to take steps to return the FDR and release the amount to the Appellant within one week. The 4th Respondent-Bank was directed to disburse the amount forthwith within one week thereafter. The Court deprecated the Respondent-Company's conduct and imposed costs of Rs. 10,000/- on them. The issue of whether the Respondent-Company's conduct amounted to contempt of court was not expressly decided but alluded to.

Key Issues

1. Whether the High Court, in its writ jurisdiction under Article 226 of the Constitution of India, can adjudicate upon the Appellant's claim for payment of the final bill amount under tender No.SECL/BSP/CMC/17/524, given the disputed questions of fact raised by the Respondent-Company regarding a separate terminated work order and alleged losses? (Question of mixed law and fact, turning on the scope of writ jurisdiction and contractual disputes). 2. Whether the Respondent-Company was justified in withholding the release of the FDR arranged by the Appellant as performance security for tender No.SECL/BSP/CMC/17/524, despite the satisfactory completion of the work under that tender? Contentions: Petitioner/Appellant: Argued that the work under tender No.SECL/BSP/CMC/17/524 was completed satisfactorily, evidenced by the Work Completion Certificate. The FDR was provided solely as performance security for this specific contract and should be released upon completion. The Respondent-Company's attempt to retain it for alleged dues from a separate contract was unjustified. Relied on the fact that the Central Government authorities had cleared the release of the FDR. Respondent/Company: Contended that the Appellant had failed to complete another work order (tender No.SECL/BSP/CMC/17/610), leading to its termination at the Appellant's risk and cost, and that approximately Rs. 6 crores was due to the Respondent-Company. This alleged liability was the basis for withholding the FDR. Initially, they claimed instructions from GST/Central Excise authorities, but later admitted to a mistake in submissions and sought to justify retention based on the alleged loss from the other contract.