Facts of the Case

D.B.S. Constructions Pvt. Ltd., a registered contractor, claimed to have carried out maintenance work under the “Operation and Minor Maintenance Work of Shirkhinda SHP (2 × 350 KW)” pursuant to an agreement dated 21 August 2012 entered into between the Chief Engineer, Bihar State Hydroelectric Power Corporation Ltd. and the petitioner.

The petitioner approached the Patna High Court seeking refund of ₹8,50,800, allegedly deducted beyond and contrary to the terms of the agreement from three bills, namely:

  • Bill No. 19 dated 31 May 2016;
  • Bill No. 23 dated 7 October 2021; and
  • Bill No. 25 dated 7 October 2021.

The petitioner further sought refund of ₹11,05,232, allegedly deducted from its Running Account Bills during the period from 5 May 2014 to 5 October 2018 under the heads of EPF and VAT/GST, pursuant to closure of the agreement by the respondent authorities.

The petitioner also sought release of the amount allegedly due under the 27th Final Bill in connection with the operation and maintenance work of the Srikhinda State Hydel Project.

According to the petitioner, despite representations dated 28 October 2021 and 9 June 2022, including its calculated claim of ₹11,05,232, the amount was not released. The Court recorded that there was no response to the petitioner’s request, the dispute continued to survive, and the request for clearance of dues remained pending.

Issues Involved

  1. Whether the petitioner’s claim for refund of ₹8,50,800, allegedly deducted beyond and contrary to the agreement from the specified bills, required consideration and decision by the competent authority.
  2. Whether the petitioner’s claim for refund of ₹11,05,232, allegedly deducted from Running Account Bills under the heads of EPF and VAT/GST, required adjudication by the competent authority.
  3. Whether the amount claimed under the 27th Final Bill for operation and maintenance work was liable to be released.
  4. Whether the respondent authorities could leave the petitioner’s representations unanswered and the monetary claims pending without timely consideration.
  5. Whether the dispute could and should be addressed through the mechanism contemplated under the Bihar State Litigation Policy, 2011.
  6. Whether recourse to Section 89 of the Code of Civil Procedure, 1908 and appropriate dispute-resolution mechanisms could reduce avoidable and prolonged litigation.
  7. Whether the State authorities were required to establish an effective grievance redressal mechanism on a digital platform for consideration of such claims.

Petitioner’s Arguments

The petitioner submitted that it was a registered contractor and had carried out maintenance work under the operation and minor maintenance arrangement for the Shirkhinda SHP (2 × 350 KW) pursuant to the agreement dated 21 August 2012.

It contended that an amount of ₹8,50,800 had been deducted beyond and contrary to the terms of the agreement from Bill No. 19 dated 31 May 2016, Bill No. 23 dated 7 October 2021 and Bill No. 25 dated 7 October 2021 and therefore sought refund of the said amount.

The petitioner further claimed refund of ₹11,05,232 deducted from its Running Account Bills between 5 May 2014 and 5 October 2018 under the heads of EPF and VAT/GST.

It also sought release of the amount allegedly due under the 27th Final Bill relating to the operation and maintenance work of the State Hydel Project.

The petitioner relied upon its representations dated 28 October 2021 and 9 June 2022 and asserted that its claims had not been resolved.

Learned counsel for the petitioner specifically prayed that the writ petition be disposed of in the same terms as the judgment dated 14 September 2022 passed in M/s. Raghoji House of Distribution vs The State of Bihar & Ors., CWJC No. 13024 of 2022.

Respondent’s Arguments

The respondents raised no objection to the petitioner’s prayer that the writ petition be disposed of in the same terms as the judgment in M/s. Raghoji House of Distribution vs The State of Bihar & Ors.

The Court therefore proceeded on the mutually agreed basis that the directions contained in the said judgment would govern the present matter mutatis mutandis, to the extent possible.

Court Order / Findings

The Patna High Court observed that the petitioner’s dispute remained alive and its request for clearance of dues continued to remain pending. The Court further recorded that there was no response to the petitioner’s request.

Without entering into the merits of the monetary claims, the Court held that the dispute could have been resolved in terms of the Bihar State Litigation Policy, 2011.

The Court referred to its earlier decision in M/s. Raghoji House of Distribution vs The State of Bihar & Ors., where it had observed that even in cases governed by contractual or statutory dispute-resolution mechanisms, parties are often forced to litigate endlessly before different legal forums and statutory tribunals.

The Court questioned why the State was not taking recourse to its own Bihar State Litigation Policy, 2011 and why it was not resorting to Section 89 of the Code of Civil Procedure, 1908.

The Court disposed of the present writ petition in terms of the judgment in M/s. Raghoji House of Distribution vs The State of Bihar & Ors., directing that the directions contained therein would govern the present case mutatis mutandis, to the extent possible.

Specifically, the Court issued the following directions:

  1. The Managing Director, Bihar State Hydroelectric Power Corporation, Government of Bihar, was directed to examine the petitioner’s case and ensure an early decision and disbursement of the petitioner’s legitimate dues payable, if any, under the work order, along with consideration of all claims.
  2. The entire exercise was directed to be completed positively within two months from the date of the judgment.
  3. In case of failure to comply within the stipulated period, costs of ₹5,000 were directed to be paid to the petitioner and recovered from the personal salary of the officer concerned.
  4. The Principal Secretary, Department of Energy-cum-Chairman, Bihar State Hydroelectric Power Corporation, Government of Bihar, was directed to establish an effective mechanism for grievance redressal.
  5. The grievance redressal mechanism was specifically required to be made available on a digital platform, and the general public was required to be informed about its availability and functioning.
  6. Failure to comply could result in initiation of proceedings for deliberate violation of the Court’s order and consequential action involving stoppage of salary of the concerned officer.
  7. The Principal Secretary was directed to file an affidavit of compliance within three months from the date of judgment. In case of failure, the Registry was directed to place the file on the judicial side.

The writ petition and pending interlocutory application(s), if any, were accordingly disposed of.

Important Clarification

The Patna High Court did not adjudicate the petitioner’s monetary claims on merits.

The Court expressly left all issues on merits, facts and law open for determination by the competent decision-making authority.

The competent authority was required to decide the matter in compliance with all principles of natural justice.

The direction for early decision and disbursement was confined to the petitioner’s legitimate dues payable, if any, under the work order and consideration of all claims. Therefore, the judgment should not be interpreted as a final determination that ₹8,50,800, ₹11,05,232 or the amount under the 27th Final Bill was conclusively payable to the petitioner.

The parties were also granted liberty to initiate fresh proceedings should the need arise.

Sections / Legal Provisions Involved

  • Section 89 of the Code of Civil Procedure, 1908 – Relating to settlement of disputes outside the Court through alternative dispute-resolution mechanisms.
  • Article 39-A of the Constitution of India – Referred to in the related precedent in connection with equal justice and the State’s Litigation Policy.
  • Bihar State Litigation Policy, 2011 – Clause 1.1(b) – Concept of the State as a responsible litigant and the principle that litigation should not be resorted to merely for the sake of litigating.
  • Bihar State Litigation Policy, 2011 – Clause 1.2 – Recognition of the Government’s responsibility to protect citizens’ rights and respect fundamental rights.
  • Bihar State Litigation Policy, 2011 – Clause 1.3 – Objective of reducing pressure on the overloaded judiciary and expediting dispensation of justice.
  • Bihar State Litigation Policy, 2011 – Clause 4.A – Setting up an effective grievance redressal system to prevent and control avoidable litigation.
  • Bihar State Litigation Policy, 2011 – Clause 4.A(1) to 4.A(5) – Grievance Redressal Committees, time-bound decision-making and review of genuine grievances.
  • Bihar State Litigation Policy, 2011 – Clause 4.B and 4.B(1) – Quick action on representations and legal notices and expeditious decisions through detailed speaking orders.
  • Principles of Natural Justice – Expressly required by the Court to govern the competent authority’s decision on merits, facts and law.

Link to Download the Order https://mytaxexpert.co.in/uploads/1783317252_1051compressed.pdf 

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