Facts of the Case

The petitioner, a works contractor, had entered into various agreements with the State of Andhra Pradesh and other State respondents for execution of works in Kurnool District. The petitioner completed the works strictly in terms of the agreements, and the execution of the work was duly entered into the measurement book prepared by the respondent authorities without any defects being noticed. While the amount payable for execution of the work was paid to the petitioner, the Withheld Amount, Earnest Money Deposit (EMD) and GST Component relating to the works were not released even after completion of the defect liability period. Despite the petitioner approaching the respondent authorities on several occasions seeking reimbursement, the amounts remained unreleased, compelling the petitioner to move the High Court of Andhra Pradesh at Amaravati under Article 226 of the Constitution for a direction to release the withheld sums.

Issues Involved

  1. Whether the respondent authorities were justified in withholding the Withheld Amount, Earnest Money Deposit and GST Component due to the petitioner despite completion of the works and expiry of the defect liability period.
  2. Whether the petitioner was entitled to a writ direction under Article 226 of the Constitution directing the respondents to release the withheld sums.

Petitioner's Arguments

  • The petitioner had entered into various agreements with the respondents for execution of works in Kurnool District and completed the work strictly as per the agreements.
  • Execution of the work was recorded in the measurement book prepared by the respondent authorities, with no defects noticed at any stage.
  • Although the amount payable for execution of the work had been paid, the Withheld Amount, EMD and GST Component remained unreleased even after completion of the defect liability period.
  • The petitioner had approached the respondents several times seeking reimbursement of these amounts, but the respondents had failed to release them, necessitating the filing of the writ petition.

Respondent's Arguments

  • The learned Government Pleader appearing for the State respondents submitted that the respondents were ready to pay the amounts due to the petitioner.
  • No specific justification was placed on record for the continued withholding of the Withheld Amount, EMD and GST Component.

Court Order / Findings

  • The Court heard learned counsel for the petitioner and learned counsel for the respondents, and perused the material placed on record.
  • Considering that the work had been completed and the defect liability period had expired, the Court held that there was no justification in withholding the Withheld Amount, Earnest Money Deposit and GST Component due to the petitioner.
  • The Court directed the respondents to release the Withheld Amount, Earnest Money Deposit and GST Component relating to the works executed by the petitioner within a period of four (04) weeks from the date of receipt of a copy of the order.
  • The writ petition was disposed of with no order as to costs, and any pending miscellaneous petitions in the writ petition were closed.

Important Clarification

  • Where a works contractor has completed the contracted work to the satisfaction of the department, as recorded in the measurement book without any noted defects, and the defect liability period has expired, continued withholding of the Withheld Amount, EMD and GST Component without justification is not sustainable.
  • Government departments cannot indefinitely retain contractual dues, including the GST component reimbursable to a contractor, once the underlying work stands completed and no defects remain on record.
  • Even where the respondents concede before the Court that amounts are payable, contractors may still need to invoke writ jurisdiction to secure a time-bound direction ensuring actual release of the dues.

Sections Involved

  • Article 226 of the Constitution of India, 1950 — invoked by the petitioner to seek a writ directing the State respondents to release the withheld contractual dues.
  • Central Goods and Services Tax Act, 2017 and Andhra Pradesh Goods and Services Tax Act, 2017 — the statutes governing the GST Component relating to the works executed by the petitioner, reimbursement of which was sought from the respondent department.

Decision – In Favour of

The writ petition was disposed of in favour of the Petitioner (works contractor). The Court directed the respondents to release the Withheld Amount, Earnest Money Deposit and GST Component relating to the works executed by the petitioner within four weeks, with no order as to costs.

Related Case Laws

The Andhra Pradesh High Court, before the same Bench, has disposed of several similarly patterned writ petitions filed by works contractors from Kurnool District seeking release of withheld EMD, Withheld Amount and GST Component relating to completed works, including Writ Petition No. 26115 of 2023 and Writ Petition No. 26109 of 2023. While these petitions arise from a common recurring fact pattern, each is a distinct proceeding with its own case number, parties, and operative directions, and the present case (Writ Petition No. 26036 of 2023) stands as a separate petition disposed of on its own facts.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 26036 of 2023
  • Coram: Hon'ble Sri Justice Venkateswarlu Nimmagadda
  • Date of Order: 02.11.2023
  • Parties: Petitioner (works contractor) vs. State of Andhra Pradesh and other State respondents

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.