Facts of the Case

The petitioner, Ch. Chandrasekhar, S/o Koteswara Rao, a contractor based in Vijayawada, executed work described as O & M - Desilting of Isukaparru Medium Drain from Km 9.00 to 10.00, Extension of Isukaparru and Chevendra Minor Drains, under Agreement No. 87/2022-23 dated 12.08.2022 awarded by the Irrigation and CAD Department, Government of Andhra Pradesh. The petitioner completed the work, and the measurement book was prepared by the respondent authorities without noting any defects. While the amount for execution of work was released, the respondents did not release the Withheld amount, the GST component, the Further Security Deposit (FSD), and the Earnest Money Deposit (EMD), even after expiry of the defect liability period. Despite repeated representations, the deposits were not released. Aggrieved, the petitioner approached the High Court of Andhra Pradesh at Amaravati under Article 226, seeking a writ of mandamus directing the respondents to prepare the final bill and release the withheld amounts, including GST, FSD, and EMD, along with an I.A. under Section 151 CPC for interim relief pending disposal.

Issues Involved

  1. Whether the respondents were justified in withholding the deposit amounts, including the GST component, FSD and EMD, after completion of the contracted work and expiry of the defect liability period.
  2. Whether the petitioner was entitled to a mandamus directing preparation of the final bill and release of the withheld amounts.
  3. Whether non-release of budget/LOC (Letter of Credit) by the Government was a valid ground for withholding payment indefinitely.

Petitioner's Arguments

  • The petitioner had entered into various agreements with the respondents, including Agreement No. 87/2022-23, and had completed the work as per the agreed terms.
  • The measurement book prepared by the respondent authorities recorded no defects in the executed work.
  • The amount for execution of work was paid, but the Withheld, GST, FSD and EMD amounts were not released even after completion of the defect liability period.
  • The petitioner had approached the respondents several times seeking reimbursement of the deposits, without success, leaving no option but to invoke writ jurisdiction under Article 226.

Respondent's Arguments

  • The Government Pleader placed on record instructions from the Executive Engineer, Drainage Division, Gudivada, dated 11.12.2023, stating the bill had not been uploaded on CFMS due to lack of LOC (Letter of Credit).
  • The bills could not be paid to the petitioner since the requisite budget had not been released by the Government.
  • The bills would be paid to the petitioner soon after the budget was released by the Government.

Court Order/Findings

  • The Court found no justification in withholding the Deposits even after completion of the defect liability period and completion of the work allotted to the petitioner.
  • It deemed it appropriate to direct the respondents to release the Deposit amounts, which had remained due to the petitioner for several months.
  • The writ petition was disposed of, directing release of the deposits (Withheld, EMD and FSD) bill amounts under Agreement No. 87/2022 dated 12.08.2022 within four (04) weeks from receipt of a copy of the order.
  • There was no order as to costs, and pending miscellaneous petitions stood closed.

Important Clarification

  • Once a contractor's work stands measured without recorded defects and the defect liability period has expired, continued withholding of deposit amounts, including the GST component, EMD and FSD, lacks justification.
  • Budgetary constraints such as non-release of LOC or budget by the Government do not by themselves entitle authorities to indefinitely withhold amounts legitimately due to a contractor.
  • Writ courts favour a time-bound mandamus for release of such withheld deposits where no dispute on quality or completion of work is raised by the department.

Sections Involved

  • Article 226 of the Constitution of India - empowers High Courts to issue writs, including mandamus, for enforcement of legal rights.
  • Articles 14, 19(1)(g) and 21 of the Constitution of India - invoked as being violated by the arbitrary withholding of amounts due.
  • Section 151 of the Code of Civil Procedure, 1908 - invoked for the interlocutory application seeking interim relief pending disposal.

Decision – In Favour of

The writ petition was disposed of in favour of the Petitioner (Assessee/Contractor), with the Court directing release of the withheld deposit amounts, including GST, EMD and FSD, within four weeks, without any order as to costs.

Related Case Laws

The Andhra Pradesh High Court, before the same Bench of Justice Venkateswarlu Nimmagadda, has disposed of several similarly-patterned writ petitions filed by contractors seeking release of withheld EMD and GST amounts relating to government works contracts, including Writ Petition No. 26115 of 2023, Writ Petition No. 26036 of 2023, and Writ Petition No. 26109 of 2023. While these share a common factual pattern of withheld contractual deposits, the present case is distinct, concerning irrigation department contract work specifically, involving a named petitioner, Ch. Chandrasekhar, and carrying its own case number, W.P. No. 29582 of 2023.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 29582 of 2023
  • Coram: The Hon'ble Sri Justice Venkateswarlu Nimmagadda
  • Parties: Ch. Chandrasekhar, S/o. Koteswara Rao vs State of Andhra Pradesh and others
  • Date of Order: 11.12.2023
  • Counsel for Petitioner: Sri K. N. Krishna Kumar
  • Counsel for Respondents: Government Pleader for Irrigation and CAD; Government Pleader for Finance and Planning

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