Facts of the Case

The petitioner, Ch. Chandrasekhar, a contractor, executed works under Agreement No. 86/2022-23 dated 12.08.2022 - O & M earth work excavation of Lankalakalavagunta Medium Drain (Km 5.700 to 10.000) and Madaka Konkepudi Minor Drain, Krishna District, under the Irrigation and CAD Department. The works were completed and recorded in the measurement books without any defects noticed. Payment for the value of work executed was released, but the EMD, Withheld Amount, FSD and GST amount remained unpaid even after expiry of the defect liability period. Despite repeated representations to the respondent departments, the amounts were not released, compelling this writ petition under Article 226, with an IA under Section 151 CPC for preparation of the final bill.

Issues Involved

  1. Whether withholding the EMD, Withheld Amount, FSD and GST amounts after completion of the works and the defect liability period was justified.
  2. Whether such withholding, with no recorded defects, violated Articles 14, 19(1)(g) and 21.
  3. Whether the petitioner was entitled to mandamus for the final bill and release of the withheld sums.

Petitioner's Arguments

  • The works under Agreement No. 86/2022-23 were duly executed and recorded in the measurement books without any defects being noted.
  • Payment for the work executed was released, but the EMD, Withheld Amount, FSD and GST amounts were withheld even after the defect liability period lapsed.
  • Repeated representations to the respondents went unanswered, leaving no option but to approach the High Court.
  • The withholding, without justification, was illegal, arbitrary and malafide, violative of Articles 14, 21 and 19(1)(g).

Respondent's Arguments

  • The Government Pleader for Respondent Nos. 1, 3 and 4 (Irrigation and CAD) and Respondent No. 2 (Finance and Planning) did not contest the entitlement on merits.
  • The respondents were ready to pay the amounts due, effectively conceding the claim.

Court Order / Findings

  • The Court noted the works were executed and recorded in the measurement books without any defects pointed out by the respondents.
  • As the defect liability period had already expired, the Court found no justification for withholding the EMD, Withheld Amount, FSD and GST amounts.
  • Recording the Government Pleader's statement that the respondents were willing to pay, the Court directed release of the amounts under Agreement No. 86/2022-23 within four (04) weeks of receipt of the order.
  • The writ petition was disposed of with no costs; pending miscellaneous petitions, if any, stood closed.

Important Clarification

  • Retentions such as EMD, FSD and the GST component withheld from a contractor's final bill cannot be kept back indefinitely once the defect liability period expires with no recorded defects.
  • Where the Government Pleader concedes readiness to pay, courts will grant a time-bound mandamus rather than relegate the contractor to further representations.
  • The order does not adjudicate any dispute under the CGST/SGST Act - it concerns a GST component withheld under a works agreement, decided on the facts before the Court.

Sections Involved

  • Article 14, Constitution of India (1950) - bars arbitrary State action.
  • Article 19(1)(g), Constitution of India (1950) - right to carry on trade or business.
  • Article 21, Constitution of India (1950) - invoked against arbitrary denial of contractual dues.
  • Article 226, Constitution of India (1950) - power to issue writs, including mandamus.
  • Section 151, Code of Civil Procedure (1908) - interim direction sought via IA No. 1 of 2023.

Decision - In Favour of

Allowed in favour of the Assessee/Contractor. Release of the EMD, Withheld Amount, FSD and GST amounts under Agreement No. 86/2022-23 was directed within four weeks, with no order as to costs.

Related Case Laws

The same petitioner, Ch. Chandrasekhar, has approached this Court more than once for release of withheld GST, EMD and FSD amounts under separate works agreements. A closely related matter, W.P. No. 29582 of 2023 (Agreement No. 87/2022-23), decided on similar facts, is already published on this site. The present case (Agreement No. 86/2022-23) is a distinct proceeding on a different works contract, not to be confused with that earlier post - the recurrence reflects a wider pattern of delayed release of retentions in irrigation works in Andhra Pradesh.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: W.P. No. 29032 of 2023 (with IA No. 1 of 2023)
  • Coram: Hon'ble Sri Justice Venkateswarlu Nimmagadda
  • Date of Order: 08.12.2023
  • Petitioner: Ch. Chandrasekhar
  • Respondents: State of AP (Irrigation and CAD; Finance and Planning), Commissioner CADA Vijayawada, Executive Engineer, Drainage Division, Gudivada
  • Counsel: Sri K. N. Krishna Kumar for Petitioner; Government Pleaders, Irrigation and CAD, and Finance and Planning, for Respondents

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