1. Heard learned Senior Counsel, Sri S. Ravi for the petitioners and learned Government Pleader for the respondents.

2. This Writ Petition was filed challenging the action of the respondents in calling upon the first petitioner to pay an amount of Rs.5,59,80,000/- with interest at 8% p.a., from the date of payment of the amounts and in issuing letter dated 26.07.2017 by the fourth respondent as illegal, arbitrary and also sought stay of further proceedings of invocation of bank guarantees.

3. When the Writ Petition came up for admission on 22.08.2017, time was granted and posted the matter to 29.08.2017, but the respondents did not give proper instructions to the learned Government Pleader, and hence this Court was constrained to grant stay of further action in the instant case. Seeking vacation of the said stay, the respondents filed W.V.M.P.No.3839 of 2017 on 13.09.2017 and while extending the interim order up to 10.10.2017, this Writ Petition was taken up for hearing on merits as the matter relates to invocation of bank guarantee.

4. The undisputed facts in this case are that the third respondent entered into an Agreement No.8 SE/2007-2008 dated 25.06.2007 for the work of Package No.04/2006 pertaining to investigation, design and earth work excavation of GNSS Main Canal from KM 119.000 to KM 141.350 including construction of CM & CD works including formation of Uddimadugu Reservoir and distributory system including field channels to feed an Ayacut of 10000 acres in Kadapa District. The work has to be completed in forty eight (48) months. The petitioners became the lowest tenderers pursuant to quoting of an amount of Rs.111,96,00,000/- being minus 23.3885% of less than the tender value. As per Clause 49 of the general conditions of contract, which forms part of the agreement, the contractor is entitled to avail the mobilization advance in two installments equivalent to 10% of the contract amount (5% for labour mobilization and 5% for machinery and equipment) named in the letter of acceptance. The 5% of the amount shall be paid in two installments i.e., 1% of the said amount shall be paid after concluding the agreement and the balance of 4% under two installments shall be released after commencement of the work i.e., after completion of investigation, survey and designs. The 1% of the amount was paid in a sum of Rs.58,98,000/- on 05.09.2007 and Rs.55,98,000/- on 24.09.2007. The balance of 4% of mobilization advance was also paid in two installments of Rs.1,34,40,000/- on 05.07.2008 and Rs.3,13,44,000/- on 24.07.2008. Since the petitioners were required to submit bank guarantees, the first petitioner submitted bank guarantee for Rs.6,71,76,000/- instead of an amount of Rs.5,59,80,000/- released by the respondents. Though the petitioners were not asked to submit the bank guarantees towards interest, the petitioners submitted excess bank guarantees as above. The bank guarantees are valid up to 08.01.2018. The commission on bank guarantee should be borne by the first petitioner only. It appears that the site could not be handed over to the petitioners as no forest clearance was obtained. In those circumstances, extension of time was granted from 25.06.2011 to 24.06.2014, from 25.06.2014 to 31.03.2015, from 01.04.2015 to 31.07.2015, from 01.08.2015 to 30.09.2015 and lastly from 01.10.2015 to 31.03.2016. Since the first petitioner opted to close the contract, no further extension was granted by the Government and the issue with regard to pre-closure of the contract is pending with the Government pursuant to letter No. CE(P) & DWRO/WRD/KDP/TS-3/Pack-IV/2016, dated 05.06.2016 of the Chief Engineer. The fourth respondent addressed a letter on 26.07.2017 to the first petitioner asking to pay back the mobilization advance of Rs.5,59,80,000/- with interest at 8% p.a., up to date from the date of payment within 14 days, and furt