A State entity must act in accordance with principles of fairness and justice in contractual obligations, and cannot withhold payments without a clear determination of dues, as this constitutes arbitrary action under Article 14 of the Constitution.

ORDER

M. Nagaprasanna, J.

The petitioner is before this Court seeking a direction by issuance of a writ in the nature of mandamus to release Rs.5.52 crores on consideration of the representation dated 27-12-2021.

2. Heard Sri Madhusudhan R.Naik, learned senior counsel appearing for the petitioner and Sri B.R. Prashanth, learned counsel for the respondents.

3. Facts, in brief, germane are as follows:-

On 09-04-2007 the respondent/Karnataka Neeravari Nigama Limited ('the Company' for short) issued a notice of tender for modernization of Anvery Canal including rehabilitation of structures, distributaries etc. falling within the reach of the said Canal. Pursuant to emerging of the petitioner as successful tenderer, an agreement comes to be executed on 25-06-2007 for the aforesaid work and work order was accordingly issued. The petitioner was issued work completion certificate with regard to the aforesaid work. Bank guarantees that were taken at the time of awarding of contract were also released. On 11-05-2019 long after the work was over, it appears that one Chidananda Murthy complains to the Karnataka Lokayukta alleging sub-standard work that was completed by the petitioner in the Canal. On 27-12-2021 the petitioner communicates to the respondent/Company requesting release of Rs.5.52 crores which was withheld for the work done in another project on the ground that the work done in the aforesaid project was alleged to be shoddy. Non-consideration of the representation for the release of the aforesaid amount has driven the petitioner to this Court in the subject petition.

4. The learned senior counsel representing the petitioner would submit that it is unheard of for a work that was completed in another project, the bills pertaining to the subsequent project are withheld on the ground that the earlier project had some shoddy work. It is his submission that the work was never complained of within the warrantee period that had been stipulated in the contract but based on some complaint later, it is alleged, that the work done by the petitioner was sub-standard. He would submit that no other person has complained of the same after due inspection of the work so done by the petitioner. He would seek a mandamus for release of the amount along with interest.

5. Per-contra, the learned counsel representing the Company would refute the submissions to contend that the petitioner has not replied to any one of the communications directing it to complete the work which was allegedly shoddy or sub-standard or had repairs and maintenance. Therefore, invoking the clause in the contract, the amount is now withheld. He would submit that withholding of the amount is only due to lack of communication from the hands of the petitioner and no fault can be found in the action of the Company.

6. In reply to the aforesaid submission, the learned senior counsel would take this Court through the rejoinder filed to the statement of objections to demonstrate that all the communications were replied to and also communicated that the repair work has been done. There is no repair work pending from the hands of the petitioner within the warrantee period in terms of the contract. He would submit that it is only a ruse to withhold the bills of the petitioner.

7. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

8. The afore-narrated facts are not in dispute. The petitioner emerging as the successful bidder pursuant to a tender notification issued in the year 2007, is not in dispute. An agreement is entered into between the petitioner and the respondent/Company. Certain clauses of the agreement become germane to be noticed, as the Company has placed heavy reliance on general conditions of contract in the agreement. They read as follows:

'.... .... ....

Addition or Reduction in Security Deposit:

(b) In cases where additions are made to the tendered work under the provisions of clause-13 an addi