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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. Kathawalla, Milind N. Jadhav, JJ.
Maha Active Engineers India Pvt. Ltd. – Petitioner
Versus
Maharashtra State Electricity Transmission Co. Ltd. and ors. – Respondents
Writ Petition (L) No. 21635 of 2021
Decided On : 10-01-2022
Constitution of India, 1950 - Article 12, 14, 226 - Writ of Mandamus – State – Equality before law – Power of High court to issue writs - Whether, considering reliefs and existence of an arbitration agreement in Present Contract, Writ Petition is maintainable - Whether impugned Letter is arbitrary and unreasonable, and therefore ought to be set aside – Held, there is no answer from Respondents as to why it accepted Petitioners bid in respect of Project T-1946 and entered into Present Contract, if all along it knew that it would seek to deviate from basic obligation to pay for work done by relying upon Old Contracts, and at same time not disclosing any of this to Petitioner when accepting its bid and entering into Present Contract - Petitioner must show impugned state action to be arbitrary, after which burden is on state entity to supply reasons for act. For reasons noted above, Petitioner has more than discharged initial onus cast upon it. Respondent has, in response, failed to supply any tenable reasons for issuing Impugned Letter - As a result of above, Court find Impugned Letter issued by Respondents to be arbitrary, unreasonable and without any authority of law – Court accordingly set it aside - Petitioner is entitled to have amounts claimed under invoices raised paid to it without any reference to any alleged claim of Respondent No.1 under Old Contracts – Petition allowed.
JUDGMENT :
S.J.Kathawalla, Milind N. Jadhav, JJ.
1. Rule. Rule was made returnable forthwith. By consent of parties the above Writ Petition was taken up for final hearing at the stage of admission after completion of pleadings.
DESCRIPTION OF THE PARTIES
2. The Petitioner is a company registered under the Companies Act, 1956. The Petitioner is an engineering, procurement and construction (EPC) contractor. It is engaged in designing, engineering, supplying, constructing, testing and commissioning of medium voltage (MV) and extra high voltage (EHV) power transmission and distribution infrastructure.
2.1 Respondent No.1 is a wholly owned corporate entity of the Maharashtra Government. Respondent No.1 owns and operates the electric power transmission system in the State of Maharashtra. It floats tenders for construction and erection of sub-stations and transmission lines that are awarded to private parties, which, upon completion, are assets owned by Respondent No.1.
2.2 Respondent Nos.2 to 4 are officers of Respondent No.1. Respondent No.2 is the Chief Engineer (Contracts and Monitoring), who is assigned the duty of floating tenders, awarding contracts and monitoring progress of the contracted works in coordination with other officers of Respondent No.1. Respondent No.3 is the Chief Engineer (EHV Project Cum Operation & Maintenance, Pune Zone) responsible for the activities of Respondent No.1 in relation to project implementation, and operation and maintenance of transmission networks in the Pune Zone. Respondent No.4 is the Superintendent Engineer (EHV Project Circle), overseeing all project related activities of Respondent No.1, including processing of bills of contracts that are under execution.
CHALLENGE IN BRIEF
3. The Writ Petition challenges a letter addressed by the Respondents refusing to release payments to the Petitioners for erection of transmission lines by the Petitioner for Respondent No.1 under a contract awarded pursuant to a public tender process. There is no dispute about the quantity or quality of the work. The reason for the impugned letter refusing payments under invoices raised is that Respondent No.1 claims it is entitled to recover amounts under prior and unrelated contracts from the Petitioner and that the withholding of the monies under this contract is a means of recovering amounts under the prior and unrelated contracts. The Writ Petition asserts that the reasons for refusing payments as stated in the impugned communications constitute state action that is arbitrary and violative of Article 14 of the Constitution of India. Hence, the present Writ Petition.
FACTS
4. The relevant facts in the matter are in brief set out hereunder :
4.1 On 22nd February, 2021, Respondent No.2 issued a Letter of Award to the Petitioner for the construction of 220kV transmission lines and 220kV end bays in the Pune zone on a turnkey basis, against Tender No. T-1946 (“T-1946 Project”).
4.2 The total contract price for the T-1946 Project was approximately Rs. 45.47 Crores. The Letter of Award also contained a schedule for completion of the T1946 Project with corresponding payment terms.
4.3 The T-1946 Project is part of a larger scheme approved by the Respondents vide Board Resolution No.118/08 dated 15th July, 2017 (“Scheme”). The Scheme is critical to provide power supply to the public at large, and to address the low voltage problem affecting the Solapur and Pune districts. The completion of the T-1946 Project is required before the Scheme can be implemented.
4.4 In view of this urgency, the Petitioner was required to expedite work on the T-1946 Project. The Petitioner commenced work on the T-1946 Project on 1st March, 2021, pursuant to the Letter of Award but before the formal contract was entered into. The Letter of Award made provisions for early payments if work was completed ahead of time.
4.5 The Petitioner issued a performance bank guarantee of Rs.1,36,40,300/- in favour of Respondent No.1 for the T-1946 Project, which was accept
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