IN THE HIGH COURT OF CALCUTTA
Tapabrata Chakraborty, Raja Basu Chowdhury, JJ.
Lipi Sarkar - Appellant
Versus
West Bengal Industrial Infrastructure Development Corporation And Others - Respondent
MAT 499 of 2019 + IA No. : CAN 1 of 2019 (Old No. : CAN 5665 of 2019)
Decided On : 13-07-2022
Mandamus Appeal - Refund of Security Deposit - Conditions of Contract - [MANDAMUS APPEAL] - [REFUND OF SECURITY DEPOSIT] - [Clause 17 of the conditions of contract, Clause marked as SD Refund, Clause 19B, Clause 25 of the terms and conditions of contract] - The court discussed the appellant's claim for refund of the security deposit, the Corporation's authority to withhold the deposit, and the terms and conditions of the contract relating to the refund of the security deposit. The court highlighted the specific clauses and their interpretations, emphasizing the Corporation's obligation to refund 75% of the security deposit after 3 months from the date of successful completion of work. The court also addressed the Corporation's right to forfeit the security deposit, the obligation to quantify the loss suffered, and the alternative dispute redressal mechanism through arbitration.
Fact of the Case:
The appellant participated in an e-Tender for Green Power Solar Photo Voltaic Plant and energy efficient LED luminaries, completed the work as per the contract, and sought refund of the security deposit. The Corporation withheld the deposit citing issues with the work and non-payment of workers' dues.
Finding of the Court:
The court found that the completion certificate confirmed the satisfactory completion of work, and the Corporation failed to release the security deposit as per the contract terms. The court also noted the lack of quantification of loss and the Corporation's failure to refer the dispute to arbitration.
Issues: Disputed questions of fact, Corporation's authority to withhold the security deposit, obligation to refund the deposit as per contract terms, and the right to forfeit the deposit.
Ratio Decidendi: The completion certificate and the specific clauses of the contract were crucial in establishing the appellant's right to refund the security deposit. The Corporation's failure to quantify the loss and refer the dispute to arbitration influenced the court's decision.
Final Decision: The court set aside the previous order and directed the Corporation to refund the entire security deposit amount to the appellant within ten days.
JUDGMENT
Raja Basu Chowdhury, J. - The present intra-Court mandamus appeal has been preferred challenging an order dated 25th February, 2019 passed in W.P. 22509 (W) of 2018 by which the learned Single Judge refused to the grant the reliefs, as prayed for, observing that the matter involves disputed questions of fact and that the parties would be at liberty to avail of their respective remedies, in accordance with law before the appropriate forum.
2. The appellant assails the aforesaid order inter alia on several grounds. It is the appellant's case that the appellant participated in an e- Tender for Green Power Solar Photo Voltaic Plant and energy efficient LED luminaries and emerged to be successful. A work order was issued on 1st July, 2016 and subsequently a contract was executed between the appellant and the West Bengal Industrial Infrastructure Development Corporation Ltd. (hereinafter referred to as the Corporation) on 11th July, 2016. To comply with the terms of the tender the appellant deposited earnest money to the tune of Rs. 10,57,249/-. According to the appellant the work was commenced on 8th July, 2016 and the same was duly completed on 15th November, 2017. The total value of work executed by the appellant was Rs.5,27,30,252/-. As per the terms of the contract, the Corporation had from time to time deducted 10% from the total value of bills, payable to the appellant and the said sum so deducted along with the earnest money deposit to a tune of Rs. 10,57,249/- made up the security deposit amount of Rs. 51,47,546/-.
3. The appellant says that as per clause 17 of the conditions of contract, the Corporation was obliged to refund the aforesaid amount of Rs.51,47,546/-.which constituted the security deposit amount, including earnest money deposit. Since the Corporation failed to refund the security deposit including the earnest money, the appellant submitted several representations but the same did not evoke any response and as such the appellant was constrained the file the writ petition on 12th November, 2018.
4. The appellant says that when the matter came hearing, the advocate representing the Corporation had orally submitted before the Hon'ble Court that during pendency of the writ petition and before expiry of the defect liability period, various issues have been pointed out to the appellant, which the appellant was required to rectify for the Corporation to release the security deposit but the appellant failed. The appellant says that the learned Single Judge only on the basis of the aforesaid submission refused to interfere, observing that the said issues involved disputed questions of fact.
5. The appellant says that the learned Judge erred in law in not appreciating that the writ petition did not involve any disputed question of fact and there was a specific clause, being clause no. 17 of the 'conditions of contract', which provided for security deposit refund.
6. According to Mr. Dhar, learned senior advocate representing the appellant, the work in respect of the contract was completed on 15th November, 2017 and despite expiry of 3 months therefrom, the completion certificate was not issued by the Corporation. The said certificate was belatedly issued on 8th August, 2018, however, confirming that the work had been completed as per tender specifications and schedule of works and that as such all allegations contrary to the same are an after-thought.
7. Relying upon the payment certificate dated 8th August, 2018, Mr. Dhar submits that the Corporation had passed six several R.A. Bills including a Final Bill and from each such bill an aggregate amount of Rs. 40,90,297/- was deducted towards security deposit. As per payment certificate the date of final payment was 28th February, 2018 but the appellant's account was actually credited on 14th March, 2018. He then takes this Court to the general conditions of the contract and refers to clause marked as SD Refund. The said clause reads as follows:
'SD Refund 75% (seventy fi
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AI
The specific clauses of the contract and the completion certificate played a pivotal role in determining the appellant's right to refund the security deposit, while highlighting the Corporation's fai....
Point of law: Not only is the writ jurisdiction of this Court invoked in a purely contractual matter, having no colour of public law and the writ remedy is thus not maintainable.
The main legal point established is that the respondents were obligated to refund the entire security deposit within six months from the completion of the work, and any claim for deduction/appropriat....
Interest on security deposit is not payable unless the contractor fulfills the conditions specified for refund, which includes obtaining a Labour Clearance Certificate.
Refund of security deposit - General Conditions of Contract - Period of refund to commence, Contractor must make an application to Labour Officer for issuance of clearance certificate - Absence of su....
The main legal point established in the judgment is that the arbitrator's decision must be in accordance with the terms of the agreement, and failure to do so can result in the decision being set asi....
Premature termination of a contract does not grant right to forfeit the security deposit without proof of actual loss, as it constitutes a penalty under the contract law.
The withholding of security deposits without proven negligence is arbitrary, invalidating the corporation's set-off claims and violating natural justice principles.
The main legal point established in the judgment is the interpretation of contractual clauses and the burden of proof in establishing entitlement to claims.
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