The court ruled that a security deposit related to construction work cannot be forfeited for non-performance of maintenance obligations, emphasizing fair treatment in contractual matters.

JUDGMENT :

(KAUSHIK GOSWAMI, J.)

Heard Mr. D. Das, learned Senior Counsel assisted by Mr. P. Sarma, learned counsel for the petitioner. Also heard Mr. B.Gogoi, learned Standing Counsel, PWD for all the respondents.

2. By way of this petition under Article 226 of the Constitution of India, the petitioner is assailing the illegal arbitrary and malafide actions of the respondent authorities in not releasing security deposit amount to the petitioner in respect of road construction works under Package No. AS-20-29 (ADB) and Pakage No. AS-20-33 (ADB) for Nalbari District, Assam.

3. The brief facts of the case is that the petitioner is a Class 1 (A) Contractor under the Public Works Department, Assam. The respondent No. 3 had allotted two road construction works to the petitioner from HMD road to Bartal No. 3, Bamunbari to Mulaghat, Barnibari to Paikanbarmaja, Mugdi to Khudra Sinadi including Cross Drainage works and Routine Maintenance of the works for five years under PMGSY (RRS-II, ADB, Batch-II) PMGSY (Ph – VI), Package No. AS-20-29, ADB (hereinafter referred to as “Package No. (i)”) vide final work order (notice to proceed with the work) No. T/BR/PMGSY/ ADB/419/2006-07/3 dated 29.06.2007 and Charia to Goalpara, Bagals Road at Sivathan via Mohkhuli to Bagurihati, Bagals road to Sursuri village including Cross Drainage works and Routine Maintenance of the works for five years under PMGSY (RRS-II, ADB, Batch- II) PMGSY (Ph – VI), Package No. AS-20-33, ADB (hereinafter referred to as “Package No. (ii)”) vide final work order (notice to proceed with the work) No. T/BR/PMGSY/ADB/470/2006-07/3 dated 13.07.2007. Accordingly, the petitioner proceeded with the said two works and completed the same.

4. It is the specific case of the petitioner that the respondent authorities while preparing and passing RA bills to the petitioner in both the works in question had deducted security deposit amount. Situated thus, representations have been filed before the respondent No. 4 in respect of both the Packages. The respondent No. 4 after receiving the respresentations from the petitioner, prepared necessary bills for releasing the deducted amount towards security deposit of the petitioner for both the works and accordingly by letter dated 20.10.2022, requested the respondent No. 3 to seek necessary requisition for each amount to the petitioner. Pertinent that the statement of deduction, no Defect Liability Certificates and concerned bills were also enclosed in the said letter. However, despite of the aforesaid direction of the respondent No. 4, no security deposit was released. Hence, the present writ petition has been filed.

5. Mr. D. Das, learned Senior Counsel for the petitioner submits that the respondents have arbitrarily and illegally not released the security deposit amount of the above two Pakages, despite the petitioner had completed the work of construction of the subject road to the full satisfaction of the respondent authorities.

6. He further submits that the ground for non-release of the security deposit being non-performance of the Routine Maintenance work, even if the same is assumed to be correct, the same does not empower the respondent authorities under the terms of the contract to forfeit the security deposit amount, which was retained by the respondent authorities from the bills of the petitioner in connection with the road construction works, so as to ensure that in the event there is any defect in the construction work, the same can be made good from the retained security deposit amount. He accordingly submits that the non-release of the security deposit is absolutely unsustainable in law and hence, warrants interference from this Court.

7. He further submits that in a similarly situated work contract issued by the respondents, wherein also the respondents have not released the security deposit amount on the ground of non-performance of the Routine Maintenance work, the petitioner had filed writ petitions before this Court being WP(C)