Writ jurisdiction can intervene against arbitrary actions by authorities; retention of guarantees must be based on ascertained liabilities.

JUDGMENT :

VIPIN CHANDRA DIXIT, J.

1. Heard learned counsel appearing on behalf of the parties.

2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner has made the following prayers:-

"It is therefore most respectfully prayed that this hon'ble Court may be pleased to issue a writ of Mandamus directing the respondents no.2 and 3 to release the bank guarantee no.200081lBGP00004 dated 05.3.2020 submitted by the petitioner at the time of execution of the agreement for SE,EDC,Ghazipur issued from IDBI Bank Limited Sigra branch Varanasi against security deposit in favor of Administrative officer for managing director Purvanchal Vidyut Vitran Nigam Limited Varanasi submitted by the petitioner, with the respondent no. 3 within a specific period fixed by this hon'ble Court.

And/or pass any other order or direction as this hon'ble court may deem fit and proper."

3. The factual matrix in the present case indicates that the respondent authorities have withheld the bank guarantee that was submitted by the petitioner at the time of the execution of the agreement in lieu of certain sums that may become payable by the contractor to seven employees who had died during the execution of the works. Further more, respondents have raised an issue with regard to payment of G.S.T. liability of a sum of Rs.11,80,79,376/- along with interest which has not been paid by the petitioner. The respondent authorities have relied on Clause 14.3 of the agreement that reads as follows:-

"14.3 : In the event of any accident and/or injury, in respect of which compensation may become payable under the Workmen's Compensation Act-VIII of 1923 including all amendments thereof, Authorized officer of Discom shall have full powers to retain out of any sums payable/becoming payable to the Contractor, any sum as may be deemed sufficient to meet such liability on receipt of award of compensation from the competent authority under the said act, and the same shall be adjusted from this amount. Any shortfall shall be recovered and any excesses shall be refunded. The opinion of the Authorized officer of Discom shall be final in regard to all matters arising under this clause."

4. Learned counsel appearing on behalf of the respondents submits that there being an alternative remedy in the form of an arbitration clause, the petitioner should be relegated to the forum of arbitration.

5. Sri Udit Chandra, learned counsel appearing on behalf of the respondent authorities has further submitted that there are several issues with regard to non-payment of provident fund by the petitioner/contractor, non-payment of G.S.T. and liability that may arise out of death of seven employees being the reason for retaining the bank guarantee as security.

6. Per contra, learned counsel appearing on behalf of petitioner has submitted that the liability arising out of payments to be made by the petitioner for the death of seven employees still has not been ascertained and the matter is pending before the Commissioner, Employees Compensation. He further submits that with regard to the G.S.T., appeal has been filed by the petitioner and the same is pending before the Appellate Authority, Prayagraj. In light of above, he submits that the respondents' actions of not releasing the bank guarantee for a sum of Rs.2,24,00,000.00 is absolutely malafide and arbitrary. He further submits that the liability that has been calculated by the respondent authorities for a sum of Rs.1,51,29,371.41/- with regard to payment for the death of the workmen is un-substantiated and without any basis in law.

7. We have perused the documents placed before us and also heard the learned counsel appearing on behalf of the parties. It is trite law that when an authority acts in an arbitrary or malafide manner dehors the contract entered into between the authority and the private party, the writ court can intervene to nullify such malafide action. However, one is to realize that the extra ordinary