The court emphasized the importance of the specific clauses in the agreement, highlighting the distinction between recovery of loss or compensation and levy of penalty.

ORDER :

Subodh Abhyankar, J.

1. This petition has been filed by the petitioner M/s. Chakra Dhar Construction, a Govt. Contractor through its proprietor under Art. 226 of the Constitution of India against the inaction on the part of the respondents to release the bank guarantee/security deposit of Rs. 41,71,838/- during the period of its validity.

2. The case of the petitioner is that it had entered into an agreement with the respondents Narmada Valley Development Authority on 29.03.2001 for construction of E/W of Indra Sagar Pariyojna Main Canal Group No. ME(B)RD 27.285 kms. to 29.419 kms. According to the petitioner, the work was also completed, however, as there was some measurement dispute between the parties pursuant to which contract was rescinded by the respondent on 5.1.2004, and subsequent to which the same was again reallocated to a third party and the cost incurred in the aforesaid process was sought to be recovered from the present petitioner as debitable amount. Hence, a case before M.P. Arbitration Tribunal was also filed by the State which was registered as case No. 28/2007 which came to be dismissed by the Tribunal vide its order dated 31.01.2009 on the ground that no demand notice was issued by the respondent for the recovery of debitable amount. This order was also challenged by the respondent in Arbitration Revision No. 14/2009 under Section 19 of the M.P. Madhyastam Adhikaran Adhiniyam, 1983 was also dismissed by the Division Bench of this Court vide order dated 20.09.2012 confirming the order passed by the Tribunal.

3. After passing of the aforesaid order by the Division Bench, the petitioner herein sought to release the Bank Guarantee submitted by them at the time of execution of the Agreement, but as the same was not responded to by the respondents, hence this petition against the inaction of the respondent to release the security deposit of Rs. 41,71,838/-.

4. Shri Umesh Tripathi, learned counsel for the petitioner has submitted that the claim of the Government has already been dismissed by the M.P. Administrative Tribunal vide order dated 31.01.2009 and which has also been affirmed by the Division Bench of this Court in AR No. 14/2009 vide order dated 20.09.2012 and as such no recovery can be effected from the petitioner and the bank guarantee furnished by the petitioner at the time of entering into the agreement has been wrongly withheld by the respondent.

5. On the other hand, Shri R.B. Singh, counsel for the respondents has opposed the prayer and has submitted that no case for interference is made out as the case which was filed by the respondent/State before the Madhya Pradesh Administrative Tribunal was in respect of the debitable amount which, the respondent incurred while reallocating the work of construction to the other contractor. Thus, even if the aforesaid claim of the State has been dismissed, the respondent are still entitled to encash the bank guarantee as per Clause 4.3.3.1 of the agreement, a copy of which is also placed on record.

6. It is further submitted by the counsel that the aforesaid dismissal of the claim of respondent before the Arbitration Tribunal as well as before this Court was on account of technical error committed by the respondents in issuing proper notice to the petitioner for demand of their claim, which has led the Tribunal as well as the High Court to hold that the respondents are not entitled to recover debitable amount which they have suffered as the petitioner failed to perform his contract. It is further submitted that since the petitioner firm did not complete its work and the work was required to be completed through debitable agency i.e. Ms. Karan Development Private Limited, Gwalior, which performed the rest of the work, and the petitioner's agreement was rescinded by the respondents hence the petitioner is not entitled to repayment of the bank guarantee. While relying upon Condition No. 4.3.3.1 of the Agreement, counsel has assailed that the aforesaid condition i