Court affirms that subcontractors are entitled to payment for completed works based on government acknowledgment, even without direct contractual ties.

ORDER:

This Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:-

“….to issue a writ, direction, or order more so in the nature of a writ of mandamus- (a)declaring that the action of Respondent 1, the Water Resources Department of the State of Andhra Pradesh (WRD) and Respondent 2, the Chief Engineer, WRD, of withholding the amount due and payable to the Petitioner towards the jet grouting, ECPT and vibro compaction works completed at the Polavaram Irrigation Project is manifestly arbitrary, unlawful and violates the Petitioner's rights under Articles 14 and 19 of the Constitution of India, 1950, and consequently (b) direct the State of Andhra Pradesh to remit amounts to the tune of INR 52,41,49,107/- (Rupees Fifty-Two Crores Forty-One Lakh Forty-Nine Thousand One Hundred and Seven only) (including GST) which are due and payable to the Petitioner along with interest….”

2. The petitioner herein is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of ground improvement, which is a critical part of all construction projects. It is a well known fact that Polavaram Irrigation Project is a multi-purpose public works project that provides irrigation to the highland areas of Visakhapatnam, East Godavari, West Godavari and Krishna districts. Polvaram Irrigation Project was declared as a national project under Section 90 of the Andhra Pradesh State Reorganization Act, 2014 and subsequently, the Polavaram Project Authority was constituted by the Central Government vide gazette notification dated 28.05.2014. Vide office memorandum F.No.1(2)/PF-1/2014, dated 30.09.2016, the Government of India decided that the State of Andhra Pradesh would execute all irrigation related construction works of the Polavaram Irrigation Project on its behalf. The 1^st respondent is the responsible authority for the construction and development of irrigation projects in the State of Andhra Pradesh such as the Polavaram Irrigation Project and the 2^nd respondent herein is the Chief Engineer for the Polavaram Irrigation Project.

3. On 02.03.2013, the 2^nd respondent entered into an Engineer, Procurement and Construction agreement with the 4^th respondent – Transstroy JSC EC UES (JV), for carrying out construction works at the Polavaram Irrigation Project which includes, surveying, investigation, sub-soil exploration, designs, engineering, estimates and construction of the Earth dams for Gap-I & Gap-III, Earth-cum-rock fill dam for Gap-II, spill channel and excavation of foundations for a 960 MW hydroelectric power house including approach channel, intake structure etc. A supplementary agreement was also executed between the respondent authorities and the 4^th respondent on 07.10.2016. In a meeting held on 08.06.2017 and 09.06.2017, the Dam Designs Review Panel decided to carryout geotechnical investigations that are necessary for the design of the Earth-cum-Rock Fill dam and to use jet grouting for the cut-offs at the upstream and downstream coffer dams.

4. Subsequently, the 4^th respondent sub-contracted part of the scope of work to the petitioner herein through the following work orders:

i. Work Order dated 03.06.2017 for Electronic Cone Penetration Tests for an Earth-cum-Rock Fill dam base and along the axis of upstream and downstream cofferdams for the Polavaram Irrigation Project.

ii. Work Order dated 11.07.2017 for execution of jet grouting works for cut-off at the upstream and downstream cofferdams for the Polavaram Irrigation Project.

iii. Work orders dated 27.09.2017 and 03.02.2018 for carrying out ground improvement using vibro-compaction for the proposed Earth-cum-Rock Fill dam foundation at the Polavaram Irrigation Pr