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2017 Supreme(Online)(KER) 29615
HIGH COURT OF KERALA
SHAJI P.CHALY, J
G SOMAN NAIR – Appellant
Versus
KERALA WATER AUTHORITY Advocate - SRI P BENJAMIN PAUL, SC, KERALA WATER AUTHORITY ,SRI P BENJAMIN PAUL, SC, KERALA WATER AUTHORITY – Respondent
WRIT PETITION (CIVIL) 7109/2017
Retention of amounts after guarantee expiry is unjustified when the contractual obligations have been fulfilled.
Headnote:
Contract - Execution of Contract - No Legal Basis for Retention - Summary of Key Legal Provisions
Fact of the Case:
The petitioner was awarded a contract for a water supply project and completed the work satisfactorily. Post-completion, amounts held as security and retention were not released by the respondents despite the guarantee period having expired.
Finding of the Court:
The court determined that the guarantee period had long expired, confirming that there was no valid reason for the respondents to retain the security and retention amounts. The agreement terms favored the release of funds post-guarantee period.
Issues: Whether the respondents have the legal right to retain the security and retention amounts after the guarantee period has expired.
Ratio Decidendi: Post-guarantee, there is no legal basis for retaining security amounts when the work is satisfactorily completed as per the contract provisions.
Final Decision: The respondents are directed to release the amounts to the petitioner within two months.
JUDGMENT
Petitioner was awarded with a contract viz., 'ARWSS to Ottasekharamangalam and adjoining villages - Phase I Supply and Laying 160mm. PVC to 32 mm. PVC pipes etc. etc.'. Petitioner satisfactorily completed the work on 31.7.2012. The guarantee period of 18 months expired on 31.01.2014, however, the retention amount of Rs.8,63,742/- and security amount of Rs.3,00,000/- are still retained by respondents 1 and 2. As per Ext.P2, the Executing Authority has requested to release the amount as early as on 17.2.2014. Petitioner has made a request, evident from Ext.P3 and later lawyer notice was issued. However, in spite of all these efforts, amounts are not released to the petitioner. These are the background facts projected by the petitioner to sustain the relief sought for by the petitioner.
2. Having heard learned counsel for the petitioner and learned Standing Counsel for Kerala Water Authority and realizing that, the guarantee period is over long back, there is no rhyme or reason for the respondents to retain the security amount as well as the retention amount. Even the agreement entered into by and between the parties was considered by this court in various judgments and has found that, the guarantee is in respect of the completion of work and commissioning of the work simultaneously and a period of 18 months is provided as the guarantee accordingly. Looking at any angle, petitioner is entitled to get the money back.
3. Now the learned Standing Counsel for KWA sought three months time, which is stoutly opposed by the learned counsel for petitioner.
4. Taking into account the economic situation prevailing in the community and other adverse aspects, I think respondents can be directed to pay the amounts within two months. Accordingly there will be a direction to the competent among the respondents to pay the retention amount as well as the security amount specified above within two months from the date of receipt of a copy of this judgment to the petitioner .
Writ petition is disposed of accordingly.
