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2026 Supreme(Online)(Mad) 19003
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. M. SUBRAMANIAM, K. SURENDER, JJ
The Government of Tamil Nadu Rep. by its Additional Chief Secretary Finance (Salaries) Department – Appellant
Versus
P.S.T. Engineering Construction Rep. by its Managing Partner V.S.Thennarasu – Respondent
WA No. 1790 of 2022 | CMP No. 13123 of 2022
For the Appellant(s):Mr.Ramanlal, Additional Advocate General, assisted by Mr.T.Arunkumar for Additional Government Pleader
For the Respondent(s): Mr.H.S.Hredai
Disputes related to contractual payments, specifically taxes, should be resolved through arbitration or competent legal forums rather than writ jurisdiction, ensuring adherence to contract terms.
Headnote:(A) The relevant laws include provisions of the General Financial Rules regarding contracts and applicable taxes. The court noted that all applicable taxes must be adhered to as per the contract's special conditions. The court emphasized that disputes over payment terms should be resolved through established legal processes rather than through writ petitions. (Paras 2-3)
(B) Contract Law - The inclusion of all applicable taxes in contractual agreements ensures compliance and protects both parties involved in disputes over payments. The court reiterated that arbitration should be pursued in case of disputes as per the contract stipulations. (Paras 2-3)
Facts of the case:
The respondent challenged a resolution relating to construction payments, specifically seeking the release of significant funds withheld due to disputes over GST claims.
Findings of Court:
The writ order was set aside because the issues regarding tax payments could not be resolved in writ proceedings.
Issues: Whether the payment disputes under the contract can be resolved via writ jurisdiction or require arbitration.
Ratio Decidendi: The court ruled that disputes arising from tax claims under the contractual agreement should be addressed through arbitration or legal forums rather than writ petitions, as it falls outside the purview of writ jurisdiction.
Result: The Writ Appeal stands allowed.
| Table of Content |
|---|
| 1. challenge of resolution regarding payment claims. (Para 1 , 2) |
| 2. dispute resolution not suitable for writ proceedings. (Para 3) |
(Judgment of the Court was delivered by S.M.Subramaniam J.)
The respondent preferred a writ petition challenging the resolution No.4.17/487 dated 10.08.2018 of the 2nd respondent, culminating in resolution dated 07.06.2019 of the 2nd respondent and consequential proceedings dated 19.11.2019 of the 4th respondent and further direct the respondents to release the balance sum of Rs.2,755, 44,,915/- along with eligible 1% bonus amount to the appellant herein.
2. The resolution passed in 487 Board Meeting held on 10.08.2018 reads as follows:
Items SUBJECT No.
4.17 PMAY(U)- HFA – Construction of 864 tenements (Stilt +9 floors) including all services such as Internal and external water supply, sanitary, electrification and development works using conventional technology under Lumpsum Turkey Design and build basis contract system at K.P. Park scheme in Cor.Dn.77 under Vertical-III (AHP) – Request of the contractor to pay the GST at the rate of 12% of the accepted tender value in additional to be bill value- Reg.
(HFA/4802/17)
TNSCB may consult a Consultant/ Auditors approved by CMRL/
Government Department to verify the claims of the contractors, under GST and the same may be placed before the Board for consideration.
3. Clause 6.6. as well as the special condition in the contract entered into between the parties would show that all applicable tax are to be paid and the Government Order issued in G.O.264, Finance (Salaries) Department dated 15.09.2017 would apply. In the event of dispute, the parties have to resolve the same either by invoking arbitration clause or by approaching the competent Forum in the manner known to law. Since there is a dispute caused regarding payment of tax, based on the terms and conditions of contract, the issues cannot be resolved in a writ proceedings. Thus, the writ order is set aside and the Writ Appeal stands allowed. No costs.
