The court ruled that the termination of the contract was valid, but the forfeiture of the pending bill amount was arbitrary and unjust, directing its release.

ORDER: (ORAL)

This writ petition is filed challenging the Termination Notice No.8/NH/Hyd/DB/D2/B-Nroad/2018-19 dated 17.05.2019 issued by respondent No.5 - the Executive Engineer (R&B), National Highways Division, R&B Complex, Masab Tank, Hyderabad, whereby Contract No.LS. A. B No.17/2017-2018 dated 15.05.2017 of the petitioner was determined by respondent No.5 and consequent ratification of determination of contract by respondent No.4 - the Superintending Engineer (R&B), National Highways Circle, Errum Manzil, Hyderabad, by Memo No.3365/T1/DSE/SENH/HYD/2018-19 dated 27.05.2019 as illegal, arbitrary, null and void, against the principles of natural justice and unconstitutional.

2. The facts of the case leading to filing of the writ petition are as under:

2.1. In the tender process, the petitioner firm was declared as successful bidder and it was allotted work vide Letter of Acceptance dated 12.04.2017. In accordance with the letter of acceptance, the petitioner submitted Earnest Money Deposit (EMD) in the shape of Bank Guarantee (BG) for a sum of Rs.29,99,000/- (Rupees twenty nine lakhs ninety nine thousand only) in favour of respondent No.4 as security for due performance of contract. Thereafter, formal agreement for execution of works was entered into between the petitioner and respondent No.4 vide LS AB No.17/2017-18 dated 15.05.2017. The total value of the work was Rs.10,11,20,556.03 paise (Rupees ten crores eleven lakhs twenty thousand five hundred and fifty six and paise three only).

2.2. The case of the petitioner is that certified copy of the original agreement along with Schedule - A was not made available to the petitioner despite repeated requests. The date of commencement of work was 15.05.2017 which is the date of agreement. The stipulated date of completion of work is 15 months and the stipulated date of completion is 14.08.2018.

2.3. It is stated that though the agreement was concluded, the site was not made available to the petitioner for more than five (5) months after the agreement was entered into. Immediately after the site was made available, the work was commenced. The petitioner completed the work of more than Rs.5.00 crores. In some stretches, work could not be taken up due to non-availability of site for various reasons like non- existence of required width for widening, execution of cement concrete pavement and laying pipelines by the local bodies etc. In these places, work had to be suspended in concurrence with the respondents’ authorities. The letter addressed to the General Manager, HMWSSB, by respondent No.6 - the Deputy Executive Engineer (R&B), National Highways Sub-Division, Hyderabad, obtained under the Right to Information Act 2005 establishes the said fact.

2.4. It is stated that the First Running Account Bill (FRA Bill) was submitted by respondent No.6 in the month of August 2018 to respondent No.5. The bill was not forwarded by respondent No.5 to the Pay and Accounts Office (PAO) for payment. The petitioner by the letter dated 28.11.2018 brought to the notice of respondent No.4 about the original agreement, but respondent No.4 in its reply dated 04.12.2018 denied having taken back the original agreement. The petitioner by the letter dated 13.12.2018 requested respondent No.5 to pass the bill to the extent of the work done by it in view of expiry of the period of agreement, but respondent No.5 replied by the Notice dated 28.12.2018 stating that the agreement not being alive, payment cannot be made and the petitioner was called upon to resume the work forthwith.

2.5. The petitioner by the letter dated 18.01.2019 submitted that no action was taken for release of FRA Bill and also emphasized that validity of the contract has been ex