WP/7615/2021 of Sri. G.Venkateswara Reddy Vs Union of India on 6 February 2026

ORDER:

In response to the Tender Notifrcation dated 15.10.20t8 issued by the respondent-Railways, the petitioner submitted his bid, and was awarded three distinct sub-works located at different sites. These comprised Sub-Work No.1 relating to repairs and'improvements to toilets in A, B, and C Blocks of the Rail Nilayam Compound, Sub-Work No.2 relating to renovation of the DMRC-cum-Conference Hall in the PCOM's Office, and Sub-Work No.3 relating to repairs and improvements to baths, toilets, and allied facilities at RPF/TC and the 7th Battalion (RPSF) at Moulali. The respondent issued a Letter ofAcceptance dated l2.ll.20l 8, awarding the works for a total original contract value of Rs. 2,89,98,194.53 (roughly Rs.2.90 Crores), though the schedule attached to the Letter of Acceptance differed from the tender schedule. The petitioner furnished a Performance Guarantee of Rs.14,50,000/- vide Deposit Accounr No. 042520100172368 dated 12-12- 2018 issued by Andhra Bank, Pattabhipuram, Guntur, and executed an a ./\

a- i wp_7615_2O2L NBK, J Agreement dated 14-12-2018. It is however contended by the petitioner that the agreemr:nt copy was never furnished despite repeated requests. 1'l Under the Letter of Acceptance date d 12.lt.2018, all three sub- works were to be completed within six months, but the petitioner asserts that execution was impeded from the outset due to the respondent's failure to hand over work sites and to finalize and sanction numerous variation items. For Sub-Work Nto.2, the petitioner was instructed telephonically on 26.lL 20l g to commence tvork, and upon delivery of site, the petitioner started work by ll'12'2018' This work was completed in all respects and was inaugurated by the GIWSCFI on 05-07-2019. Similarly, Sub-Work No.3 commenced after the site was eventually handed over by the SSE/W lMLy,and variation statements for additionrll items were submitted on 16.02.2019 with the petitioner,s signature for approval by the DEN/ESTATE/HYB, rhough these variations were never finalized. Despite completion, payments were repeatedly delayed, with cc-I driled t9-03-20r9 paid only on 05.07.2019 after 97 days,cc_Il dated 04-05.ttol9 paid on05.07.2019 after 23 days,cc-Ill dated 06.07.20rg paid on 30.08.2019 after 4s days, cc-IV dated 15.10.20t9 paid on 12-11.2019 after 20 days, cc-v dated z}.rz.2ot9 paid on 19.02.2020 after 55 days, cc-w dated 20-03-2020 paid on07.06.2020 after 70 days, and cc_ vII dated 14])92020 paid on 05.01 .2[2tafter [04 days. The petitioner srares that, as on the: date of termination, amounts of Rs. 15,00,000 l_ forsub_work No.2 and Rs. I 1,50,000 /- for Sub-work No.3, pending since July 2019 and Septembe r 2020 respectively, remained unpaid. 1.2 l'he gravamen of the dispute concerns Sub-work No. r. According to the petitioner, while the work was originally awarded in November 2018, the detaired scope-namery repairs and improvements to 54 toilets-was tlot disclosed either in the tender schedule or the agreement i I I I I I t- w9_7675-2021 NBK, J schedule. The petitioner states that this expanded scope was communicated by the respondent only vide letter dated 27.01.2020, more than one year and two months after the Letter of Acceptance, whereas the respondent alleges that the scope had already been communicated to the petitioner much earlier under a letter dated 10.05.20[9. Even thereafter, the petitioner contends that the respondent failed to hand over the site for the majority of the toilets. Out of the alleged 54 toilets, work sites were provided only for four toilets-two on 14.08.2020 and two subsequently-and even in respect of these four, work was stalled due to non-finalization and non-sanction of variation items. The remaining 50 toilets were never handed over to the petitioner up to the date of termination. 1.3 Throughout this period, the petitioner sought extensions of the contract cuffency due to site non-handover and pending variations. A sub- agreement dated 10.05.2019 extended the currency from l2.OS.2Ot9 to 11.11.2019, another dated 05.12.2019 extended it from 12.1,t.2019 to 1,1.04.2020, and yet another dated 06.08.2020 extended it from 12.08.2020 to tl .02.2021 , all under Clause I 7(AXii) of the General Conditions of Contract, but copies of these sub-agreements were allegedty never furnished. Ultimately, by Subsidiary Agreement No. 20IDEN/ESTATES/HYB/5 dated 2l-01-2021, the respondent extended the contract tenure from 12.02.2021 to 11.08.2021 without levy of penalty, which the petitioner relies upon as a clear admission that delays were not attributable to him. 1.4 Despite these extensions, the respondent issued progress notices dated 11.12.2020 and 15.12.2020 alleging slow progress of work, and the petitioner answered to the notices on 19. 12.2020 and 21.12.2020, explaining that progress was hindered by delayed site handover, unpaid bills, and unfinalized variations. Thereafter, a seven-day notice dated 15.02.2021

wp_7615_2O21 NBK, J alleged faih-Lre to show adequate progress and submit a detailed programme for Sub-Work No.l. The petitioner replied on 18.02.2021 and again on 22.02.2021, asserting that the notice was unjustified because variation items were not fin,alized, payments of approximately Rs. 30,00,000/- for additional items were rending, and the work site itself had not been handed over for most toilets. This was followed by a 48-hour notice dated 02.03.2021, to which the pt:titioner responded on 08.03.202 I . t.5 A meeting was then convened on 09.03.2021, and handwritten Minutes of It{eeting were recorded and signed by officials and the petitioner's representative. The petitioner emphasizes that in this meeting the respondent did not dispute the limited number of toilets handed over or the pendency of payments. Nlevertheless, on 10.03.2021, the respondent issued proceedings No. YWl48/W.lll/67l18/Bills, rescindingthe contract underClause 62 of the GCC, forfeir:ing the security deposit, encashing the performance guarantee, and debarrirrg the petitioner and its partners from participating in future tenders flor the balance work. 1.6 The petitioner alleges that this termination is arbitrary mala fide, and illegal br:cause the original scope of work under the Letter of Acceptance dated l2.l l.:1018, particularly Sub-Work Nos.2 and3,, stood fully compteted, and the so-called balance works pertained only to variation items under Sub- Work No.l, which were neither part of the original contract nor sanctioned nor supportr:d by site handover. The petitioner further states that the respondent countered by alleging slow progress and failure to execute the RN toilets work, but failed to speciff what sanctioned balance work remained incomplete cr to acknowledge its own lapses in site handover, payment, and approval of yariations. In this clash of allegations, the petitioner maintains that the resprsndsnl't own conduct----extending the contract without penalty

') wp_7515-2021 NBK, J on21.01.2021, delaying payments since July 2019 and September 2020,and withholding agreement copies-demonstrates that the delay was systemic and attributable to the department, rendering the drastic action of termination and debarment legally unsustainable.

2. A counter affrdavit is filed by the respondents essentially contending that the Writ Petition is not maintainable and liable to be dismissed in limine on the following grounds:

a) The challenge relates to termination of a contract, forfeiture of security, and' debarment-purely contractual matters not amenable to writ jurisdiction.

b) The Petitioner is only a General Power of Attorney (GPA) holder of the original contractor Shri G. Venkateswara Reddy. The GPA does not authorize him to institute legal proceedings. The validity of the GPA ceased upon termination of the contract.

c) The Petitioner has submitted an unapproved version of the GPA to the Court, misleading the Hon'ble Court.

d) The remedy, ,f ony, lies in arbitration as per Clause 63 & 64 of the Indian Railways General Conditions of Contract (IRGCC). The Petitioner has not invoked this clause.

e) The cause title is defective for not impleading the necessary party, the General Manager 2.1 Adverting to the factual aspects, it is contended that the Letter of Acceptance was issued on 12.11.2018, and the formal agreement was executed on 14.12.2018. The original completion date was 11.05.2019. Despite granting five extensions totalling 23 additional months (until 11.08.2021) due to rains, COVID-19, etc., the Petitioner completed only about 35% of the work (approx. Rs.l.10 Cr. against a total value of approx. Rs.2.90 Cr.) over 28 months.

ir

NBK, J 2.2 With regard to Sub-Work No. I (Toilet Renovation - 54 toilets), the Petitione:: commenced work on only 4 toilets in August/October 2020 and left them incomplete, executing less than 1% of this sub-work's value (Rs.l ,04,5641- against Rs.l.60 Cr.). The claim of Rs.1,50,000 is false. No joint measur'3ment or billing was done as the work was incomplete. 2.3 With regard to Sub-Work No. 2, the work was completed, however, the claim of Rs.33,68,856 is false, and the actual value is Rs.20,80,1011, and an amount of Rs.18,687,856 has already been paid- Further, the r:laims for variation require mutual wriffen agreement per Clause 41 of IRGCO, which was not finalized. 2.4 With regard to Sub-Work No. 3, the petitioner's claims regarding dates and arrrounts (Rs.l1,50,000) are false and contradictory. 2.5 [t is contended that due to consistent slow progress and non- compliance ,Cespite repeated notices, the contract was rightfully terminated under Claus,: 62 of IRGCC vide letter dated 10.03.2021. The debarment is limited to participating in the balance work of this specific contract. 2.6 It is contended that the petitioner, as per the tender declarations, is deemed tc have inspected the site and understood the scope. Multiple written reminders were sent from November 2018 onwards to commence work and submit a programme chart, and the reminders have been ignored by the petitioner. It is also contended that the claim of the petitioner that the petitioner has not received the Agreement copy is false. It is stated that the original contractor signed the formal agreement and subsequent extension agreements, and the payments totalling Rs.1,02,85,712 were received, which would not bt: possjble without the agreement. [t is further contended that the proposed verriations were not processed because the petitioner included inadmissible items, and repeatedly failed to sign finalized variation ,r'\ (-

NBK, J statements despite numerous requests and meetings. It is therefore contended that there is no merit in the writ petition, and the writ petition is liable to be dismissed.

3. The petitioner filed a reply affidavit contending that the Writ Petition is maintainable. It is settled law that a writ against a State/its instrumentality arising from a contractual obligation is maintainable, even if it involves disputed facts or monetary claims. It is stated that an application to implead the General Manager, South Central Railways, as a party is filed separately; and that the subsequent GPA dated 15.03.2021, specifically authorizing the petitioner/deponent to pursue legal remedies against termination, is now filed. The earlier GPA was filed inadvertently. [t is also contended that the respondent's termination (10.03.2021) is illegaland malafide, especially after granting an extension (without penalty) via subsidiary Agreement dated 21.01.2021, extending the contract until 11.08.2021 under Clause l7(AXii) of GCC. 3.1 With regard to Sub-Work No. I (54 Toilets at Rail Nilayam), it is contended that the Respondent fundamentally breached the contract by not handing over the work site for all 54 toilets. Details and locations were communicated only via lefter dated 27.01.2020, and only 4 toilets were ever made available, and even for these, work was held up due to non-sanction of required variations. Further, the Minutes of a discussion held on 09.03.2021 (attended by a JE) exist, contradicting the respondent's claim that no one attended and that there was no progress. 3.2 With regard to Sub-Works No. II & III, the respondent's counter admits these works are completed and that payments are pending. The termination and forfeiture concerning these completed sub-works is a patent illegality.

7I I I ; ; wp_7515_2O2 1 NBK, J 3.3 With regard to scope of work & variations, the specific number

(54) and location of toilets were not detailed in the tender/agreement schedule. The respondent failed to provide a phased handover schedule. It is contended t.hat multiple variation statements were submitted but not finalized by the respondent malafidely. Additional items were necessary to complete the work, ar; shown in the variation statements. The respondent's obligation to provide necessary instructions/drawings is mandated under Clause 22(4) of GCC & Clause 6(2) of the Agreement. It is further contended that the respondent admits payments were delayed "for want of funds" (Para 23 of Counter), confirming the petitioner's grievance. It is also contended that the delay in bill processing (e.g., CC-VII) was due to the respondent's delay in executing the subsidiary extension agreement. It is further contended that the 7-day notice pertained only to Sub-Work I, yet the termination notice illegally terminated e.ll three sub-works, including the completed ones (II & m).

4. Learned counsel for the petitioner submits that the termination order, forfeiture of guarantees, and debarment are manifestly arbitrary, disproportionate, and violative ofArticles l4 and 19(l)(g) ofthe Constitution, as the respo:rdent's own admitted delays and breaches caused the impugned slow progress; that the writ petition is maintainable, as seffled law permits writ jurisdir:tion against State instrumentalities for arbitrary actions in contractual matters, even when monetary relief is sought; that the respondent's conduct is estopped by its own action of granting a final, penalty-free extension untilAugust 2O2l,which constitutes an admission that delays were not attributable to the petitioner; that the gravamen of the dispute is Sub-Worl'- No. l, for which the respondent fundamentally breached the contract by lailing to hand over the site for 50 toilets (out of total54 toitets) and by not flnalizing essential variation items, stalling the limited work that could comrnence; that the termination is patently illegal as it rescinds the .-? \r *1

wp_7515_2021 NBK, J entire contract, including the fully completed and inaugurated Sub-Works No. 2 & 3, for which substantial payments remain overdue; that the respondent's admission of delayed payrnents "for want of funds" confirms systemic failure on its part, negating its allegation of sole contractor default; that the alleged procedural notices were issued mechanically without considering the Petitioner's detailed responses attributing delay to the'Respondent's breaches; that the forfeiture of security and perforrnance guarantee for. completed and accepted works is unjust, punitive, and amounts to an unlawful enrichment of the Railways; that the respondent's reliance on the arbitration clause is misplaced, as the remedy under Article 226 is invocable when State action is arbitrary; that the impugned actions, being the result of non-application of mind to the Respondent's contributory defaults, are unsustainable in law and warrant judicial intervention.

5. Learned counsel for the respondents essentially contends that the writ petition is not maintainable, as it arises from a purely contractual dispute for which the exclusive remedy is arbitration under Clause 1.0 of the Special Conditions read with Clauses 63 and 64 of the Indian Railways General Conditions of Contract (IRGCC). It is contended that the Petitioner, being merely a General Power ofAttorney holder, lacks the requisite locus standi to institute these proceedings, & fact compounded by the submission of an unapproved GPA version to this Hon'ble Court. It is contended that the termination was lawful and justified under Clause 62 of the IRGCC due to the petitioneCs slow progress of work and breach of terms, having completed only 35Yo of the work value over 28 months despite five extensions totalling 23 additional months. The respondent fulfilled all obligations, including repeated site handovers and communications, white the petitioner failed to mobilize resources, submit mandatory programme charts, and complete even the four toilets commenced. The extensions granted were without prejudice rl ll !t; IiI, !i rl li .

wp_7615_2O21 NBK, J to the respondent's right to terminate for persistent default, and the admitted delays in peryment were systemic, arising from fund availability, and did not excuse the petitioner's non-perforrnance. [t is contended that the forfeiture of security an<[ encashment of the performance guarantee are vatid contractual consequencos, and the debarment is limited solely to the balance work of this specific contract. It is further contended that the petitioner, having approached this Court with unclean hands and without exhausting the contractual arbitration rnechanism, is not entitled to any equitable relief.

6. Having considered the respective contentions, it is to be noted that the entire Contract Value is Rs.2.9 crore, and the amount paid to the petitioner is Rs. 1,02,85,',t 12, and the Performance Guarantee furnished by the petitioner is Rs.14,50,000. The stand of the respondent is that the Sub-Works 2 and 3 are complete, however, there are disputes over final dues, and that the payments were delaye,C by the Department "for want of funds". Further, there are major disputes ove:r the Valuation of completed work (with regard to variations and final bills), trrd over the legality of terminating the entire contract, including the completed sub-works.

7. In this .onn""iion, and with regard to the nature of disputes, it is relevant to note that Clause 1.0 of the Special Conditions of Contract, which is part of tht: Agreement and the provision of Clauses 63 and 64 of IRGCC will be applicable towards settlement of claims/disputes, and the parties have to seek arbitration as per the said provision under Clauses 63 and 64 of IRGCC. Further, the petitioner's Reply Affidavit does not deny the existence of Clauses 63 and 64. Though it is sought to be contended that a writ is maintainable' against an arbitrary action of the State or its instrumentality, it is to be note<l that the process of tender allocation is not disputed as arbitrary or illegal. Moreover, the respondent authority does not deny the completion (' \

iI i I l wp_7615-2021 N8K, J To PSK. GJP of sub-works No.2 and 3, however, the respondent contends that only 35% of the contract work has been completed since the date of contract and that the petitioner's progress of work is too slow and therefore the respondent justifies the impugned termination.

8. Keeping in view the facts and circumstances of the case, this Court is not inclined to invoke writ jurisdiction under R.ti"i" 226, instead this Court deems it appropriate to relegate the parties to arbitration remedy as provided under Clauses 63 and 64 of the Contract, as the amounts alleged to be due, and also the impugned termination are essentially the disputes arising out of or in connection with the contract between the petitioner and the respondent.

9. Accordingly, the writ petition is disposed of directing the parties to avail the arbitration mechanism provided under the Contract. It is made clear that undisputed and admitted bills pending, if any, in respect of the completed work under Sub-works No.2 and 3, shall be cleared within a period of four weeks from the date of receipt of a copy ofthis order. No costs. Miscellaneous petitions pending, if stand closed. SDT P.C. SULEKHA DEVI ASSISTANT REGISTRAR _- /TRUE COPY// (9_ SECTTON OFFICER

1. The Divisional Fngineer/Estates (DEN), Union of lndia, Hyderabad Division, South Central Railways, Secunderabad.

2. The General Manager, South Central Railways, Secunderabad.

3. One CC to SRI S.V.S.CHOWDARY, Advocate [OPUCJ

4. One CC to SRI P.DEVENDER, SC FOR CENTITAL GOW. IOPUC]

5. Two CD Copies 4r :l :i il ;l :: .I

I) D HIGH COIURT ATED:0610212026

ORDER

WP.No.7615 of 2021 t THE S 1l HqR Troq C) { {' * I I DISPOSINIG OF THE WRIT PETITION WITHOUTCOSTS ,iv