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Writ Petition In Contractual Matters Maintainable If Work Payment Arbitrarily Withheld By State Or Its Instrumentality: Andhra Pradesh High Court

Jagriti Sanghi
24 March 2022 2:00 PM GMT
Writ Petition In Contractual Matters Maintainable If Work Payment Arbitrarily Withheld By State Or Its Instrumentality: Andhra Pradesh High Court
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The Andhra Pradesh High Court recently reiterated that a writ petition in contractual matters is maintainable if State or any instrumentality of the State acts arbitrarily by withholding the amount legitimately payable to the contracting party. In the instant case, Justice Battu Devanand held that the petitioner is entitled to the principal amount along with interest for the loss caused...

The Andhra Pradesh High Court recently reiterated that a writ petition in contractual matters is maintainable if State or any instrumentality of the State acts arbitrarily by withholding the amount legitimately payable to the contracting party.

In the instant case, Justice Battu Devanand held that the petitioner is entitled to the principal amount along with interest for the loss caused due to "illegal deprivation of right".

"When the State or its instrumentalities failed to act legally within reasonable period to make payment to the petitioner for the works executed by her and infringed the fundamental rights of the petitioner, we hold that the Writ Court is having jurisdiction to entertain the claim of the petitioner."

Brief Facts of the case

The Writ Petition was filed to declare the action of Respondents (State government and A.P. Education & Welfare Infrastructure Development Corporation) in not releasing the bill amount of Rs. 15,92,859/- for the work executed by the petitioner as illegal, arbitrary and against natural justice principle.

The petitioner participated in a tender and became the successful bidder. He was given the work order. The petitioner completed the work and the bill was prepared and approved by the Respondent. However, the bill amount was not released for a long period of time and the Respondents were dragging the issue.

Contention of both sides

The Respondent submitted that the bill was not paid due to non-availability of funds. The Respondent contended that their Corporation was only an executing agency to look after the civil construction and to monitor the quality of work and the funds were to be released by the Director of B.C. Welfare, Andhra Pradesh, who had given the Administrative sanction to take up the work.

Furthermore, the Respondent contended that the petitioner executed the agreement with a condition precedent that all the subject issues should have been raised before an Arbitrator or before the competent civil court as an alternative mode of dispute settlement. But the petitioner suppressed material facts of the agreement and invoked the writ jurisdiction of the High Court under Article 226 of the Constitution of India.

The counsel for the petitioner contended that in the absence of any dispute with regard to the execution of work within stipulated period as per the agreement, it was the legal duty of the respondents to clear the bill and make payment. The respondents had failed to pay the amount even after execution of work and therefore, the High Court could entertain the writ and direct the respondents to make payment.

Court's ruling

The court observed that there was no dispute with regard to the execution of work pursuant to the agreement. The bill was also approved and the Respondent had admitted about the paucity of funds.

The Court did not accept the contention of the Respondents that the Petitioner had to avail alternative remedy as per the terms of the Agreement. If the State or its instrumentalities failed to act legally within reasonable period to make payment to the petitioner for the works executed by her and infringed her fundamental rights, the Writ Court is having jurisdiction to entertain the claim of the Petitioner.

Justice Battu Devanand relied on the Apex Court decision in ABL International Limited v. Export Credit Guarantee Corp. of India Ltd., in which it was held that a writ petition against a State arising out of contractual obligations is maintainable in appropriate case even if disputed questions of fact arise.

Writ Petitions In Contract Matters Maintainable When There Is Arbitrariness By The State: SC

The court opined that not releasing the amount for which the Petitioner was legitimately entitled was nothing but depriving her rights. The Petitioner could not look after the welfare of the family and she could not make payments to material vendors or employees. Due to this, petitioner's respect and dignity was deteriorated and the right to life under Article 21 of the Constitution of India was violated. Even though there was no fault on the part of the Petitioner, she did not receive the payment.

The court allowed the Writ Petition and directed the respondents that the bill be cleared forthwith with interest at 12% p.a. from the date of submission of bill.

Case Title: Kathupalli Venkata Sowmya Versus The State of Andhra Pradesh

Citation: 2022 LiveLaw (AP) 33

Click Here To Read/Download Order

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