MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 1 MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) Dated:- 21st April,2009. HON'BLE MR.JUSTICE SANGEET LODHA Mr. K.K.Shah, for the petitioner. None present for the respondents. 1. Heard learned counsel for the petitioner. 2. In this writ petition, the petitioner is seeking directions against the respondents to release of the FDR for Rs.16,000/- submitted by him as security deposit against the work of Water Proofing Treatment (WPT) awarded in his favaour by the respondents. 3. The petitioner was awarded a contract CA No. CE(P) J/Jodh/45/1984-85 for provision of Storage Accommodation and other buildings at Banar,Jodhpur vide acceptance letter dated 9.3.85. The petitioner completed the above mentioned work. However, the petitioner was awarded an additional work of WPT. Against the said additional work, the respondent demanded a security deposit of Rs.16,000/- which was submitted by the petitioner vide FDR No. 656632 dated 23.1.89 with the Punjab National Bank, Ratanada,Jodhpur. The work was completed by the petitioner . 4. After expiry of the guarantee period of WPT work i.e. five years from the date of completion of the work , the petitioner MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 2 approached the respondent no. 3 by way of an application for release of aforementioned FDR on 2.4.93 but the respondents vide communication dated 10.4.93 intimated that the FDR could not be released because yet another contract awarded in favour of the petitioner has been cancelled and the same is being executed through other agency on the risk and cost of the petitioner. The petitioner represented against the same vide representation dated 17.8.93 inter alia stating therein that the cancellation of another contract has nothing to do with the security deposit pertaining to the contract in question. It was submitted that the security deposit of Rs.16,000 given in respect of the contract in question which is due to the petitioner and which is not under any dispute cannot be withheld on the plea of cancellation of another contract .The petitioner also served the respondents with a notice for demand of justice. The notice for demand of justice was responded by a letter dated 11.6.99 issued by the Garrison Engineer (A) No.2, Jodhpur wherein it was reiterated that since the government recovery was due from the petitioner against yet another contract cancelled on account of default on the part of the petitioner, the FDR for Rs.16,000 cannot be released. In the meantime, the petitioner requested the respondent to renew the FDR for a further period of ten years. Accordingly, the FDR has been got extended for a further MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 3 period of ten years w.e.f. 22.1.93.Thereafter vide communication dated August 12, 2000 , the petitioner through his counsel requested the respondents to release the amount lying in the FDR above Rs.16,000 inasmuch as in terms of the contract the liability of the work was only upto Rs.16,000. However, the request made by the petitioner was turned down vide communication dated 11.8.2000 issued by the Garrison Engineer (A) Utility, on the ground that more than Rs.29,76,800 has been awarded by the sole arbitrator in respect of CA No. CE JZ/Jodh/12 of 1989-90 in favour of Union of India. Hence this petition. 5. The respondents in the reply has taken the stand that more than Rs.29,76,800 has already been awarded by the sole arbitrator in favour of the Union of India under the CA No. CE JZ/Jodh/12 of 1989-90 against the petitioner and the award has already been filed before the District Judge,Jodhpur vide Case No. 09-A for making it rule of court therefore, till the finalisation of the said case the guaranteed amount against the WPT for Rs.16,000 could not be released to the petitioner. It is submitted on behalf of the respondents that as per condition No. 67 of the Agreement No. 2249 , the government can withhold the amount of contractor from any other contracts or the amount due to him. 6. It is contended by the learned counsel for the petitioner MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 4 that the liability of the petitioner towards the WPT was Rs.16,000 only which was to be deposited with the respondents as a guarantee for a period of five years hence, the amount was placed in the FDR in favour of Union of India so that the interest is earned by the petitioner. It is submitted by the learned counsel that once the guarantee is over, the respondents are duty bound to release the FDR in question and the same cannot be withheld against for recovery of any amount due under another contract. In the alternative, it is submitted by the learned counsel that in no case, the amount more than Rs.16,000 i.e. basic security deposit could have been withheld but the balance amount above Rs.16,000 has to be released as the liability of the petitioner under the contract was not beyond Rs.16,000 . 7. I have considered the submissions of the learned counsel for the petitioner and perused the record. 8. It is not in dispute that the Contract Agreement No. CE(P) J/JODH/45/84-85 and Contrat Agreement No. CEJZ/JODH/12/89-90 were two separate and independent contracts, of course, entered into between the same parties. It goes without saying that the rights and liabilities of the parties to the contract shall be governed by the terms and conditions of each contract. Any party to the contract being in an MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 5 advantageous position on account of inequality of bargaining power or otherwise cannot be permitted to take advantage of the situation and make to suffer other party to the contract. 9. The security deposit of the one contract which stands duly performed cannot be permitted to be appropriated against the dues in any other contract, this legal proposition already stands settled by a decision of this Court in the matter of State of Rajasthan vs. Bool Chand, (1974 W.L.N.(UC),3). In the said matter, the plaintiff-respondent was awarded contract for cutting wood in the jungle. He paid Rs.500/- as earnest money and also deposited Rs.25,60/- as security representing 10% of the contract amount. The plaintiff completed the said contract within the stipulated period but neither earnest money nor the security deposit were refunded to him. Consequently, he preferred a suit for recovery of Rs.3060/- and interest thereon. The defendant's case was that no doubt the plaintiff had completed the said contract but he had committed default in respect of another contract on account of which Rs.1380/- were forfeited. Accordingly,it was submitted on behalf of the defendant-State that the plaintiff was entitled to get back Rs.1603.09 paisa only. 10. After due consideration, this Court inter-alia held that “Forfeiture is a nature of penalty or a fine and it is not a debt for which the creditor can appropriate any other amount of the MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 6 debtor lying with him. Forfeiture can also be strictly according to the terms of the contract. Since, the amount other than Rs.500/- did not represent any deposit by the plaintiff towards the suit contract, the State was not entitled to forfeit the same.” 11. The view taken by this Court in the matter of Bool Chand (supra) has been further followed by this Court in the matter of Kundan Lal Handa vs. State of Rajasthan, (1990(1) Arbitration Law Reporter, 27) holding that it is settled law that the amount relating to one contract cannot be recovered from the amount payable in respect of other contracts or other transactions. 12. The view taken as aforesaid has been further followed by this Court in “State of Rajasthan vs. M/s Navbharat Constructions(S.B.Civil First Appeal No. 132/1991), decided on 1.10.07. 13. Thus, in view of settled position of law as aforesaid, in considered opinion of this court, the respondents had no authority to withhold the security deposit of the plaintiff under the Contract Agreement in question towards the amount of compensation likely to be levied, under yet another contract. Even otherwise, the respondents could not have refused to release the security deposit of the petitioner for a claim which was not due at the relevant time. The action of the respondents in withholding the security deposit of the petitioner for a liability MAHESH CHAND AGRAWAL VS. UNION OF INDIA & ORS. (S.B.CIVIL WRIT PETITION NO. 4607/06) 7 likely to be incurred by in future cannot be countenanced by this court. 14. In the result, the writ petition succeeds, it is hereby allowed. The respondents are directed to release the FDR in question of the petitioner within a period of two weeks from the date of receipt of this order. No order as to costs. (SANGEET LODHA),J. Aditya/-