THE HON’BLE SRI JUSTICE K.C.BHANU WRIT PETITION NO.7723 OF 2011 Date: 30th November, 2011 Between: M/s. MNR-SLEC (JV), rep. by its Authorised Signatory, 6-3-635, Akash Gangal, Khairatabad, Hyderabad. …..Petitioner AND The Principal Secretary, I & CAD Department, A.P.Secretariat, Saifabad, Hyderabad and others. …..Respondents THE COURT MADE THE FOLLOWING: THE HON’BLE SRI JUSTICE K.C.BHANU WRIT PETITION NO.7723 OF 2011 ORDER:- This writ petition is filed seeking to issue a writ of mandamus declaring the action of the respondent Nos.2 to 4 in withholding the retention amount deducted from the running bills @ 2.5% of the gross value of the bills, as arbitrary and illegal and consequently direct the respondent Nos.2 to 4 to release the same against furnishing of an unconditional bank guarantee for the equal value valued till 1.1.2012 pertaining to LSAB No.39/BLIP/2004-05, dated 7.3.2005 in respect of design, estimation and execution of Budpur balancing reservoir, Budpur Village, Atmakur Mandal, Mahaboobnagar District, comprising the main components (i) formation of earth dam with FRL of +352 M (ii) construction of spillway and (iii) construction of head regulators to let out water into left and right main canals. 2. Heard both sides. 3. It is stated in the affidavit filed in support of the petition that respondent No.2 had called for tenders for investigation, design, estimation and execution of Budpur balancing reservoir, comprising the main components (i) formation of earth dam with FRL of +352 M (ii) construction of spillway and (iii) construction of head regulators to let out water into left and right main canals, and other connected works therewith on 01.10.2004. The petitioner, being the lowest bidder, the work was awarded for a value of Rs.36,98,00,001/- and the work has to be completed in 24 months, through agreement dated 07.03.2005, and the said work has been completed in the year 2009, that Clause 47 deals with retention of money by the respondents during the execution of work. Clause 47.1 states that “the department shall retain from each payment due to the contractor @ the rate of 5% of bill amount until completion of the whole of the works, the retention amount so accumulated will be released against the Bank Guarantee in spells of Rs.25.00 lakhs (Rupees twenty five lakhs only). Clause 47.2 further states that “on completion of the whole of the works out of total amount retained (i.e. 5%) 2.5% will be repaid to the contractor and balance (i.e. 2.5%) when the Defects Liability period has passed and the Engineer-in- Charge has certified that all the defects notified by the Engineer-in- charge to the contractor before the end of this period have been corrected”. In terms of the said condition, the respondents have withheld an amount equivalent to 5% of each of the running bills and have repaid half of the retention money on couple of occasions, that the work was completed on 31.12.2009, the petitioner is entitled for the refund of the retention money against Bank Guarantee. The maintenance (defects liability) period will be expiring on 31.12.2011, and the petitioner will be entitled for refund of the retention money without furnishing any security. During the progress of work, the Government of A.P., have issued a memo bearing No.22829/Reforms(A1)/2008 dated 23.12.2008 correcting an alleged mistake in memo No.5217/Reforms/2006, Irrigation & CAD Dept. dated 23.02.2006 whereby an amount equivalent to 2.5% of the each of the bill, which in effect amounts to retaining an amount equivalent to 2.5% of the agreement value till the completion of the defects liability period even if the accumulated amounts are in excess of Rs.25.00 lakh, that an amount of about Rs.1.00 crore is lying with the respondents and that in similar circumstances, this Court in WPMP No.3382 of 2009 of W.P.No.2644 of 2009 granted the interim prayer directing the respondents to release the withheld amount equivalent to 2.5% against bank guarantee. Hence, the petitioners filed the present writ petition. 4. The second respondent filed a counter affidavit stating that the petitioner being the lowest bidder, the above said work was awarded to him vide Agreement dated 7.3.2005, that according to the terms and conditions mentioned in Clause Nos.42.2.1, 47.1 and 47.2, the petitioner is not entitled for refund of retention money against bank guarantee, that the Government issued memo dated 23.12.2008 making some amendments to Memo No.5217/Reforms/2006, Irrigation & CAD Department, dated 23.2.2006, through which it was directed to keep 2.5% withheld amount in cash only and that according to the above memo, retention amount is to be released against bank guarantee and other 2.5% on cash only till the defect liability period is over. 5. The learned counsel for the petitioner contended that the retention amount may be released to the petitioner as the petitioner is ready to furnish bank guarantee for the retention amount and that the defects liability period would be completed by 31.12.2011 and a direction may be given to the respondents to pay the retention amount to the petitioner 6. The factual matrix is not in dispute. According to the amended memo, it is clear that an amount of 2.5% of the total value of work done is to be retained as security from final bill and an amount equivalent to 2.5% of the amount of each running bill shall be retained in cash till the end of defect liability period. After the defect liability period, there is no impediment in releasing the said amounts. 7. Therefore, the writ petition is disposed of directing the respondents to release the said amount after the defect liability period is over. No costs. _______________ K.C.BHANU, J 30th November, 2011 TJMR THE HON’BLE SRI JUSTICE K.C.BHANU WRIT PETITION NO.7723 OF 2011 Date: 30th November, 2011