Disputed question of facts arising out of contract cannot be resolved through the jurisdiction under Article 226: Chhattisgarh High Court

1 NAFRHIGH COURT OF CHHATTISGARH BILASPUR Judgment Reserved on 23.11.2020Judgment Delivered on 27.11 .2020Writ Appeal No.1720(Arising out of order dated 14.01.2020 passed in Writ PetitionSouth Eastern Coal Field Limited Jamuna And Kotma Area Anuppur arranged by the Appellant in favour of the 2Respondent Company towards performance security forms the subjectmatter of challenge in this appeal.2.The gist of the factual matrix is that the Appellant turned to besuccessful in the tender floated by the Respondent Company and thework was awarded to him in terms of the tender and agreement executedin this regard. Performance security was to be arranged in the form ofBank Guarantee to the requisite extent and this was arranged by theAppellant through the 4th Respondent by effecting the Fixed Deposit in theprescribed manneron account of theAppellant clearly showing the interest of the Respondent therein. Thework was admittedly completed within time to the satisfaction of theRespondent Company and Annexure P 7 Work Completion Certificatedated 05.07.2016 was issued in this regard. The Appellant submitted thefinal bill for a sum of Rs.1 03 13 737 but the same was kept pendingby the Respondent Company in cold storage which made the Appellantto approach this Court by filing writ petition for immediate interference.3.The factual position as to award of the work and satisfactorycompletion of the same by the Appellant Writ Petitioner was conceded bythe Respondents in the writ petition. It was however pointed out that when steps were being taken to release the amount some instructionswere obtained from the authorities of the GST Central Excise Departmentto withhold the payment including the security deposit because of theliability to be cleared by the Writ Petitioner to the Government. It was inthe said circumstance that the payments were not effected and the FDRwas not caused to be returned released. It was also pointed out thatsome other work was also awarded to the Writ Petitioner vide NIT 3No.SECL BSP CMC 17 610 but there was a failure in completing the saidwork under which circumstance the work order was terminated and itwas ordered to be re tendered at the risk and cost to the Writ Petitioner.Action was also being pursued to effect recovery of the alleged losscaused to the Respondent Companybut the amount duehas not been released the Respondent Company contends that anotherwork order given to the Writ Petitionercame to be terminated at the risk and cost to the Writ Petitioner for the default committed by him and that a sum ofabout Rs.6 Crores is due to the Respondent Company. In view of the 4disputed question of facts the prayer sought for w.r.t. the amountspayable under the final bill in respect of the tenderNo.SECL BSP CMC 17 524 cannot be adjudicated by this Court andhence interference is not possible. It is for the Writ Petitioner to availappropriate remedy before other appropriate forum in accordance withlaw w.r.t. this head.6.However the limited question to be considered in this appeal isonly with regard to the justifiability to the action inaction on the part of theRespondent Company in not causing the FDR to be released to the WritPetitioner. 7.Admittedly the Fixed Deposit was effected and Annexure P 2 FDRwas arranged by the Writ Petitioner through the 4th Respondent Bankshowing the interest of the Respondent Company in connection with theparticular work towards the “performance guarantee” under tenderNo.SECL BSP CMC 17 524. In other words if there was any failure onthe part of the Appellant in completing the work as agreed in terms of thetender it was open for the Respondent Company to invoke the Bankguarantee clause and require the 4th Respondent to effect the paymentunder the FDR to the Respondent Company to the extent as payable.Admittedly no such failure or lapse has occurred on the part of theAppellant Writ Petitioner in performing the work under tenderNo.SECL BSP CMC 17 524 and it has been completed on time to thesatisfaction of the Respondent Company which led to issuance ofAnnexure P 7 Work Completion Certificate. This being the position theBank Guarantee offered towards performance security has served thepurpose which cannot be extended beyond the scope of tenderNo.SECL BSP CMC 17 524. To put it more clear the said amount in the 5Fixed Deposit on account of the Writ Petitioner can t be demanded by theRespondent Company unless there is a failure in performance of the saidcontract which hence has to be returned to the Writ Petitioner oncompletion of the work. There is no dispute in this regard by theRespondent Company as well but for their contention that the saidamount was retained only on the basis of instructions received by theCentral Government authorities to retain the security deposit as well. Inother words the said Fixed Deposit in the name of the Writ Petitioner isnot an amount in the hands of the Respondent Companywhich can be retained with reference to the alleged defaultin respect of some other work contract so as to appropriated towards thealleged loss. 8.Paragraph 9 of the verdict passed by the learned Single Judge isrelevant as to the cause for retention of the said amount which isextracted below :“9. In the instant case the entire claim of thepetitioner arises out of a work contract enteredinto between the petitioner and therespondents. It is not a case between theparties of breach of contract. What has to beseen is that after the petitioner has dischargedits contractual obligations the respondentManagement has itself released the periodicaldues payable to the petitioner. However bythe time the contract was culminated therespondents received a specific instructionfrom the Govt. of India Ministry of Finance tofirstly stop all the releasing of further duespayable to the petitioner and secondly towithhold the security amount lying with therespondents including any bank guaranteeand other fixed deposits as security. This 6aspect is not disputed by the counsel for thepetitioner. The said Central Service Tax andCentral Excise Department is not a partybefore this Court.”9.It was pointed out that the GST authorities have already issuedclearance as per Annexure P 14 pointing out that no amount is due fromthe Appellant to the Central Government and that the amount under theFDR could be released to the Appellant. Since the GST authorities haveclarified the position as per Annexure P 14 there was no furtherjustification for retaining the FDR without causing it to be released to theAppellant. 10.When the matter came up for consideration before this Court on11.02.2020 it was submitted by the learned counsel for the Respondent Company that in view of the turn of events particularly pursuant toAnnexure P 14 necessary instructions have already been given to theBankers to release the Bank Guarantee furnished by the Appellant WritPetitioner. The order passed on that date reads as follows :“Shri Malay Shrivastava Advocate for theAppellant.Shri Vivek Chopda Advocate for theRespondents SECL.The learned counsel for the Appellant submitsthat despite the completion of works andpresentation of final bill in respect of thepayment due to an extent of more than Rs. 1crore no amount is being paid by theRespondent Company referring to some stopmemo issued by the CGST authorities. Thelearned counsel submits that on taking up thematter with the CGST authorities theAppellant was given to understand that a 7clearance letter has already been issued bythe Respondent Company. The intimationgiven to the Petitioner has been produced asAnnexure P 14 dated 26.06.2019. Still nosteps are being taken and hence the writpetition which came to be dismissed in limineand therefore the appeal.The learned counsel appearing for theRespondent Company submits that pursuantto Annexure P 14 necessary instructions havealready been given to the bankers to releasethe bank guarantee furnished by theAppellant Writ Petitioner. The learned counselhowever submits that amounts under differentheads in respect of the various other contractsare due from the Appellant Writ Petitioner tothe Respondent Companyand steps are being takento have the said amount recovered. Thelearned counsel also points out that there wasan attempt from the part of the Appellant WritPetitioner to resort to extra judicial means bywinning over the police and this was subjectedto challenge by the Respondent Company andfavorable verdict has already been obtained inthis regard. The learned counsel seeks fortime to put forth the sequence of events alsoproducing copies of the relevant materials.Issue urgent notice to 4th Respondent byspeed post. Process fee as per rules.List this matter for further consideration aftertwo weeks.”11.When the matter came up for further consideration on 19.03.2020 it was pointed out on behalf of the Appellant that the Respondent Company has been informed by the 4th Respondent Bank that the reverse 8side of the FDR has not been properly signed by them to have theamount released and thus seeking to cure the defects. It was submittedby the learned counsel for the Respondent Company that intimation hasalso been given to the Bank to release the amount and if any defect wasthere it would be caused to be cured. This is recorded in the order dated19.03.2020 in the following terms : “Shri Malay Shrivastava Advocate for theAppellant.Shri Shubham Pandey Advocate on behalf ofShri Vivek Chopda Advocate for theRespondent SECL.The learned counsel for the Appellant pointsout that despite the completion of work to thesatisfaction of the Respondents andsubmission of the bill the amount due underthe bill and the FDR has not been released.The reason stated by the Respondents is thatthe amount was withheld on the basis ofinstructions given by the authorities of theCGST Department with regard to pendingdues from the Petitioner. On 11.02.2020 areference was made to Annexure P 14 issuedby the CGST authorities pointing out thatinstruction has been given to the Respondentsto have released the amounts holding that noamount was due from the Petitioner towardstax.With reference to Anneuxre P 14 it wassubmitted by the learned counsel for theRespondents on 11.02.2020 that they hadalready given instructions to the Bank torelease the FDR amount to the Petitioner. Itwas accordingly that the matter wasadjourned to ascertain the position as on date. 9Today the learned counsel for the Appellantpoints out that the Respondent SECL hasbeen informed by the Bank that the reverseside of the FDR has not been properly signedby them to have the amount released and nospecific instructions have been given to themin this regard. The learned counsel for the Respondentsconcedes that the intimation was given to theBank to release the amount and if any defectis there it will be caused to be cured. Time issought for to get instructions in this regard.Post the matter tomorrow i.e. on 20.03.2020.”12.Despite the clearance given by the Central Government authoritiesvide Annexure P 14 the assurance and undertaking given from the part ofthe Respondent Companyand the specific pleading admission from the part of theRespondent Company as put forth in the reply statement as to thecompletion of work the eligibility of the Appellant to get back the FDR andthe instructions stated as given by the Respondent Company to theBanker it was not honoured. The learned counsel for the Respondent Company submits that there was some mistake in the submissions made leading to the order dated “19.03.2020” which has been sought to becorrected by filing I.A. No.020. In paragraphs 5 and 6 of the saidIA it is stated that when the order was passed on 19.03.2020 the learnedcounsel could not inform about the order regarding the recovery issuedagainst the Appellant because of which the amount under the FDR couldnot be released. We find absolutely no merit in the said submission forthe reason that the amount under the FDR does not form an amount inthe hands of the Respondent Company to be adjusted or appropriatedagainst the amounts if any to be recovered by the Respondent Company 10from the Appellant. It is only w.r.t. the Bank Guarantee given through the4th Respondent Bank arranged by the Appellant towards performanceguarantee in respect of the particular work under tenderNo. SECL BSP CMC 17 524. If only there was any failure on the part of theAppellant in performing the said work on time would it give a cause ofaction to the Respondent Company to point to the default and to demandthe amount from the Bank. But this has never happened and on the otherhand the work under the above tender has been completed to thesatisfaction of the Respondent Company leading to issuance ofAnnexure P 7 Work Completion Certificate. As such the purpose of theBank Guarantee is over and the amount covered by Annexure P 2 FDRon account of the Writ Petitioner still remains that of the Writ Petitionerand it is liable to be returned by the Bank for which no claim orobstruction can be put forth by the Respondent Company unlike anyamount due under the bills raised in relation to the work performed. 13.In the above circumstance the course and conduct pursued by theRespondent Company in causing the FDR to be released does notappear to be correct or proper. In spite of the specific assertions madethrough the pleadings filed and also the submissions made before thisCourt that in the light of Annexure P 14 issued by the CentralGovernment authorities and the instructions already issued to theBankers to release the FDR no proper steps have been taken by theRespondent and retention of the FDR is sought to be justified withreference to the alleged loss sustained by the Respondent Company asput forth in I.A. No.020. Obviously nothing is mentioned in the saidI.A. with regard to the submissions made on “11.02.2020” as to theinstructions already issued to the Banker to release the FDR. 1114.The pleadings filed by the Respondent Company and thesubmissions made through the learned counsel do not reconcile with thedeeds pursued. We record our displeasure as to the casual way in whichthe matter has been dealt with by the Respondent Company by way ofincorrect or inconsistent submissions as to the release of the FDR at thesame time retaining the same at their hands as conceded in I.A. No.03 of2020. It may amount to Contempt of Court as well where serious actionmay be necessary in view of the verdict rendered by the Apex Court incase of Dhananjay Sharma v. State of Haryana and Others reported inAIR 1995 SC 1795. 15.However in view of the fact that we are not interfering with theverdict passed by the learned Single Judge in respect of the amount dueunder the bill but for modifying the same with regard to the right of theAppellant to get back the FDR provided arranged through the 4thRespondent Bank towards the performance security under tenderNo.SECL BSP CMC 17 524 we restrict ourselves in disposing the appealdirecting the Respondent Company to take all further steps to return theFDR with necessary endorsementand cause thesaid amount to be released to the Appellant s account within one weekfrom the date of receipt of a copy of the judgment. The 4th Respondent isdirected to disburse the amount due to the Appellant towards the FDRforthwith at any rate within one week thereafter. If there is any failure onthe part of the Respondent Company in acting as above it shall be for the4th Respondent Bank to release the FDR to the account of theAppellant Writ Petitioner notwithstanding any such lapse on the part ofthe Respondent Company and such payment will discharge the 4thRespondent from any liability to the Respondent Company in connectionwith the FDR arranged towards the performance security under tender 12No.SECL BSP CMC 17 524. The verdict passed by the learned SingleJudge stands modified to the above limited extent.16.The course and conduct pursued by the Respondent Companyw.r.t. the release of the security amount covered by the FDR isdeprecated and we dispose of the writ appeal with a cost of Rs.10 000 payable by the Respondent Company to the Appellant Writ Petitioner. Sd Sd (Parth Prateem Sahu) Chief Justice Judge Anu 

Summary: It is settled law that the rights arising out of a contract cannot be resolved through the discretionary jurisdiction of this Court under Article 226 of the Constitution of India; especially when disputed questions of facts are involved. This judgment was pronounced by the division bench of the Chhattisgarh High Court consisting of Hon’ble Chief Justice P.R. Ramachandra Menon and Justice Shri Parth Prateem Sahu in the matter of Niranjan Lal Agarwal v. Coal India Limited and others. [W.A 178/2020]. The petitioner in the present writ petition alleged that the Fixed Deposit Receipt (FDR) which was arranged by the appellant in favour of the respondent company towards ‘performance security’ was not released by the company even after issuing the work completion certificate. It was anyway brought up that, when steps were being taken to release the sum, a few directions were obtained from the specialists of the GST/Central Excise Department to retain the instalment including the security store, in light of the obligation to be cleared by the Writ Petitioner to the Government. It was in the said situation, that the instalments were not affected and the FDR was not caused to be returned/released. The learned Single Judge observed that there were disputed questions of fact, which could not be resolved in a proceeding under Article 226 of the Constitution of India. It was also observed that the reasons for non-disbursement of the amount due to the Writ Petitioner was because of the instructions given from the part of the authorities of the Central Government. In the said circumstance, interference was declined and the writ petition was dismissed, which is put to challenge in this appeal. The division bench of Chhattisgarh High Court upheld the observations made by the learned Single Judge and opined that “When the Appellant/Writ Petitioner contends that the work involved in the present tender is admittedly complete (as certified by the Respondent-Company) but the amount due has not been released, the Respondent-Company contends that another work order given to the Writ Petitioner came to be terminated ‘at the risk and cost’ to the Writ Petitioner, for the default committed by him and that a sum of about Rs.6 Crores is due to the Respondent-Company. In view of the 4 disputed questions of facts, the prayer sought with respect to the amounts payable under the final bill cannot be adjudicated by this Court and hence, interference is not possible. It is for the Writ Petitioner to avail appropriate remedy before another appropriate forum, in accordance with the law with respect to this head. The pleadings filed by the Respondent-Company and the submissions made through the learned counsel do not reconcile with the deeds pursued. We record our displeasure as to the casual way in which the matter has been dealt with by the Respondent-Company by way of incorrect or inconsistent submissions as to the release of the FDR; at the same time, retaining the same at their hands. It may amount to Contempt of Court as well, where serious action may be necessary in view of the verdict rendered by the Apex Court in the case of Dhananjay Sharma v. State of Haryana and others reported in [AIR 1995 SC 1795]. The 4th Respondent is directed to disburse the amount due to the Appellant towards the FDR forthwith, at any rate within one week thereafter. If there is any failure on the part of the Respondent-Company in acting as above, it shall be for the 4th Respondent-Bank to release the FDR to the account of the Appellant/Writ Petitioner, notwithstanding any such lapse on the part of the Respondent-Company and such payment will discharge the 4th Respondent from any liability to the Respondent-Company in connection with the FDR arranged towards the performance security. The verdict passed by the learned Single Judge stands modified to the above-limited extent.” Finally, the course and conduct pursued by the Respondent-Company w.r.t. the release of the security amount covered by the FDR was deprecated and they disposed of the writ appeal with a cost of Rs.10, 000/- payable by the Respondent-Company to the Appellant/Writ Petitioner. Click here to read the judgement