Advanced Mining Technologies Private Ltd. v. State of Telangana, rep. by its Principal Secretary, Industries and Commerce Department, Hyderabad
2023-01-03
K.SARATH
body2023
DigiLaw.ai
ORDER : This Writ petition is filed with the following relief: “….to issue a Writ, more specifically in the nature of Writ of Mandamus, declaring the actions of the respondent No.2 in deducting interest on the mobilization advance of Contract No.1078 from the Bills of Contract No.7600006776 as illegal, arbitrary and against the principles of natural justice and consequently direct the respondent No.2 to release the payments due including all the deductions of interest on mobilization advance of Contract No.1078 effected on the bills of Contract No.7600006776 immediately along with the interest and costs”. 2. Heard Sri P.Sri Raghu Ram, Learned Senior Counsel appearing for Sri P.Sri Ram, Counsel for the petitioner and Sri E.Madan Mohan Rao, appearing for Sri B.Arjun, Counsel for the respondent Nos.2 and 3. 3. The learned Senior Counsel for the petitioner submits that the petitioner-company and the 2nd respondent-Corporation entered into 1st Contract on 15.11.2006 vide Contract ROC No.1078. Disputes arose between the petitioner-company and the respondents with regard to said contract regarding non-availability of resource as claimed by the respondents and the consequent reduction in production causing huge losses to the petitioner. The parties entered into Arbitration to settle the disputes as provided contract No.1. The Bank Guarantee for the mobilization of advance in Contract No.1 was sought to be invoked by the respondents herein vide CRP/MP/Sec.12/AMT/2014 /556 dated 22.11.2014 while the Arbitration has not reached its conclusion. Against the same the petitioner filed W.P.No.13807 of 2016 and this Court granted interim stay in the same and the matter is still pending. 4. The learned Senior Counsel for the petitioner further submitted that the Arbitral Award was ended on 12.02.2016 in favour of the petitioner and directed the respondent No.2-Corporation to pay a total sum of Rs.88,58,25,243/- (Rupees Eighty Eight Crores Fifty Eight Lakh Twenty Five Thousand Two Hundred and Forty Three only). Against the said Arbitral Award, the respondent No.2-Corporation preferred appeal under Section 34 of the Arbitration and Conciliation Act 1996 in COP No.90 of 2017 on the file of City Civil Court, and interim stay was granted by the said Court.
Against the said Arbitral Award, the respondent No.2-Corporation preferred appeal under Section 34 of the Arbitration and Conciliation Act 1996 in COP No.90 of 2017 on the file of City Civil Court, and interim stay was granted by the said Court. Against the said interim stay, the petitioner filed CRP No.7184 of 2018 and this Court has been pleased to passed interim order on 23.04.2019, directed the respondents to pay 50% of the awarded amount after adjustment of Mobilization Advance due pending disposal of the application under Section 34 of the Arbitration and Conciliation Act, 1996 and thereafter the orders of this Court was modified by the Hon’ble Supreme Court of India in SLA (C) No.17920 of 2019 on 09.08.2019 to the extent of requiring the petitioner to furnish the security for the amount paid by the respondents herein. The respondents herein requested to deduct the advance due amount of Rs.26,83,00,000/-(Twenty Six Crores Eighty Three Lakhs only) from the amount awarded by the Tribunal before disbursing 50% of the award against the security as directed by this Court. After adjusting the amount due to the petitioner from the amount awarded was rounded off to Rs.60,00,00,000/- (Rupees Sixty Crores only). While it being so, the petitioner-company and the respondent Corporation entered into another contract on 13.03.2017 vide contract No. No.7600006776 (hereinafter referred to as “Contract No.2”). The contract No.2 was with respect to work of extraction of coal by High wall Mining Technology on a cost per tone basis. The said work as was valued at Rs.1,18,63,80,000/- (Rupees One Hundred Eighteen Crores Sixty Three Lakhs Eighty Thousand only). 5. The learned Senior Counsel for the petitioner further submits that, while the work was in progress, the petitioner-company was orally threatened by the respondent-corporation to acknowledge that an amount of Rs.3,30,24,080.16 Ps (Rupees Three Crores Thirty Lakhs Twenty Four Thousand Eighty And Sixteen Paise Only) was to be recovered as interest due from the mobilization advance on Contract No.1 as on that date and the petitioner was forced to issue a letter on 29.08.2017 acknowledging the interest due on the mobilization Advance of Contract No.1. The petitioner-company was not in a position to challenge the illegal action of the respondents as on that date and the coercion continued till the date of completion of Contract No.2 and also subsequent interest to be regularized from the running bills of Contract No.2. 6.
The petitioner-company was not in a position to challenge the illegal action of the respondents as on that date and the coercion continued till the date of completion of Contract No.2 and also subsequent interest to be regularized from the running bills of Contract No.2. 6. The Learned Senior Counsel for the petitioner further submits that the Contract No.2 was completed on 08.11.2021 and the bills were raised on 25.11.2021. On presentation of last bill the total amount due to the petitioner was Rs.7,50,69,546.06 ps (Rupees Seven Crores Fifty Thousand Sixty Nine Thousand Five Hundred Forty Six And Six Paise only), the respondent-Corporation sent a letter No.RG.1/FAD/AMT/22-23/3075 dated 13.04.2022 and another letter ref.No.RG.I/Agt.GDk.1grp /2022/289 dated 29.04.2022 informing the petitioner-company that the entire payment was withheld against the settlement of future interest amount on mobilization advance. Against the said illegal and arbitrary series of actions of the instrumentality of the State to deduct future interest on already deducted amounts that are secured by the Bank Guarantee, the petitioner is constrained to file this Writ petition 7. The learned Senior Counsel appearing for the petitioner further submits that the respondents have no authority to deduct or withhold uncalculated, un quantified and unsubstantiated amounts from legally and contractually due amounts to the petitioner, regardless of reasons, let alone the frivolous and arbitrary reasons of future interest. 8. The learned Senior Counsel appearing for the petitioner further submits that the Contracts 1 and 2 are separate instances between the respondent-corporation and the petitioner-company. In Contract No.1 the Arbitral Tribunal, consisting of two Subject Matter Experts and one Retired Chief Justice, adjudged the matter both on merits and law and decided the matter against the respondent-corporation. Utilizing their status as an instrumentality of State, the Respondent blatantly and illegally trying to squeeze money from the petitioner-company in Contract No.2. The action of the respondents is arbitrary and illegal. 9. The learned Senior Counsel for the petitioner further submits that the mobilization advance has already been deducted from the amount awarded by the Arbitral Tribunal before paying 50% of the award to the petitioner. The respondent-corporation will have to pay to the dues from the award only at a nominal interest as set by the Courts without deducting of interest being claimed by the respondents on the mobilization advance.
The respondent-corporation will have to pay to the dues from the award only at a nominal interest as set by the Courts without deducting of interest being claimed by the respondents on the mobilization advance. It is the respondents’ default by which the amount of mobilizaiton advance could not be recovered, for which the petitioner cannot be penalized with interest on the issue caused and being continued to be caused by the respondents. 10. The learned Senior Counsel for the petitioner, in support of his claim, has relied upon the following judgments: Gangotri Enterprises Ltd., Vs. Union of India and others, 2016 (11) SCC 720 ABL International Ltd., and others Vs. Export Credit Guarantee Corporation of India Ltd., 2004 (3) SCC 553 11. Sri E.Madan Mohan Rao, Learned Senior Counsel appearing for the respondents that the allegations of non-payment of Mobilization Advance cannot be termed as illegal and the writ petition is not maintainable. The petitioner-company itself has given a letter on 29.08.2017, i.e. five years ago for allowing the respondents to deduct interest on Mobiizaiton Advance and now cannot contend after five years in a writ petition on the ground of coercion. The said voluntary act under threat, coercion, force, etc., is highly improbable and such an allegations may not come under Article 226 of Constitution of India. The issue is being contractual in nature, without seeking the dispute settlement mechanism as provided in Clause 53 of the Agreement between the petitioner and the respondents, the petitioner cannot approach this Court by filing writ petition and the same is liable to be dismissed. 12. The learned Senior Counsel appearing for the respondents further submits that Clause No.53 of Contract No.7600006776 dated 13.03.2017 (Contract No.2) deals with settlement of dispute whenever any dispute arise between the parties and if the disputes/differences is not settled through negotiations, the respective parties can seek remedy by arbitration by invoking the same within 120 days of disputes. In the instant case the petitioner-company, without invoking the above clause and without exhausting the remedy available in the contract approached this court and therefore the writ petition is not maintainable. The petitioner’s claim that the respondents coerced the petitioner to accept the deductions of interest on Mobilization Advance is one contract against another contract, but the respondents are entitled for recovery of interest on Mobilization Advance as per contract.
The petitioner’s claim that the respondents coerced the petitioner to accept the deductions of interest on Mobilization Advance is one contract against another contract, but the respondents are entitled for recovery of interest on Mobilization Advance as per contract. The petitioner-company itself submitted a letter on 29.08.2017 agreeing to pay interest on mobilization advance from the new contract awarded and permitted the respondents to deduct interest due and therefore the question of coercion does not arise. 13. The learned Senior Counsel appearing for the respondents has relied upon the following judgments: Kerala Electricity Board and another Vs. Kurien E.Kalavathi and others, (2000) 6 SCC 293 State of Bihar and others Vs.Jain Plastics and Chemicals, AIR 2002 SC 206 Joshi Technologies International Inc. Vs. Union of India and others, (2015) SCC 728 VPR Mining Infrastructure Pvt Ltd. Vs. The Singareni Collieries Ltd., WA No.651 of 2022 (TSHC) 14. The learned Senior Counsel for the respondents further submits that the accusation made are against the State or its instrumentalities does not mean an aggrieved person can bypass established civil adjudicatory process and directly seek writ relief and requested to dismiss the writ petition. 15. After hearing both sides, this Court is of considered view that admittedly the petitioner-company submitted a letter on 29.08.2017 in Contract No.2 and allowed the respondent-corporation to deduct interest on mobilization advance relating to Contract No.1. Thereafter, the petitioner-company submitted letter to the respondent-corporation after completion of Contract No.2 on 31.03.2022 and requested to release an amount of Rs.5,51,56,303.11 Ps (Rupees Five Crores Fifty One Lakh Fifty Six Thousand Three Hundred and Three, Eleven Paisa). The respondent-Corporation gave a reply on 13.04.2022 and stated that as per the consent given by the petitioner the respondent-corporation deducted interest due amount against the earlier contract’s mobilization advance from the running bills. Now, the petitioner-company is questioning the said action of the respondent-corporation in withholding the amount. The consent letter of the petitioner dated 29.08.2017 reads as follows: “The new contract is awarded by SCCL vide P.O.No.7600006776 dated 24.03.2017 and as we require funds for operational expenses, we request you to kindly deduct interest due amount (pertaining to earlier contract) in 4 months i.e. 8 fortnightly bills of the new contract and then the subsequent interest also will be regularized from the running bills of the new contract without prejudice”. 16.
16. The petitioner-company itself gave consent for deduction of interest due amount pertaining to contract No.1, and now after five years the petitioner-company cannot agitate on the ground that the contract No.1 and 2 are separate instances between the petitioner-company and respondent-corporation. The arbitral award is in favour of the petitioner in respect of Contract No.1 and the respondent-corporation availed their remedy in appropriate proceedings and obtained interim orders in their favour. The judgments relied upon by the learned Senior Counsel for the petitioner not apply to the instant case. 17. The petitioner-company itself has given consent letter five years ago for allowing the respondent-corporation to deduct interest on mobilization advance and now the petitioner cannot dispute after receiving nearly more than Rs.110 Crores, and after five years at the stage of last bill payment cannot question in a writ petition on the ground of coercion. 18. Admittedly, the relationship between the petitioner-company and respondent-corporation is in contractual in nature. The petitioner-company availed alternative mechanism as per Clause 53 of agreement in Contract No.1 and obtained favorable orders in arbitral award. In the instant case, the petitioner-company without availing alternative remedy filed this writ petition as submitted by the learned Senior Counsel appearing for the respondents. 19. The Hon’ble Supreme Court in Bharat Coking Coal Limited and others Vs. AMR Dev Prabha and others, (2020) 16 SCC 759 held as follows: 30. But merely because the accusations made are against the State or its instrumentalities doesn’t mean that an aggrieved person can bypass established civil adjudicatory processes and directly seek writ relief. In determining whether to exercise their discretion, writ courts ought to not only confine themselves to the identity of the opposite party but also to the nature of the dispute and of the relief prayed for. Thus, although every wrong has a remedy, depending upon the nature of the wrong there would be different forums for redress. 31. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce.
In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources. 33. Such conscious restraint is also necessary because judicial intervention by itself has effects of time and money, which if unchecked would have problematic ramifications on the State’s ability to enter into contracts and trade with private entities. Further, it is not desirable or practicable for courts to review the thousands of contracts entered into by executive authorities every day. Courts also must be cognizant that often-a-times the private interest of a few can clash with public interest of the masses, and hence a requirement to demonstrate effect on ‘public interest’ has been evolved by this Court. 20. The Hon’ble Supreme Court in Joshi Technologies International Inc., Union of India and others (supra 5) held as follows: 69. The position thus summarized in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, can refuse to exercise. It also follows that under the following circumstances, 'normally', the Court would not exercise such a discretion: 69.1 The Court may not examine the issue unless the action has some public law character attached to it.
At the same time, discretion lies with the High Court which under certain circumstances, can refuse to exercise. It also follows that under the following circumstances, 'normally', the Court would not exercise such a discretion: 69.1 The Court may not examine the issue unless the action has some public law character attached to it. 69.2 Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said made of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration. 69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. 69.4 Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances. xxx xxx xxx 70. Further legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to the contracts entered into by the State/public Authority with private parties, can be summarized as under: xxx xxx xxx 70.4 Writ jurisdiction of High Court under Article 226 was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5 Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the license if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the license, if he finds it commercially inexpedient to conduct his business. 70.6 Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 21. In view of the above settled proposition of law that the dispute relating to terms and conditions of contract, with regard money related may not be permitted to agitate in a Writ Petition under Article 226 of Constitution of India. In the instant case also dispute is relating to the violation of terms and conditions of contract.
21. In view of the above settled proposition of law that the dispute relating to terms and conditions of contract, with regard money related may not be permitted to agitate in a Writ Petition under Article 226 of Constitution of India. In the instant case also dispute is relating to the violation of terms and conditions of contract. In view of the same, this Court is not inclined to pass orders as prayed for by the petitioner in the Writ petition, and the petition is devoid of merits and the same is liable to dismissed. 22. Accordingly, this Writ Petition is dismissed. No order as to costs. 23. Miscellaneous Petitions pending, if any, shall stand closed.