Nafr High Court
Case Details
1 ROHIT KUMAR CHANDRA Digitally signed by ROHIT KUMAR CHANDRA Date: 2025.03.28 10:24:40 +0530 2025:CGHC:14753-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WA No. 185 of 2025 M/s BSBK Private Limited, through R.K. Nema S/o Late Shri Ramlal Nema aged about 62 years General Manger M/s BSBK Private Ltd. 4th Floor Surya Treasure Island Mall Bhilai District - Durg Chhattisgarh versus ... Appellant 1 - The State of Chhattisgarh Through Its Secretary Department of Urban Administration and Development Mantralaya Mahanadi Bhawan Capital Complex Atal Nagar Nawa Raipur Chhattisgarh 2 - Municipal Corporation Bilaspur Through The Commissioner Municipal Corporation Bilaspur District - Bilaspur Chhattisgarh 3 - Executive Engineer (PMAY And HFA) Municipal Corporation Bilaspur District - Bilaspur Chhattisgarh ... Respondents For Appellant : For respondent No.1/State : For respondent Nos. 2 & 3 : Mr. Satish Agrawal through VC and Mr. Siddharth Dubey, Advocates Mr. Shashank Thakur, Dy. Adv. General Mr. Ashish Tiwari, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal , Judge Judgment on Board Per Ramesh Sinha , Chief Justice 27 . 03 .202 5 1.
Legal Reasoning
Heard Mr. Satish Agrawal, appearing through virtual mode and Mr.Siddharth Dubey, learned counsel for the appellant as well as Mr. Shashank Thakur, learned Deputy Advocate General, 2 appearing for the State/respondent No.1 and Mr. Ashish Tiwari, learned counsel, appearing for respondent Nos. 2 & 3/ Municipal Corporation, Bilaspur on I.A. No. 01 of 2025, which is an application for condonation of delay of 65 days in filing the instant appeal. 2. On due consideration and for the reasons mentioned in I.A. No. 01 of 2025, the same is allowed and delay in filing the hereby condoned. 3. With the consent of learned counsel for the parties, the appeal is heard finally. 4. By way of present writ appeal under Section 2 of Sub-Section (1) of the Chhattisgarh High Court (Appeal to Division Bench Act,
Decision
2006, the appellant, who was writ petition in the writ petition has challenged the order dated 22.10.2025 passed by learned Single Judge in WPC No. 2524 of 2024 (M/s. BSBK Private Limited Vs. State of Chhattisgarh & Others), whereby the writ petition filed by the writ petitioner / appellant herein was allowed by the learned Single Judge and it was ordered that the respondents shall refund the amount towards security deposit and performance guarantee to the petitioner within period of two months, failing which, the aforementioned amount shall carry interest at the rate of 7% per annum. 5. Brief facts necessary for disposal of this appeal are that 3 respondent No.2 issued Notice Inviting Tender (NIT) on 25.11.2016 for the work “Construction of Multi Story Building Including Internal Water Supply, Sanitary and Internal Electrification For 1232 Nos. of DUS by Monolithic/PRE-Cast Technology with Infrastructure (Road, Drain, Water Supply, Sewerage, Rain Water Harvesting Etc.) under HFA Scheme” at Ashok Nagar. The petitioner participated in the tender proceedings, became successful and the work was awarded for lump-sum amount of Rs. 62,21,60,000/-. An agreement in this regard was also executed between the parties. Petitioner completed the work. ‘Work Completion Certificate’ was issued on 13.05.2020. Part of RA bills were not disbursed as also security deposit and performance guarantee in terms of Clause 2 & 4 as provided under Annexure -K- (Special Conditions) were also not disbursed. Petitioner wrote several letters and when the request for disbursement of the aforementioned amount was not acceded to, filed writ petition bearing WPC No.1070 of 2021 which was disposed off vide order dated 16.03.2022 granting liberty to the petitioner therein to submit representation to be decided within specified time frame. Upon considering the representation, RA bills were disbursed but the outstanding amount towards security deposit and performance guarantee amount were not disbursed. Petitioner thereafter again made several representations upon which respondent No.3 wrote letter to the petitioner mentioning that as only 50% of dwelling units have been handed over to 4 beneficiaries, payment towards security deposit and performance guarantee as mentioned in Clause 2 & 4 Annexure -K (Special Conditions) would be released after handing over 100 % dwelling units to the beneficiaries. Petitioner again wrote letter to the respondent and also sent legal notice. However, when the amount towards security deposit and performance guarantee as per Clause 2 & 4 of Annexure -K (Special Conditions) was not disbursed, he filed writ petition bearing WPC No.2524 of 2024, which was allowed by the learned Single Judge vide impugned order dated 22.10.2024 observing that since respondents acted unfairly, arbitrarily in withholding the amount of security deposit and performance guarantee, as such, the petitioner is entitled for refund of the same, accordingly held that petitioner is entitled for the refund of security deposit as also performance guarantee. It was further observed that the petitioner is entitled for award of interest if the amount as ordered by that Court is not paid within time and accordingly, it was ordered that respondents shall refund the amount towards security deposit and performance guarantee to the petitioner within period of two months, failing which, the aforementioned amount shall carry interest at the rate of 7% per annum. 6. Being aggrieved by the impugned order dated 22.10.2024 passed by the learned Single Judge to the extent interest for delayed period has not been granted for no reasonable / legal reason, the instant appeal has been filed contending that the learned Single 5 Judge ought to have given the interest and compensation for the delayed payment. 7. Mr. Satish Agrawal, learned counsel for the appellant, appearing through virtual mode, vehemently argued that learned Single Judge failed to consider the facts and law properly regarding grant of interest on delayed payment of security deposit and performance guarantee amount. He further argued that upon the issuance of work completion certificate, the respondent became legally bound to release all outstanding dues, including the security deposit and performance guarantee, without unwarranted delay. Despite the Petitioner's full compliance with all contractual obligations and the official acknowledgment of completion through the certificate dated 13.05.2020, the respondent has unjustifiably withheld these amounts. He submitted that the respondent's arbitrary and deliberate delay has caused severe financial hardship to the petitioner. Despite the prolonged non-payment, the petitioner continued to meet financial obligations towards the workforce and vendors engaged in the project. To do so, the petitioner was compelled to rely on cash credit borrowing from it's banker, State Bank of India, resulting in payment of interest at the rate of 14.25% per annum and later at 17.25% per annum due to the downgrading of it's credit rating, a direct consequence of the respondent's inordinate delay. Such an order would ensure accountability and discourage arbitrary withholding of payments for completed work. He contended that it is a settled principle of 6 law that Courts have the discretion to grant interest based on the facts and circumstances of a case. In the present matter, the respondent has acted arbitrarily, and the learned Single Judge ought to have exercised discretion in favor of the petitioner. As a State entity, the respondent cannot be permitted to unjustly enrich itself at the cost of the petitioner. Therefore, he prays to allow the instant appeal and to modify the impugned order dated 22.10.2024 and grant interest of Rs. 2.88 croroes on the delayed payment from 13.05.2020 (date of issuance of completion certificate) till the date of payment was made to the petitioner in the interest of justice. 8. On the other hand, Mr. Ashish Tiwari, learned counsel appearing on behalf of respondent Nos. 2 & 3 / Municipal Corporation, Bilaspur opposed the submission made by learned counsel for the appellant and submitted that the learned Single Judge, after considering all the aspects of the matter, has directed the respondents to refund the amount towards security deposit and performance guarantee to the petitioner within period of two months, failing which, the aforementioned amount shall carry interest at the rate of 7% per annum and in compliance of the impugned order passed by the learned Single Judge, the respondents had already released the amount to the tune of Rs.3,11,08,000/- (security deposit and Rs. 1,86,64,000/- (performance guarantee) within the stipulated time frame. 7 9. We have heard learned counsel for the parties and perused the impugned order and other documents appended with writ appeal. 10. It is not in dispute that the appellant Company participated in the tender in question, became successful and the work was awarded for lump-sum amount of Rs. 62,21,60,000/-. An agreement in this regard was also executed between the parties and he has deposited an amount to the tune of Rs.3,11,08,000/- as security deposit and Rs. 1,86,64,000/- as performance guarantee. It is also not in dispute that the appellant completed the work on 31.12.2019 and ‘Work Completion Certificate’ was issued by respondent No.3 on 13.05.2020, however, in Coloum No. 6 “Present Status of Work”, it is specifically mentioned that work has been successfully completed, testing and handling over houses is in process. 11. To better understand the Special Conditions of contract for disbursement of amount deposited towards security deposit and performance guarantee, it would be appropriate to extract relevant clauses of ‘Condition of Contract’ and ‘Special Conditions’. Clause 2.4 mentions Earnest Money. Clause 2.4.1 and 2.7 is extracted below for ready reference:- “2.4 Earnest Money: 2.4.1 No tender will be, received, without a deposit of earnest money of Rs. 29.26 Lacs in a separate sealed cover duly prescribed as envelope "A" Earnest Money. The earnest money will be returned to the 8 unsuccessful tenderer on the rejection of their tender and will be retained from successful tenderer as part of security deposit. x x x x x x 2.7 There is provision of the Security Deposit shall be @ 5% & performance guarantee in addition to security deposits shall be @3% of the amount of contracts.” 12. Refund of security deposit is provided under Clause- 2 of the ‘Special Conditions’ and clause 4 thereof deals with refund of performance guarantee, which read as under:- “2. Security deposit Clause 1.1 and 2.8 of NIT: Fifty percent of the security deposit will be refunded on completion, testing and handing over of the building, to the department. Remaining fifty percent will be refunded six months after completion or after one monsoons, whichever is later. xxx xxx xxx 4. Performance Guarantee: (i) The contractor shall also be responsible for performance of work carried out by him for a period of 24 months(Twenty four) months beyond the completion of work for which performance security has to be furnished by him @ 3% (three percent) of amount of contract. For this purpose contractor has to submit to the department a Bank Quarantee of 3% (three percent) amount of the value of work done on every running and final bill payable to him. If contractor fails to submit bank 9 guarantee of 3% amount of the gross bill, then 3% amount of bill shall be deducted from his running and final bill payment. However, the contractor can get refund of such performance security amount deducted if he submits appropriate bank guarantee valid for the period as stated above or 24 months (Twenty four) month after actual completion. If require, the Commissioner, of ULB concerned shall ask the contractor to extend the validity period of the Bank Guarantee(s) for such period which he considers it proper and the contractor shall extend the validity period of such Bank Guarantee accordingly. If the contractor fails to extend the period accordingly, the Commissioner, of ULB concerned shall encash the B.G. before the expiry of the validity period. (iii) The contractor shall have to carry out all necessary "Rectification" of defects noticed, caused due to any reasons at his own cost within such reasonable period mentioned in such communication notice from the Commissioner, / Executive Engineer of ULB concerned to him. (iii) Failure of the contractor to rectify the defects properly in the given period, it shall be open for the Commissioner, / Executive Engineer of ULB concerned to get the defect(s) rectified either departmentally or through other agency (without calling any tender/quotation) and recover the actual cost plus 15% (fifteen percent) of such cost from the contactor from any sum, in any form, and available with the department or can be recovered as "Arrears of Land Revenue" (iv) After one year of completion of construction, 50% 10 (fifty percent) of available performance Bank guarantee shall be returned to the contractor subject to the satisfaction of the Commissioner, of ULB concerned. (v) Remaining performance Bank Guarantee as would be remaining (after recovery all cost plus 15% (Fifteen percent) for rectification of defects, if done by the department or through other agency) shall be returned after 2 years (24 months) of completion. The performance guarantee will be in addition to the normal security to be deducted as per clause 1 of agreement for the execution of contract.” 13. A bare reading of Clause -2 of ‘Special Conditions’ would show that refund of 50% of security deposit is on completion, testing and handing over the building to department. Under the aforementioned clause, obligation on the part of Contractor is of completion of work awarded, its testing and handing over the building to the department and it does not specifically mention about handing over the building to beneficiaries and the reason assigned by respondents for withholding refund of amount of security deposit that 50% DUs were handed over to the beneficiaries and proceedings of handing over possession of 50% of DUs to the beneficiaries is pending is contrary to the terms and condition/Special conditions of contract. As such, the learned Single Judge has rightly held that respondents acted unfairly, arbitrarily in withholding the amount of security deposit and performance guarantee, refund of which petitioner is entitled for. Accordingly it was held that petitioner is entitled for the refund of 11 security deposit as also performance guarantee. So far as the claim of interest on the amount due to petitioner is concerned, it was observed by learned Single Judge that it is not in dispute that parties entered into commercial transaction, petitioner made huge investment, has also made huge deposit of Rs.3,11,08,000/- towards security deposit and Rs.1,86,64,800/- towards performance guarantee and aforementioned amount was arbitrarily withheld by respondent without there being any valid reason. Award of interest falls within the ambit of discretionary jurisdiction. Thus, the learned Single Judge, relying upon the judgment of the Hon’ble Supreme Court in the case of Secretary, Irrigation Department Government of Orissa & Ors. Vs. G.C. Roy (1992) 1 SCC 508, wherein it has been observed that “a person deprived of use of money to which he is legitimately entitled has right to be compensated for deprivation, call it by any name, it may be called interest, compensation or damages, has observed that to balance the equities, the petitioner shall be entitled for award of interest if the amount as ordered by that Court is not paid within time and accordingly, directed the respondents to refund the amount towards security deposit and performance guarantee to the petitioner within period of two months, failing which, they were directed to pay interest at the rate of 7% per annum. 14. Admittedly, in compliance of order of the learned Single Judge, the respondents have already paid the aforementioned amount of 12 security deposit and performance guarantee within the time frame stipulated by the learned Single Judge. 15. After considering the submissions made by the learned counsel appearing for the parties and upon perusing the impugned order, we notice that the same has been rendered by the learned Single Judge with cogent and justifiable reasons. In an intra-court appeal, no interference is usually warranted unless palpable infirmities are noticed on a plain reading of the impugned order. In the facts and circumstances of the instant case, on a plain reading of order, we do not notice any such palpable infirmities or perversities, as such, we are not inclined to interfere with the impugned order. Learned Single Judge while allowing the writ petition by the impugned order and directing the respondents to refund the amount towards security deposit and performance guarantee to the petitioner within period of two months, failing which, the aforementioned amount shall carry interest at the rate of 7% per annum, has adverted to all the facts of the case. We do not find any fault in the impugned order. 16. Accordingly, the writ appeal, being devoid of merit, is liable to be and is hereby dismissed. No cost(s). Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice Chandra