Vida Engg Co v. NBCC (India) Limited & Anr

5. The said sum or any part thereof, can be withheld or ·forfeited by NBCC (India) Ltd., being the employer only in. the event of failure on our part as the Contractor in executing the contractual work. In the -instant case_ and in view of complete discharge of all our obligations under the contract (completion certificate enclosed), we are entitled to and NBCC (India} Ltd. is obliged to refund the entire sum of Rs, 1, 17, 761290/- together with interest accruing thereon forthwith.

6. However, it is conspicuous to note that for one reason or other/ NBCC (India) Ltd. is delaying the payment of the aforesaid sum which is not only unfair, unjust and unconscionable but also per se illegal; NBCC {India) Ltd.; being the 'trustee[1] of our asset, is not permitted to enjoy a state of 'unjust enrichment' in perverse manner. NBCC, also being a public authority, is bound by considerations of honesty and good faith and should be held to a high standard of rectangular rectitude while dealing with a private entrepreneur, like ours. We firmly believe, NBCC (India) Ltd. will surely not violate such well settled doctrine of honesty.

7. Intentionally we are not making any elaborate presentation of the subject matter on the presumption that you will be provide with all the relevant records and correct inputs by your concerned department. In any event, we are ready and willing to provide any further information or clarification that you may require for dispassionate consideration of request.

8. In the aforesaid premises, we shall be deeply obliged if you kindly do the needful in passing necessary directive to the concerned department of NBCC (India) Ltd. for releasing the aforesaid sum of Rs. 1,17,76,290/together with interest accruing thereon within a period of fifteen days from the date of receipt of this letter. As per privity of contract the said sum may please be remitted to us through RTGS or other e-modes to our undermentioned bank account which is known to NBCC (India) Ltd., under intimation to us: Account No. 31032577887 Bank Details: State Bank of India, Kalighat Branch, IFSC Code: SBIN0001722”

13. It is submitted that instead of releasing the security deposit/fixed deposit, NBCC started raising objections

14. Due to this persistent denial of refund, the petitioner filed a complaint to the, such as alleged delays in completion of work, the matter being sub-judice, and even claiming that the refund is time-barred. Centralised Public Grievance Redress and Monitoring System (CPGRAMS). This prompted respondent no. 2/National Rural Infrastructure Development Agency (NRIDA) to convene a meeting on 26.08.2019 in New Delhi with representatives of respondent no. 1. During this meeting, it was resolved that NBCC would issue a speaking order within 7 days

15. It is submitted that following a series of communications exchanged between the petitioner and respondent no. 1, the latter verbally informed the petitioner that only the principal amount of the Performance Security Deposit would be released, excluding the interest accrued on the corresponding fixed deposit. The petitioner estimates the accrued interest, which is being withheld, to exceed ₹1 crore. in response to the petitioner’s complaint. Furthermore, NRIDA wrote to NBCC on 13.09.2019, explicitly stating that the withholding of the PBG amount was not in accordance with the contract and that NBCC’s conduct could result in unnecessary litigation.

16. The petitioner objected to this, via a letter dated 02.11.2020 “Ref: Our discussion over phone on 24.10.2020 & 30.10.2020, reiterating that interest must also be paid by NBCC. The same is reproduced as under – Dear Sir, This is with reference to the above old issue. That,

1. NBCC had agreed before all concerned Authorities (viz., TRRDA, NRIDA, MORD) the above contract was successfully completed by the contractor and handed over to Tripura State PWD long back, during early March, 2018 NBCC had issued proper Extension of Time (EOT) and also, issued successful completion certificate to the contractor without mention of any penalty.

2. The initial PBG, submitted by the contractor, was encashed by NBCC due to non-renewal in time, on 23.08.2011 i.e., during DLP. This was not as any penalty of performance; and was retained immediately as per CL 43.[5] of Standard Bidding Document of the contract, in the name of NBCC, the Client, as interest bearing FD in SBI, with the consent of the contractor.

3. Also, a petition No. 06 of 18 made of Sri Arun Kr Dey & oths., a third Party, relating to Case No. Civil Misc. (M.S. 02 of 18), with a futile attempt to injunct the release of Security Deposit of Vida Engg. Co., h' ad been disposed of by the Ld. Court on 25.06.2019. The above facts are not only matter of records but also are amply circulated to all concerned Authorities relating to the PMGSY Work viz., MORD, NRIDA, TRRDA. In view of the aforesaid NBCC, being "the Trustee" of the Performance Security (Fixed) Deposit, was supposed to release the FD with accrued interests as on date, to the contractor, on 'as is where is' basis. Whereas, in the above telephonic discussions you have mentioned that only the 'Principal Amount' of the FD would be released to us, the contractor, on submission of a no objection certificate from this side to ratify your such action & to signify that we have no further claim against NBCC in this regard. Further, you denied to issue any sort of written communication in this connection. Now we request your good-self to justify your above statement and/or intention of your management within 7 days of receipt of this letter.”

17. In reply dated 12.11.2020, NBCC stated that the petitioner’s claim for interest was without merit, and the principal PBG amount would only be released subject to the petitioner furnishing a No Objection Certificate (NOC) “Dear Sir,. Reply dated 12.11.2020 is reproduced as under – In reference to your aforesaid letter, it is submitted that as per Clause 46.[1] of contractual conditions, the Performance Bank Guarantee ("PBG") should have been in possession of NBCC till the successful completion of construction, operation and maintenance period and handing over to Client which is 1 year +5 years+ 45 days. In this regard it is also an undisputed fact that the PBG was encashed by NBCC due to admitted failure at your end to renew the same as per provisions of contract. It is also a matter of record that not once during the aforesaid period of encashment did you ever submit a renewed PBG to NBCC till date to cure your default in non-renewing of PBG. As such, your instant insistence on releasing PBG amount along with interest appears to be a belated attempt to try and take advantage of your defaults and is totally devoid of merit. It may also be mentioned here that Sri Arun Kr Dey & ors have filed MS No 2 of 2018 praying for a permanent injunction on release of encashed PBG amongst others which is still pending before the Civil Court at Tripura. While the Interim prayer of Sri Arun Kumar Dey & ors for an ad Interim injunction on release of encashed PBG amongst others has been disposed by the Civil Court, it is pertinent to clarify that the main suit is still pending as on date. Notwithstanding the aforementioned facts, your reliance on Clause 43.[5] of Standard Bidding document appears to be misconceived as the said clause relates to Security Deposit and does not in any manner relate to PBG. It is therefore requested that Bank details may be provided along with No dues certificate to enable NBCC to release the principal amount of PBG.”

18. The petitioner objected to this condition through a letter dated 09.12.2020, stating that submission of an NOC was not a contractual requirement and that it was being wrongly imposed to avoid paying interest. NBCC, however, reiterated its position via letter dated 12.02.2021

19. It is submitted that the actions of NBCC, in first. illegally withholding the PSD for over a decade, then refusing to pay the accrued interest, and finally making release of the principal amount conditional upon the submission of a non-contractual NOC are

20. Being aggrieved by the same, the petitioner has filed the present petition. arbitrary.

21. Learned Counsel for the NBCC while refuting the contentions of the petitioner has submitted as under a. It is submitted that the dispute raised by the petitioner arises from a contractual relationship between the parties. Relying on Joshi Technologies International Inc. v. Union of India (2015) 7 SCC 728, it is submitted that the matters which are purely contractual in nature and do not involve any element of public law cannot be adjudicated through writ jurisdiction. b. Relying upon Union of India v. Puna Hinda (AIR 2021 SC 4187), it is submitted that writ jurisdiction should not be exercised in matters involving complex factual disputes or monetary claims. It is submitted that the question of how much money is payable, if any, is a factual issue best left to adjudication by the appropriate civil forum. c. It is further submitted that the petitioner has failed to exhaust the adequate alternative remedies available under law, including civil suits. It is submitted that when a contract provides a specific dispute resolution mechanism, the parties are required to adhere to it. d. It is submitted that the petitioner was required to furnish a Performance Security and an additional security for unbalanced bid in terms of Clause 27.[4] of Invitation to Bidders, in the format detailed in Clause 32 of Invitation for an amount of Rs. l,17,76,290/- within 10 days of the receipt of the Letter of Acceptance until 45 days after the lapse of Defects Liability period. Accordingly, on 25.08.2007, a Performance Bank Guarantee PBG of Rs. l,17,76,290/- was submitted by the petitioner. The contract stipulated a completion period ending on 13.09.2008, followed by a 5-year maintenance period. However, the petitioner failed to complete the project within the stipulated timeframe. It is submitted that repeated instructions to extend the validity of the PBG were ignored by the petitioner. Consequently, NBCC issued a notice on 07.07.2011 invoking the PBG and eventually encashed it in accordance with the contract. e. It is submitted that despite clear communication and sufficient notice, the petitioner did not raise any objection or challenge to the encashment of the PBG. f. It is submitted that the petitioner has failed to disclose the existence of other civil suits pending before courts in Tripura involving the same parties and subject matter. g. During the course of the hearing, it was submitted that NBCC is willing to refund the security deposit, subject to the petitioner furnishing a No Objection Certificate (NOC). It was further submitted that NBCC is not liable to refund any interest accrued thereon, as the encashment of the PBG and the subsequent placement of the amount in a fixed deposit occurred solely due to the petitioner’s failure to maintain the PBG.

22. Respective counsel have been duly heard.

23. This Court finds no merit in the objections raised by the respondent concerning the maintainability of the writ petition on the ground that it pertains to contractual matters involving disputed questions of fact or monetary claims. Similarly, this Court is not persuaded by the objection regarding the existence of an alternative remedy.

24. A Division Bench of this Court, in a recent judgment titled Sahakar Global Limited JV and Another v. Municipal Corporation of Delhi, 2025 SCC OnLine Del 2273 after an elaborate discussion of the principles laid down by the Supreme Court in Subodh Kumar Singh Rathour v. Chief Executive Officer, 2024 SCC OnLine SC 1682 and M.P. Power Management Co. Ltd., Jabalpur v. Sky Power Southeast Solar India Pvt. Ltd., (2023) 2 SCC 703, has clearly delineated the scope of judicial review in matters concerning government contracts and tenders. The relevant portion of the said judgment is extracted below:

35. As already observed above, Subodh Kumar Singh Rathour, (supra) discusses the past judgments on the issue and has quoted with approval, the judgment of the Apex Court in M.P. Power Management Co. Ltd. (supra) where the scope of judicial review by the Courts in contractual disputes concerning public authorities has been exhaustively discussed. M.P. Power Management Co. Ltd. (supra) finds mentioned in Subodh Kumar Singh Rathour (supra) in paragraph 55 which is also extracted herein below:

of judicial review of the courts in contractual disputes concerning public authorities. The aforesaid decision is in the following parts:— […](i) Scope of Judicial Review in matters pertaining to Contractual Disputes:— This Court held that the earlier position of law that all rights against any action of the State in a non-statutory contract would be governed by the contract alone and thus not amenable to the writ jurisdiction of the courts is no longer a good law in view of the subsequent rulings. Although writ jurisdiction is a public law remedy, yet a relief would still lie under it if it is sought against an arbitrary action or inaction of the State, even if they arise from a non-statutory contract. The relevant observations read as under “53. […]:— when the offending party is the State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr. Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court's jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary i. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.. ii. The principle laid down in Bareilly Development Authority (supra) that in the case of a non statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal (supra), may not continue to hold good, in the light of what has been laid down in ABL (supra) and as followed in the recent judgment in iii. Sudhir Kumar Singh (supra). The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent-State in a case by itself to ward-off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary (Emphasis supplied).” xxx

(iii) Exercise of Writ Jurisdiction after the Contract comes into

Existence:— This court held that even after the contract comes into existence an action may lie by way of a writ to either (I) obviate an arbitrary or unreasonable action on part of the State or (II) to call upon it to honour its obligations unless there is a serious or genuine dispute as regards the liability of the State from honouring such obligation. Existence of an alternative remedy or a disputed question of fact may be a ground to not entertain the parties in a writ as long as it is not being used as smokescreen to defeat genuine claims of public law remedy “v.. The relevant observations read as under:— After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a Writ Petition vi. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State.. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence vii. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a Writ Petition in a contractual matter. Again, the question as to whether the Writ Petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the Petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought.. Undoubtedly, while there is no prohibition, in the Writ Court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit. viii. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a Writ Petition (See in this regard, the view of this Court even in ABL (supra) explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co., by its observations in paragraph-14 in ABL (supra)]. ix. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a Writ Petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant x.. The reach of Article 14 enables a Writ Court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court's approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the Writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State.”

(iv) Exercise of Writ Jurisdiction after Termination or Breach of the Contract:— A relief by way of a writ under Article 226 of the Constitution will also lie against a termination or a breach of a contract, wherever such action is found to either be palpably unauthorized or arbitrary. Before turning away the parties to the remedy of civil suit, the courts must be mindful to see whether such termination or breach was within the contractual domain or whether the State was merely purporting to exercise powers under the contract for any ulterior motive. Any action of the State to cancel or terminate a contract which is beyond the terms agreed thereunder will be amenable to the writ jurisdiction to ascertain if such decision is imbued with arbitrariness or influenced by any extraneous considerations xi. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The. The relevant observations read as under:— intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the Fundamental Right of the Petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible Rule in favour of the Court turning away the Petitioner to alternate Fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the Writ Court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL Limited (supra), if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL (supra). It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition. xii. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate Forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (See in this regard Kumari Shrilekha Vidyarthi v. State of U.P.). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely malafide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases.”

(v) Other relevant considerations for Exercise of Writ

Jurisdiction:— Lastly, this Court held that the courts may entertain a contractual dispute under its writ jurisdiction where (I) there is any violation of natural justice or (II) where doing so would serve the public interest or (III) where though the facts are convoluted or disputed, but the courts have already undertaken an in-depth scrutiny of the same provided that the it was pursuant to a sound exercise of its writ jurisdiction. The relevant observations read as under:— xiii. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate Forum xiv. Another relevant criteria is, if the Court has entertained the matter, then,. while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the Writ Petition itself xv.. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14 (Emphasis supplied)”. [See Sudhir Kumar Singh (supra)].” xxx

39. The subject matter of discussion in Subodh Kumar Singh Rathour, (supra) was, thus, an arbitrary cancellation of contract, and it is in these circumstances that the Hon'ble Supreme Court has observed that cancellation of a contract deprives a person of his very valuable rights and is a very drastic step. It has further been observed that, therefore, public authorities should be circumspect in disturbing their contractual obligations through means beyond the terms of the contract in the exercise of their executive powers. The Hon'ble Supreme Court, however, in the same breath, also observes that it is not that the State has no power to alter or cancel a contract that it has entered, however, if the State deems it necessary to alter or cancel a contract on the grounds of public interest or change in policy, then such considerations must be bona-fide and should be earnestly reflected in the decision-making process and also in the final decision itself. Paragraph 129 of the judgment in Subodh Kumar Singh Rathour, (supra) is apposite to be referred to, which reads as under:

40. Thus, Subodh Kumar Singh Rathour (supra) is a case where a contract pursuant to the tender process which was entered into, was cancelled at a stage pursuant to the contract work by the contractor that had already been commenced, whereas, in the instant case, no letter of award or work order has been issued. The contract, pursuant to the declaration of the Petitioner as ‘H-1’ in pursuance of the subject tender, has also not been constituted.

41. M.P. Power Management Co. Ltd. (supra) has been quoted with the approval in Subodh Kumar Singh Rathour (supra) wherein it has been held that an action under writ jurisdiction will lie even at the stage prior to award of contract by the State wherever such award of a contract is imbued with procedural impropriety, arbitrariness, favouritism or without any application of mind. xxxx

44. The judgment in M.P. Power Management Co. Ltd. (supra) has extensively been quoted by the Apex Court in Subodh Kumar Singh Rathour, (supra) which has been discussed above. The conclusions drawn in M.P. Power Management Co. Ltd. (supra) by the Apex Court can be found in paragraphs 82 to 82.15 of the said judgment, which are extracted herein below:— “82. We may cull out our conclusions in regard to the points, which we have framed:

82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.

82.2. The principle laid down in Bareilly Development Authority [Bareilly Development Authority v. Ajai Pal Singh, (1989) 2 SCC 116] that in the case of a non-statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal [Radhakrishna Agarwal v. State of Bihar, (1977) 3 SCC 457], may not continue to hold good, in the light of what has been laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] and as followed in the recent judgment in Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 82.3. ].

82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489]). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651]. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary.

82.5. 82.6. Without intending to be exhaustive After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition., it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence 82.7.. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ Petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the Petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit

82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22], by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553]].. 82.[9] 82.10.. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant. The reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court's approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State……. ……..82.13. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate forum.

82.14. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the writ petition itself.

82.15. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. (See Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706]).”

45. From the afore-quoted extract of the judgment in M.P. Power Management Co. Ltd. (supra), what we find is that it is settled that a writ petition would lie when the State purports to award any largesse even at a stage prior to the contract being entered into. However, the Apex Court has further observed that such judicial scrutiny would be undertaken within the nature of judicial review as declared by the Apex Court in its decision in Tata Cellular v. Union of India, (1994) 6 SCC 651. Thus, there is no doubt that the action on the part of the State or its instrumentality in the matter relating to Government contracts will lie even to the stage prior to the contract being executed. However, judicial review in such matters has to be undertaken in terms of the principles declared by the Apex Court in Tata Cellular, (supra). xxx

49. In view of the aforesaid discussion, the scope and extent of judicial review of the action of the State by this Court in the exercise of its jurisdiction under Article 226 of the Constitution in matters relating to tender/contract is well established which can be summarized, so far as the same is relevant for the purpose of consideration of the issue arising in this case, as below:

25. There is no doubt as regards the factual matrix in the present petition. It is undisputed that the petitioner is entitled to refund of the security deposit [placed in a fixed deposit by the respondent following the encashment of the petitioner’s Performance Bank Guarantee (PBG)]. However, the respondent insists on production of NOC by the petitioner as pre-condition for such refund. The writ Court can judicially review a contractual dispute where one of the parties to the contract is a public authority and also in such a situation where there is a violation of principles of natural justice, where the action complained against does not serve any public interest and the public authority has not acted in good faith.

26. The legal position is well settled that for release of the admitted contractual entitlements of the petitioner, it is impermissible for the respondent to require the petitioner to furnish an NOC.

27. Ex-facie, the NBCC’s insistence on a production of NOC by the petitioner as pre-condition for release of the admitted dues of the petitioner, is unsustainable. Hence, this Court directs NBCC to release the amount due and payable to the petitioner towards refund of security deposit without insisting on an NOC from the petitioner.

28. Further, prima facie, the petitioner is entitled to the interest in terms of Clause 43.[5] of the GCC. The same explicitly contemplates that a security deposit can be converted into any interest bearing asset of any scheduled commercial bank. The contractual obligation of the petitioner is to maintain the security deposit to the extent contemplated under the contract; any interest which has accrued on the security deposit will necessarily enure to the benefit of the person who has furnished the security deposit and who is contractually entitled to the refund thereof. Also, at the relevant point of time, the petitioner had addressed communications to the respondent requesting that the concerned amount may be kept in a fixed deposit so that the same could be released to the petitioner at the end of the requisite period contemplated under the contract.

29. However, learned counsel for the respondent submits that there are extenuating circumstances which disentitle the petitioner to interest. Prima facie, the said contention is untenable; however, in the present proceedings, this Court is refraining from rendering any final findings as regards thereto and considers it apposite to direct the respondent to consider all the relevant aspects of the matter and take a suitable decision as regards release of the interest amount accrued on the security deposit, to the petitioner. Let an opportunity of hearing be granted to the petitioner and the requisite decision be taken expeditiously.

30. The present petition stands disposed of in the above terms. Pending application also stands disposed of.

SACHIN DATTA, J APRIL 21, 2025