APHC010570162023 IN THE HIGH COURT OF ANDHRA PRADESH FRIDAY ,THE TWENTY FIFTH DAY OF APRIL TWO THOUSAND AND TWENTY FIVE THE HONOURABLE SRI JUSTICE B KRISHNA MOHAN WRIT PETITION NO: Between: M/s. Aishwarya Civiltech Pvt. Ltd., and Others The Union Of India and Others Counsel for the Petitioner(S): 1. CHERUVU CHAITANYA BHARGAVA SARMA Counsel for the Respondent(S): 1. J U M V PRASAD (CENTRAL GOVERNMENT COUNSEL) 2. MAHESWARA RAO KUNCHEAM ( SC For F.C.I ) IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) FRIDAY ,THE TWENTY FIFTH DAY OF APRIL TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE B KRISHNA MOHAN WRIT PETITION NO: 29510/2023 M/s. Aishwarya Civiltech Pvt. Ltd., and Others ...PETITIONER(S) AND The Union Of India and Others ...RESPONDENT(S) Counsel for the Petitioner(S): CHERUVU CHAITANYA BHARGAVA SARMA Counsel for the Respondent(S): (CENTRAL GOVERNMENT COUNSEL) MAHESWARA RAO KUNCHEAM ( SC For F.C.I ) IN THE HIGH COURT OF ANDHRA PRADESH [3233] THE HONOURABLE SRI JUSTICE B KRISHNA MOHAN ...PETITIONER(S) ...RESPONDENT(S) 2 The Court made the following ORDER: Heard the learned Senior Counsel for the petitioners and the learned Senior Counsel appearing for the respondents. 2. This writ petition is filed questioning the action of the respondents in non-payment of amounts to the petitioners approximately to an extent of Rs.1,76,54,555/- as per the terms of contract, even after finalizing the bills payable to them in relation to the works executed for ‘construction of godown with mezzanine floor and office building including provision of IEI, Power Wiring, Water Supply Pump Sets, Street Lightening, Fire Alarm System, Fire Fighting with Wet Riser and Sprinkler System, CCTV Surveillance System, DG Set etc. for Central Warehousing Corporation, Vijayawada’. 3. The 1st petitioner is a registered Contractor with Central Public Works Department. It predominantly undertakes the construction of Government buildings. The 2nd petitioner is an Electrical Contractor, entered into Memorandum of Understanding with the 1st petitioner to execute the electrical portion for the construction of godown with Mezzanine floor and office building including provision of IEI, Power Wiring, Water Supply Pump Sets, Street Lightening, Fire Alarm System, Fire Fighting with Wet Riser and Sprinkler System, CCTV Surveillance System, DG Set etc. for Central Warehousing Corporation, Vijayawada. The said MOU was ratified by the 3rd respondent. 3 4. The main functions of the CPWD include: i) designing, construction and maintaining Central Government non residential buildings, ii) designing, constructing and maintaining residential accommodations meant for Central Government Employees and iii) construction works for some public sector undertakings (which do not have captive civil engineering division) and some autonomous organizations, as deposit works and iv) providing consultancy services in planning, designing and construction of civil engineering projects, as and when required by public undertakings and other autonomous bodies. 5. While so, the 3rd respondent invited online percentage rate composite bids in open bid system from the approved and eligible contractors of CPWD (Composite category) for the “Constructions of godown with Mezzanine floor and office building including providing IEI, Power Wiring, Water Supply Pump Sets, Street Lightening, Fire Alarm System, Fire Fighting with Wet Riser and Sprinkler System, CCTV Surveillance System, DG Set etc. for Central Warehousing Corporation, Vijayawada” vide Notification Inviting Tender (NIT) No.36/2019-20/EE/CPWD/Vijayawada. The estimated cost (composite) was set at Rs.12,78,26,170/- including Rs.11,51,57,747/- for the civil work portion 4 and Rs.1,26,68,423/- for the electrical work component. The last date for online submission of bid was on 25.11.2019 at 12.00 hours and the tender was opened at 15.00 hours on 25.11.2019. 6. The 1st petitioner became the successful bidder and its tender was accepted at the tendered percentage of 13.65% below the estimated cost put in tender which stood out for Rs.11,03,77,898/-. The 3rd respondent vide S.No.23(117) 2019 dated 19.12.2019 requested the 1st petitioner to submit the Performance Guarantee of Rs.55,18,595/-. Then the 1st petitioner submitted performance guarantee in the form of Bank Guarantee on 24.12.2019. Subsequently, the subject site was handed over to the 1st petitioner on 17.02.2020. The 1st petitioner executed and completed the work and the same was handed over to the Central Public Works Department (CPWD). The 2nd respondent vide letter No.23(225)/2022/M.A.(Vijayawada0 8065-66 dated 20.12.2022 issued completion certification and certified that the work has been carried out generally to the specifications and completed satisfactorily on 14.02.2022. In April, 2022, the 4th respondent was handed over the godowns by the Central Public Works Department. 7. Whereas, even after issuance of the above said completion certificate to the petitioner, the respondents have still not paid the amounts due under the pre-final bill and the final bill to the 1st petitioner till date. The 1st petitioner submitted a pre-final bill dated 14.02.2022 for which a part payment was made 5 and the balance due amount is Rs.73,38,867/- under the said bill. The final bill was also submitted to the 3rd respondent under which a sum of Rs.47,13,586/- and Rs.56,02,102/- for civil and electrical works respectively is pending as on today towards the final bill with interest. 8. The 1st petitioner submitted several representations to the 2nd and 3rd respondents for clearing the bills dated 14.08.2022, 25.10.2022, 25.11.2022 and 15.03.2023 but no action was taken on those representations by the 3rd respondent. The 2nd petitioner also raised grievance in June, 2023 in the Grievance Portal of the Hon’ble Prime Minister of India. The 3rd respondent replied that “this office acknowledges the non-payment of your bill for the work of ‘construction of godown with mezzanine floor and office building for Central Warehousing Corporation (CWC) at Vijayawada, Andhra Pradesh”. The counsel for the petitioners submits that the non-payment of bills to the petitioner was admitted by the 3rd respondent as per the above said reply also. He further submits that the building was already put in use by the Central Warehousing Corporation (CWC) i.e., the 4th and 5th respondents by generating revenues over it but the respondents jointly and severally failed to clear the bills of the petitioner till date. The 3rd respondent further replied that “the CPWD does not have its own for clearing the financial liabilities arising in the execution of deposit works and their office is making all efforts for getting the funds from the CWC. The dues payable to the petitioner shall be paid 6 along with applicable rate of interest, if any, as per the contract agreement as soon as the funds are received from CWC”. However, since February, 2022, the above said amounts are not paid even though they are admitted by the respondents. 9. The counsel for the petitioner further submits that the 1st petitioner has been approaching the 2nd and 3rd respondents in person and addressed several emails and sent representations as stated supra, but there is no response from the respondents on the said issue to clear the bills due. The petitioner invested huge amounts in the execution of work by borrowing from different sources at higher rate of interest to execute the said work, but the pre-final and the final bill are not paid to the petitioner till today. Though the work was executed to the satisfaction of the authorities concerned, and even upon the issuance of completion certificate, the bills prepared in May 2021 have not been cleared till today. The interest on the borrowed amounts by the petitioner is piling up day by day. If the above said amounts are not paid, the petitioner would suffer an irreparable loss and hardship. 10. On the other hand, the learned Central Government Counsel appearing for the respondent No.3 submits that the 1st petitioner became the successful bidder and his tender was accepted at 13.65% below the estimated cost after the tender amount was valued at Rs.11,03,77,898/-, to commence the work on 17.02.2020 as per the letter dated 19.12.2019. The said tender amount does 7 not include the escalation on materials and labour which can be paid as per the general conditions of the contract and also the ESI and EPF reimbursement, contingencies, departmental charges and any difference if any in the GST rates if changed subsequent to the tenders. During the execution of work, at the request of CWC, providing of two more mezzanine floors in the godown was considered and revised estimate was submitted to the Superintending Engineer, CWC, Hyderabad for Rs.1577.872 lakhs which was approved by the respondent Nos.4 & 5 vide letter dated 29.01.2021. The said additional work was executed in the same agreement allowing deviations in the corresponding agreement items as these items cannot be executed separately since these extra floors were part and parcel of the same work. Hence the deviations are bound to occur as the scope of the work has been increased due to addition of two mezzanine floors. 11. He further submits that generally the preliminary estimates are prepared based on the plinth area and the detailed estimates are prepared based on the approved architectural drawings item wise. The detailed estimates of the structural designs are prepared on the assumed designed sizes which may vary after the structural design was thoroughly checked and approved. While preparing the structural designs, due care will be taken for the safety and stability of structures depending upon the prevailing soil conditions. During the execution of work, due to poor soil conditions, the godown was designed in 8 such a way that the load from the grade slab is to be transferred to the filled-up soil and mezzanine floor was designed to carry a load of 600 kg/sqm and the load of the mezzanine floor was transferred from steel columns to plinth beams and from plinth beams to structural RCC columns and from columns to pile caps & piles. The increase in quantities of pile foundation, RCC & Reinforcement is due to the above design considerations which lead to increase in the cost. 12. He further submits that the 3rd respondent received the 12th & prefinal bill from the 1st petitioner on 07.02.2022 for gross amount of Rs.1,63,43,465/- and net amount of Rs.1,58,65,909/- out of which an amount of Rs.95,00,000/- has been paid to the 1st petitioner as advance bill on 30.04.2022 and due to paucity of funds, balance amount of Rs.73,38,867/- became due to be paid after receipt of deposit from the respondent Nos.4 & 5. Subsequently, the 1st petitioner submitted the 13th & final bill for gross amount of Rs.47,13,586/- for civil work on 10.05.2022. Similarly, the 2nd petitioner submitted the 5th & final bill for electrical work for gross amount of Rs.56,02,102/- on 04.11.2022 which is received by the 3rd respondent on 19.01.2023. The 3rd respondent continuously made requests to the CWC/respondent Nos.4 & 5 for release of the funds to clear the dues of the 1st petitioner through various letters including Form-65 to the Executive Engineer of the respondent Nos.4 & 5. In addition to this, copy of every bill was submitted to the respondent Nos.4 & 5 for 9 recoupment of fund and month-wise progress was also sent to the respondent Nos.4 & 5 till January’ 2023 showing the details of total expenditure, balance fund along with progress of the project. At no point of time, there was a communication from the respondent Nos.4 & 5 with regard to the denial of approvals/sanction to the intimated deviation of work and allowed the respondent Nos.2 & 3 to continue with the progress of the construction and furthermore a Nodal Officer of the respondent Nos.4 & 5 regularly monitored by visiting the progress of work and he knew the requirements of spot deviations which were not projected in the main agreement for the better fitment of the construction and the said Nodal Officer also allowed the respondent Nos.2 & 3 to proceed with the required and intimated deviations. As pointed out by the 5th respondent, though the progress expenditure was shown as Rs.14,73,61,077/- against the deposit received Rs.1577.87 lakhs vide letter of the 3rd respondent dated 02.03.2022, the 3rd respondent clearly mentioned and informed the detailed expenditure report separately on account of pending clearance of the passed bills approved to be the pending liability of Rs.2.50 Crore vide letter of the 3rd respondent dated 21.12.2021 which is still awaited from the respondent Nos.4 & 5. In the absence of pending receipt of deposit, the completed godowns and office building (project completed on 14.02.2022) were handed over to the respondent Nos.4 & 5 on 26.04.2022 in the national interest to avoid further financial loss to the Government 10 Exchequer enabling the CWC to generate revenue for the Government. Since then, the CWC is getting revenue. With a good intention, the respondent Nos.2 and 3/CPWD handed over the godowns and office building to protect the Government interest and the Government revenue which is nearly amounting to Rs.1.40 Crores approximately from April’ 2022 to December’ 2023 for CWC. Inspite of the same, the 3rd respondent has not received the due amount from the respondent Nos.4 & 5/ CWC and as such, the due amount of 12th & prefinal bill and 13th & final bill to the 1st petitioner could not be paid till date. 13. Similarly, the learned Senior Counsel appearing for the respondent Nos.4 & 5 relying upon their counter submits that the MOU between CWC (respondent Nos.4 & 5) and CPWD (respondent Nos.2 & 3) was signed on 06.09.2018 for execution of CWC projects by CPWD on deposit basis and CWC cannot pay the admitted amount directly to the contractor/petitioner. As per clause 16 of MOU, any likely cost over runs and above 10% of AA&ES shall be intimated with justification to CWC for approval before incurring additional expenditure. For construction of warehouse cum office block at CW, Vijayawada, CPWD submitted the preliminary estimation for sanction and CWC gave approval for an amount of Rs.1434.90 lakhs vide letter No.4098 dated 05.08.2019. Later, CPWD submitted revised preliminary estimation for the additional 2 mezzanine floors as requested by CWC and increased 11 foundation depth as per site condition for an amount of Rs.1577.87 lakhs vide letter No.5040-45 dated 20.09.2019 and CWC again accorded approval for revised preliminary estimation amount vide letter dated 29.01.2021. CWC reimbursed Rs.1567.77 lakhs vide sanction order Nos.6228 dt.17.10.2019, SO No.9729 dt.25.02.2020, SO No.1707 dt.29.07.2020, SO No.2250 dt.10.09.2020, SO No.3820 dt.16.12.2020, SO No.4565 dt.11.02.2021, SO No.929 dt,29.05.2021, SO No.3289 dt.17.11.2021, SO No.58 dt.07.04.2022 to CPWD & withheld an amount of Rs.7.15 lakhs for clarification of department charges against submitted bills and as per MOU. The petitioner claimed that the part payment was made after submission of his pre final bill. On completion of the work, the CPWD handed over the 4 units in two phases i.e., 2 units were handed over on 26.04.2022 and the remaining 2 units were handed over on 09.06.2022 to CWC after completion dated 14.02.2022 recorded by CPWD in the completion certificate issued to the contractor/petitioner. Though the soil investigation was completed by the CPWD before conception of the project, required/suitable foundation was not adopted by the CPWD at the time of estimation time due to which cost was increased by CPWD at the time of execution. The CPWD neither intimated nor took approval regarding the additional expenditure in advance. As the CWC is a central government commercial organization, the decision on necessity of construction of godown based on IRR (Internal rate of return), but 12 CPWD took own decision on expenditure relating to CWC. Though the amount spent in constructing / renovating CWC structures, CPWD must give prior intimation of additional works i.e., raising height of compound wall, deck slab and additional road, which are not in the scope of preliminary estimation without consent of CWC which is against the MOU clause No.16. The same has been communicated to CPWD by CE, CWC vide letter dated 13.04.2023. In view of the above the respondent No.4 confirmed vide letter dated 13.04.2023 that the further payment will not be entertained by CWC to the CPWD as the unapproved work cannot be entertained. The CWC does not have any agreement with the petitioner/contractor and is not bound to make any payment. 14. In view of the above said facts and circumstances and upon consideration of the rival submissions made, it is to be seen that the 2nd respondent issued the completion certificate vide letter dated 20.12.2022 as stated supra observing that “the work has been carried out generally to the specifications and has been completed satisfactorily on 14.02.2022”. Similarly, the 3rd respondent addressed a letter to the 2nd petitioner dated 14.06.2023 observing that the 2nd respondent thoroughly reviewed the structural designs adopted and vigorously perused the reasons for escalation of cost of the project by elaborately quoting his observations vide his letter dated 02.09.2022 to the CWC/R4 and R5, justifying the unavoidable reasons which have 13 resulted in the increase of cost of the project and requested to sanction and release the balance funds. But the CWC authorities are reluctant to release the balance funds merely on the ground that prior approval was not obtained for escalation of cost of the project before incurring it. The CPWD is making all efforts for getting funds from the CWC and dues payable to the petitioners will be paid along with the interest as per the contract agreement as soon as the funds are received from the CWC. 15. As per the office memorandum of the 3rd respondent dated 10.09.2018 there was a Memorandum of Understanding between the Central Warehousing Corporation and the CPWD signed on 06.09.2018 for construction of buildings of Central Warehousing Corporation for their upcoming projects. The Executive Engineer of Central Warehousing Corporation addressed a letter to the 3rd respondent dated 29.01.2021 informing that CA of CWC has accorded the sanction for construction of two more mezzanine flooring within the cost of revised AA & ES of Rs.15.77 Cr. As proposed, two more additional mezzanine flooring be provided within the scope of the work. Prior to it, only the 3rd respondent addressed a letter to the Executive Engineer of CWC dated 21.12.2021 submitting Form-65 as on 20.12.2021 giving the details of the passed bills of the subject work for information and taking further necessary action furnishing the reasons in respect of the increasing cost of the work and thereby requested to release a 14 sum of Rs.2.50 Cr. at the earliest, as per the enclosed Form-65. The details of further fund requirement were also mentioned therein. 16. Even as per the above said MoU dated 06.09.2018, the expenditure incurred on the construction work shall be reimbursed by the CWC on the basis of certified monthly expenditure statement made by the CPWD. There is no dispute with regard to the completion of the work and handing over of the subject godowns and other office buildings to the respondent Nos.4 & 5 as referred above and the respondent Nos.4 and 5 are generating revenues out of it for the benefit of the organization. Even as per the point A(16) of the above said MoU, any likely cost overruns shall be intimated with justification thereof to CWC for approval before incurring additional expenditure. The CPWD shall submit revised preliminary estimate with full justification to CWC if the actual expenditure on the work exceeds by more than 10% of the AA & ES amount. By following the said condition only, at the request of the CWC, the CPWD got the work executed and completed by the petitioner for the construction of additional mezzanine flooring of godowns as per the requirement of the CWC with necessary approvals and it only claimed incidental expenditure incurred by the petitioner by placing necessary bills before the CWC furnishing the details of approvals and claimed release of that particular amount only, which is not contrary to the terms and conditions of the above said MoU. It is the not a case for invoking the arbitration proceedings 15 by either of the parties under A(23) of the above said MoU. It is a case of execution of the work completely and taking over of the possession of the subject godowns and buildings by the respondents herein and thereby not paying the balance amount towards the expenditure cost incurred by the petitioner. Taking advantage of the delivery of possession of the subject buildings and enjoying of the same by generating the income over it to their own purposes without caring to pay the pending bills of the petitioner is not just and proper on the part of the respondent Nos.4 & 5 inspite of several reminders were being made by the respondent Nos.2 & 3. Both the respondent organizations are the central government organizations and one admits the liability and the other denies and evades the liability and responsibility after getting the work extracted completely to their satisfaction at the cost and expenditure of the petitioners herein. Disowning to pay the balance amount due to the petitioners by the respondents herein jointly and severally will become an undue enrichment and the impugned action is contrary to the above said bid notification and MoUs referred as above. In view of the same, action of the respondents in withholding the due amount of the petitioners on one pretext or the other is declared to be illegal, arbitrary, violative of the principles of natural justice and contrary to law. 17. In the result, the respondents are directed to release the pending due amount of Rs.1,76,54,555/- to the petitioners with interest at the rate of 6% per 16 annum as expeditiously as possible within a period of two (02) months from the date of receipt of this order. 18. Accordingly, the Writ Petition is allowed. There shall be no order as to costs. As a sequel, Miscellaneous Petitions pending, if any, shall stand closed. __________________________ JUSTICE B KRISHNA MOHAN 25-04-2025 PND