1 VS,J W.P.No.8997 of 2019 APHC010207152019 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3333] TUESDAY,THE SECOND DAY OF DECEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SMT JUSTICE V.SUJATHA WRIT PETITION NO: 8997/2019 Between: 1. M/S.RSR INFRA WORKS INDIA PVT. LTD.,, REP. BY ITS MANAGING DIRECTOR, R.GOPALA KRISHNA, S/O.R.SUBBA RAJU, AGED 44 YEARS, R/O.D.NO.79-15-8/2, PRASANTHI ESTATES, RAJAHMUNDRY, EAST GODAVARI DISTRICT ...PETITIONER AND 1. THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS PRINCIPAL SECRETARY, MAJOR IRRIGATION DEPARTMENT, A.P. SECRETARIAT AT VELAGAPUDI, AMARAVATI, GUNTUR DISTRICT 2. THE SUPERINTENDENT ENGINEER, WATER RESOURCES DEPARTMENT, IRRIGATION CIRCLE, SRIKAKULAM 3. THE EXECUTIVE ENGINEER, SPECIAL INVESTIGATION BUILDING, SRIKAKULAM ...RESPONDENT(S): Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ Order or Direction more particularly one in the nature of Writ of Mandamus declaring the Letter No SE/IC/SKLM/DB/ATO 1/303M Dated 6-7-2019 and the Revised order vide Lr.No.SE/IC/ SKLM/ 2 VS,J W.P.No.8997 of 2019 DB/ATO-1/311 M dated 9-7-2019 of the 2nd Respondent in terminating contract entered in between the Petitioner and Respondents for execution of vide agreement No. 03/SE/2018-19 dated 28-5-2019, as illegal, irregular, arbitrary, in violation of principles of natural justice, unfair, unconstitutional, unjustified and unsustainable and consequently direct the Respondents to release the bank guarantees furnished by the petitioner at the time of the agreement No 03/SE/2018-19 dated 28-52-019, by setting aside the Letter No SE/IC/SKLM/DB/ATO 1/303M Dated 6-7-2019 and the Revised order vide Lr No SE/IC/ SKLM/ DB/ATO1/311 M dated 9-7-2019 of the 2nd Respondent, as and pass such other order or orders may deem fit and proper in the circumstances of the case. Prayer is amended as per the Court's Order dt.14.10.2025 in I.A.No.01 of 2025. IA NO: 1 OF 2019 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondents not to encash the Bank Guarantees furnished by the petitioner at the time of entering into the agreement for due execution of the work IA NO: 2 OF 2019 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of Letter No.SE/IC/SKLM/DB/AT0.11303M, dt.6.7.2019 of the 2nd Responden IA NO: 3 OF 2019 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased Pleased to vacate the interim order dated 11-07-2019 passed in I.A.No.1/2019 in WP No.8997 of 2019 and dismiss the writ petition with exemplary costs and pass IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to permit the petitioner to amend the prayer in WP.No. 8997/2019 as follows: <to issue an appropriate Writ Order or Direction more particularly one in 3 VS,J W.P.No.8997 of 2019 the nature of Writ of Mandamus declaring the Letter No SE/IC/SKLM/DB/ATO 1/303M Dated 6-7-2019 and the Revised order vide Lr.No.SE/IC/ SKLM/ DB/ATO-1/311 M dated 9-7-2019 of the 2nd Respondent in terminating contract entered in between the Petitioner and Respondents for execution of vide agreement No.03/SE/2018-19 dated 28-5-2019, illegal, irregular, arbitrary, in violation of principles of natural justice, unfair, unconstitutional, unjustified and unsustainable and consequently direct the Respondents to release the bank guarantees furnished by the petitioner at the time of the agreement No.03/SE/2018- 19 dated 28-5-2019, by setting aside the Letter No SE/IC/SKLM/DB/ATO 1/303M Dated 6-7-2019 and the Revised order vide Lr.No.SE/IC/ SKLM/ DB/ATO-1/311 M dated 9-7-2019 of the 2nd Respondent,= as and pass Counsel for the Petitioner: 1. SUBBA RAO KORRAPATI Counsel for the Respondent(S): 1. GP FOR IRRI AND CAD (AP) The Court made the following: 4 VS,J W.P.No.8997 of 2019 THE HONOURABLE SMT JUSTICE V.SUJATHA WRIT PETITION NO: 8997/2019 ORDER:- The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:- <…to issue an appropriate Writ, Order or Direction more particularly one in the nature of Writ of Mandamus declaring the Letter No.SE/IC/SKLM/DB/ATO 1/303M, Dated 6-7-2019 and the Revised order vide Lr.No.SE/IC/ SKLM/ DB/ATO-1/311 M dated 9-7-2019 of the 2nd Respondent in terminating contract entered in between the Petitioner and Respondents for execution of vide agreement No.03/SE/2018-19 dated 28-5-2019, as illegal, irregular, arbitrary, in violation of principles of natural justice, unfair, unconstitutional, unjustified and unsustainable and consequently direct the Respondents to release the bank guarantees furnished by the petitioner at the time of the agreement No.03/SE/2018-19 dated 28-5-2019, by setting aside the Letter No.SE/IC/SKLM/DB/ATO 1/303M Dated 6-7-2019 and the Revised order vide Lr No.SE/IC/ SKLM/ DB/ATO1/311M dated 9-7-2019 of the 2nd Respondent, as and pass such other order or orders may deem fit and proper in the circumstances of the case.= 2. In pursuance of the tenders invited by the 2nd respondent through e- Procurement for execution of the work of package-III Formation of Flood Bank on Vamsadhara River right margin from Scotpeta Village in L.N.Peta Mandal to Kalingapatnam Village of Gara Mandal in Srikakulam District (Balance Work), the petitioner has participated in the said tender process, was declared successful and accordingly entered into an agreement with the 2nd respondent on 28.05.2018. 5 VS,J W.P.No.8997 of 2019 3. The grievance of the petitioner is that his contract was subsequently terminated the 2nd respondent vide proceedings No.SE/IC/SKLM/DB/ATO- 1/303M, dated 06.07.2019, on the ground that the petitioner had breached the agreement conditions by unlawfully entrusting the work to a sub contractor, M/S Svedy Infrastructure Private Limited, which is in violation of the tender conditions as well as the agreement conditions and the Preliminary Specifications to A.P. Standard Specifications (Ps to APSS). It was also alleged that the petitioner attempted to draw mobilization advance by submitting a fake and forged Bank guarantee through his authorized signatory, Sri Y.L.Amarnath Babu. 4. Challenging the said proceedings, the present writ petition is filed on the ground that he had not entrusted the work to any sub contractor and had only authorized Sri Y.L.Amarnath Babu to submit the requisite documents before the concerned authorities. It is also contended that the impugned proceedings dated 06.07.2019 were issued without any prior notice or affording an opportunity to explain as to why his contract should not be terminated. 5. When the writ petition came for admission on 11.07.2019, this Court passed the following interim order:- <…there shall be an interim direction to the respondents not to encash the bank guarantees furnished by the petitioner at the time of entering into the agreement for due execution of work.= 6 VS,J W.P.No.8997 of 2019 6. Heard learned counsel for the petitioner as well as learned Assistant Government Pleader for Irrigation appearing for the respondents. 7. Respondent No.2 filed a detailed counter affidavit reiterating the allegations made in the impugned order. It is stated that the petitioner had never informed the office of the 2nd respondent about engaging any sub-contractor for execution of the said work, which in fact is in violation of Condition No.15 of agreement dated 28.05.2018 prohibiting sub-letting without written permission. It is further stated that the petitioner submitted a fake and forged bank guarantee No.00183091000EK90183, dated 18.01.2019 for Rs.13,12,47,968/-, which was said to be obtained from Allahabad Bank, Kandi Devi Nivas Branch, Murishabad, towards mobilization advance @ 5% of labour procurement campaigning. After submission of the said bank guarantee, the 2nd respondent sent it to Allahabad Bank for confirmation of genuineness. The 2nd respondent received a letter from Allahabad bank on 04.02.2019 informing that the said bank guarantee was not issued by their bank and was not genuine. As the petitioner had submitted a forged bank guarantee and was trying to gain wrongfully, his authorization was cancelled by the impugned orders. 8. It is also stated that the respondents issued a 7-days notice to the petitioner, for which he submitted an explanation, and therefore the contention regarding violation of principles of natural justice is unfounded. It is further stated that pending the writ petition, the 2nd respondent, vide letter 7 VS,J W.P.No.8997 of 2019 No.SE/IC/SKLM/DB/ATO-1/311M, dated 09.07.2019, in supersession of the earlier proceedings, once again terminated the petitioner’s contract towards criminal breach of agreement conditions. Challenging the said order, the petitioner filed I.A.No.1 of 2025 seeking amendment of the prayer duly enclosing the said order dated 09.07.2019. An additional counter affidavit was filed by the 2nd respondent reiterating the facts as stated in the original counter and stating that, as the petitioner’s agency has violated Condition No.15 of the agreement and Clause 54 of the Preliminary Specifications to Andhra Pradesh Standard Specifications (PS to APSS), the petitioner’s bank Guarantees were forfeited. 9. For ready reference, Condition No.15 of the agreement and Clause 54 of the Preliminary Specifications to Andhra Pradesh Standard Specifications (PS to APSS) are extracted hereunder:- <15.0 SUBLETTING OF CONTRACT:-No part of the contract shall be sublet without written permission of the Executive Engineer nor shall transfer be made by power of attorney, authorizing others to receive payment on the contractors’ behalf. If the prime contractor desires to sublet a part the work he should submit the same at the time of filing tenders itself or during execution giving the names of the proposed the sub-contractor along with the details of his qualification and experience. The Tender accepting authority should verify the experience of the sub-contractor and if the sub-contractor satisfies the qualification criteria with reference to the value of work proposed to be sublet, he may permit the same. However, the total value of works to be awarded on subletting shall not exceed 50% of contract value. The extent of subletting shall be added to the experience of the sub-contractor and to that extend deducted from that of the main contractor.= 8 VS,J W.P.No.8997 of 2019 <54. Assignment or sub-letting: The contractor shall not, without the written consent of the Executive Engineer, assign the contract nor sub-let any portion of the same. Ordinarily no sub-letting will permitted, but in case such should be permitted by the Executive Engineer, it shall in no way free the contractor from any of his responsibilities under any caluse of his Preliminary Specification or of the <Articles of Agreement=. 10. However, in none of the above clauses either Condition No.15 of the agreement or Clause 54 of the Preliminary Specifications to Andhra Pradesh Standard Specifications (PS to APSS), it has been mentioned that if the contractor violates any of the conditions by sub-letting or assigning any part of the work without written consent, the bank guarantee furnished by him shall be forfeited. 11. Learned counsel for the petitioner has brought to the notice of this Court the enquiry report submitted by the Chief Engineer, Quality Control Wing, Coastal Region and APERL, Vijayawada, dated 30.09.2020. As per the said report, two points were framed, 1) Claim of the Agency that the work was sublet to another agency and POA was given to the Sub-Contractor and 2) Whether fake Bank Guarantees for Mobilization Advance were submitted by the Sub- Contractor to Superintending Engineer as claimed by the Agency . The points are answered as under:- 1) The claim of the main Agency that the work was sublet to a sub-contractor is not a valid claim. Only authorization was given on the letter head, which is not legally valid. The term sub-letting was loosely used by the Agency in all their corresponding. The sub-letting needs approval of the Department and is restricted in 9 VS,J W.P.No.8997 of 2019 accordance with agreement conditions. Practically there is no sub- letting of the work or part of the work to any subcontractor in the subject work. 2) It is not established from the records that the Main Agency had any part in this mischievous act of submitting fake documents because the entire episode took place within one week. But the Main Agency i.e, M/s RSR Infra Woks (India) Private Limited may have to be held responsible for authorizing such treacherous person without knowing his character completely. This caused unnecessary correspondence and inconvenience to the Government. Summing up the overall report, it is submitted that the Main Agency was dragged into the controversy without his knowledge because of the treacherous act of the Authorized Signatory. As soon as the Main Agency came to know about the developments, the Agency took all actions to safeguard themselves as well as the Department by reporting the matter to the Superintendent of Police. 12. From the above, it is evident that the allegations made in the impugned orders are not supported by the enquiry report. The termination of the petitioner’s contract was effected even before the enquiry was completed. Though the counter affidavit claims that a show-cause notice was issued, no date of such notice is mentioned, and no material has been placed to substantiate the same. Further, as noted earlier, neither the agreement nor the specifications provide for forfeiture of the bank guarantee for violation of Conditions 15 or 54. 13. As the petitioner’s contract was terminated long back in 2019, this Court does not intend to interfere with the same at this distant point of time. However, with regard to the bank guarantees, the respondents cannot withhold them in the absence of any contractual authority to do so. 10 VS,J W.P.No.8997 of 2019 14. Accordingly, the respondents are directed to release the bank guarantees furnished by the petitioner as expeditiously as possible, preferably within a period of eight (08) weeks from the date of receipt of a copy of this order. It is also noticed that the petitioner’s earlier contracts, along with other contracts prior to 2019, were cancelled by the Government as a policy decision. 15. Accordingly, the Writ Petition is disposed of. No costs. As a sequel, miscellaneous applications, pending, if any, shall also stand closed. ____________________ JUSTICE V.SUJATHA Date :02.12.2025 JLV 11 VS,J W.P.No.8997 of 2019 280 THE HONOURABLE SMT JUSTICE V.SUJATHA WRIT PETITION NO: 8997/2019 Date :02.12.2025 JLV