IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI THURSDAY, THE THIRTEENTH DAY OF FEBRUARY j TWO THOUSAND AND TWENTY FIVE ’ PRESENT HONOURABLE SRI JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE AND HONOURABLE DR JUSTICE Y. LAKSHMANA RAO WRIT APPEAL NO: 103 OF 2025 Writ Appeal under clause 15 of the Letters Patent against the order dated 27.01.2025 in W.P.No.1396 of 2025 on the file of the High Court. Between: M/s. Satra Services And Solutions Private Limited, (Old name M/s SATRA Infrastructure Management Services Pvt Ltd), Represented by Uppuluri Machiraju S/o Venkata Ramana, Associate Vice President, R/o 40,1 Jain Sadguru Images Capital Park, Madhapur Hitech City, Madhapur, Hyderabad, Telangana State. ...APPELLANT/WRIT PETITIONER AND 1. Union of India, Represented by its Director General, Road Development and Special Secretary, Ministry of Road Transport and Highways, Secretariat, New Delhi. 2. Ministry of Road Transport and Highways EAP Zone, Represented by its Executive Engineer, Jeevan Bharti Building, MoRTH, Ground Floor, 124 Connaught Place, New Delhi-110001 3. Ministry of Road Transport and Highways, Government of India, Represented by its Chief Engineer cum Regional Officer, Vijayawada, NTR District, Andhra Pradesh. 4. Roads and Buildings National Highways, Andhra Pradesh, Represented by its Superintending Engineer, Vijayawada, NTR District, Andhra Pradesh. 5. Ministry of Road Transport and Highways, Represented by its Project Director, Project Implementation Unit,Araku, ZP Colony, Near CBM Church, Araku Valley, Alluri Sitharamara Raju District, Andhra Pradesh ...RESPONDENTS lA 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 suspend the operation of Letter No.MoRTH/PIU/ARAKU/consultancy/SATRA/NH516E dated 13.01.2025 issued by the Respondent No.2 imposing penalty of 5% over the value of consultancy work and debarring the Petitioner from participating in bids pertaining to National Highway works. Counsel for the Appellant: SRI K.S. MURTHY, SENIOR COUNSEL FOR SRI N. ASHWANI KUMAR Counsel for the Respondent No.1: SRI JUPUDI V. K. YAGNADUTT(CENTRAL GOVERNMENT COUNSEL) Counsel for the Respondent Nos.2 to 4: SRI S.S.VARMA, SC FOR NHAI The Court made the following: JUDGMENT APHC010065882025 IN THE HIGH COURT OF ANDHRA PRADESH Sr.No:-3 AT AMARAVATI [3522] WRIT APPEAL NO: 103 of 2025 M/s. Satra Services and Solutions Private Limited ...Appellant Vs. Union Of India and Others ...Respondent(s) ********** Advocate for Appellant; Mr. K. S. Murthy, Senior Counsel, appearing for Mr.N Ashwani Kumar Mr.Jupudi V. K. Yagnadutt(Central Government Counsel), Mr.S. S. Varma (SC For NHAI) Advocate(s) for Respondent(s); CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR DR JUSTICE Y. LAKSHMANA RAO DATE : 13th February 2025 PER DHIRAJ SINGH THAKUR. CJ : The present writ appeal has been preferred against the judgment and order, dated 27.01.2025, passed in W.P. No.1396 of 2025. Briefly stated, the material facts are as under: The petitioner/appellant herein was engaged to render consultancy services for preparation of detailed project reports regarding selected stretches/corridors of National Highways/State Roads. An agreement, dated 2 HCJ a Dr.YLR, J W.A. No: 103 of 2»25 28.07.2016, was executed between the parties in that regard. A Detailed Project Report (DPR) came to be prepared by the appellant in regard to which certain discrepancies were found. A Committee was constituted to go into the issues of the discrepancies/deficiencies in the services rendered by the appellant. The Committee, after affording the appellant an opportunity of being 2. heard, submitted a report in which it recorded a finding that there was a major deficiency in the services rendered by the appellant inasmuch as there was a 16 km major water pipeline of 600m dia, which was going parallel to the Highway within the right of way. The existence of the water pipeline, which according to the report of the Committee, was even visible at several places through several valves which were over the ground. Due to the discrepancy pertaining to the existence of the water pipeline, the concerned Ministry had to order a change in the scope of the work on account of the fact that there would be a shifting of the center line of the alignment on account of the existing municipal water pipeline. The variation would cost additional Rs.20.72 crores. According to the respondents, the Consultancy had to collect details of all important physical features such as buildings, structures, monuments, burial grounds, cremation grounds, railway lines, water mains, severs, utility 3. 3 HCJ a Dr.YLR, J W.A. No: 103 of 2025 along the alignment of the road and further, the detailed road inventory surveys were required to be carried out in that regard. Accordingly, the Committee, having considered the lapse as a major deficiency, which resulted in huge variation as also substantial loss of time in project execution, recommended imposition of penalty to the tune of 5% of the value of the contract of the consultancy work as also recommended debarring the appellant Consultancy for a period of six months from participation in the bids. services etc.. Based on the recommendations made by the concerned Committee, an 4. order, dated 13.01.2025, came to be issued by the Executive Engineer of the Ministry of Road, Transport & Highways imposing a penalty to the tune of 5% of the contract value of the consultancy work as also debarring the appellant the bids in the National for a period of six months from participating in Highway works as a consultant. For purposes of reference, clause 7.3 dealing with ‘penalty’ and clause 7.4.2 dealing with ‘warning/debarring’ a consultant, are reproduced hereunder: “7.3. Penalty 7.3.1 Penalty for Error/Variation i)lf variation in any of the main quantities of work like earth work including sub grade, GSB, WMM, Bituminous works (BM/DBM/AC/BC), drains, total concrete quantities and reinforcing steel in bridge works or overall project cost, found during execution is more than +/- 15%, the penalty equivalent to 5% of the contract value shall be imposed. For this purpose retention money equivalent to 5% of the contract value/will be forfeited. This shall exclude any additional/deletion of items/works ordered during the execution. 4 HCJ a Dr.YLR, J ✓ W.A. No: 103 of 2025 IT 7.4.2 Warning/Debarring In addition to the penalty as mentioned in para 7.3, warning may be issued to the erring consultants for minor deficiencies. In the case of major deficiencies in the Detailed Project Report involving time and cost overrun and adverse effect on reputation of further the Roads & Building Department, NH wing, GoAP, other penal action including debarring for certain period may also be initiated as per policy of further the Roads & Building Department NH wing GoAP.” The appellant accordingly challenged the order, dated 13.01.2025, before the learned single Judge, who allowed the writ petition partially to the extent of imposition of penalty on the ground that even as per the recommendations of the Committee since the variation in the main quantities of work was not more than 15%, penalty in terms of clause 7.3.1 could not have been imposed. 5. There is no appeal preferred against this portion of the judgment, yet, the appellant, who was the petitioner before the learned single Judge, is only aggrieved of that part of the judgment rendered by the learned single Judge, which held the respondents entitled to impose the punishment for warning/debarring as per the agreed terms of the Contract. The learned single Judge, by virtue of the judgment and order impugned, has relegated the appellant to resort to the dispute settlement mechanism in terms of clause 9.2 of the Agreement, which envisages as under: “9.2 Dispute Settlement Any dispute between the Parties as to matters arising pursuant to this Contract which cannot be settled amicably within thirty (30) days after receipt 5 HCJ a Dr.YLR, J W.A. No; 103 of 2025 by one Party of the other Party’s request for such amicable settlement may be submitted by either Party for settlement in accordance with the provisions specified in the SC.” Mr. K. S. Murthy, learned Senior Counsel, appearing for the appellant would submit that clause 7.4.2 would have been invoked only in case there major deficiency reported in the DPR and since a major deficiency was not defined anywhere, the order debarring the appellant was unsustainable in law. It was also urged that the learned single Judge by observing that ‘the respondents are entitled to impose punishment as per clause 7.4 of the Agreement’ had in fact upheld the imposition of punishment in terms of clause and further that referring the parties to avail the mechanism of 6. was a 7.4.2 settlement of disputes in terms of clause 9.2 of the Agreement would not achieve any fruitful result. It was also prayed that pending the outcome of the arbitration proceedings, which the parties may resort to in terms of clause 9.2 of the Agreement, the operation of the order impugned, dated 13.01.2025, ought to have been stayed. however, not convinced by the argument of learned counsel for the appellant. Even in the absence of there being a specific definition as to what would constitute a major or minor deficiency, yet, the Committee constituted for that purpose in its report appears to have clearly held the deficiency as a major deficiency leading to a cost overrun of approximately twenty crores. By no stretch of imagination can this be said to be a minor 7. We are. J HCJ a Dr.YLR, J W.A. No; 103 of 2023" » deficiency, which deficiency could have easily been avoided, had a proper i survey been carried out by the appellant in accordance with the terms and conditions of the agreement between the parties. Equally untenable is the argument that pending the outcome of the arbitration proceedings in terms of clause 9.2, the operation of the order impugned, dated 13.01.2025, should have been stayed. There is absolutely no basis for such a proposition as the order impugned had fixed the six months period to run from the date of the passing of the order by the Executive Engineer and in case, the said order were to be stayed, the same would have even otherwise been rendered meaningless beyond the period of six months, in which eventuality, the arbitration proceedings would have been rendered academic. In our opinion, the view expressed by the learned single Judge warrants interference. The appeal is found to be without any merit and is accordingly dismissed. We, however, make it clear that nothing said by the learned single Judge or this Court would in any way prejudice the proceedings before the Arbitrator in case proceedings were initiated in terms of clause 9.2 of the Agreement r/w the Special Conditions of Contract. No costs. 8. no 7 HCJ a Dr.YLR, J W.A. No: 103 of 2025 Pending miscellaneous applications, if any, shall stand closed. SD/- M. RAMESH BABU DEPUTY^REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. One CC to Sri N. Ashwani Kumar, Advocate [OPUC] One CC to Sri Jupudi V. K. Yagnadutt(Central Government Counsel) [OPUC] One CC to Sri S.S. Varma, SC for NHAI[OPUC] Three CD Copies. 2. 3. 4. ssb HIGH COURT DATED:13/02/2025 JUDGMENT WA.No.103 of 2025 f 1 9 FEB 2025 ON Co & current Section ^ DISMISSING THE W.A. WITHOUT COSTS