- 1 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF NOVEMBER, 2025 PRESENT THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE AND THE HON'BLE MR. JUSTICE C.M. POONACHA WRIT APPEAL NO. 1549 OF 2024 (GM-TEN) BETWEEN: 1. EXECUTIVE ENGINEER KARNATAKA URBAN WATER SUPPLY AND DRAINAGE BOARD (KUWS & DB) M.G. ROAD, RAVINDRA NAGAR HASSAN - 573 202 KARNATAKA 2. KARNATAKA URBAN WATER SUPPLY AND DRAINAGE BOARD (KUWS & DB) M.G. ROAD, RAVINDRA NAGAR HASSAN - 573 202 ALSO AT: #5, JALABHAVAN, 1ST STAGE 1ST PHASE, BTM LAYOUT BANNERGHATTA ROAD BANGALORE - 560 029 (REPRESENTED BY EXECUTIVE ENGINEER) …APPELLANTS (BY SRI VEERESH R. BUDIHAL, ADVOCATE) AND: 1. ABHIRAM INFRA PROJECTS PRIVATE LIMITED A COMPANY INCORPORATED UNDER Digitally signed by AMBIKA H B Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 THE COMPANIES ACT, 1956 HAVING ITS OFFICE AT C-81, FLAT No.402 SRI JYOTHI NILAYAM MADHURA NAGAR HYDERABAD - 500 038 TELANGANA INDIA (REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE S. VENKATA RAMANA REDDY) 2. M/S AXIS BANK LIMITED HAVING BRANCH AT: 6-3-879/B, G. PULLA REDDY BUILDING GREENLANDS BEGUMPET ROAD HYDERABAD - 500 016 (REPRESENTED BY ITS BRANCH MANAGER) …RESPONDENTS (SRI. ROHAN VEERANNA TIGADI, ADVOCATE FOR C/R-1) THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 27.08.2024 PASSED BY THE LEARNED SINGLE JUDGE OF THIS HON'BLE COURT IN WRIT PETITION No.18245/2021 (GM-TEN) AND FURTHER TO DISMISS THE SAID WRIT PETITION & ETC. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE and HON'BLE MR. JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE) 1. For the reasons stated in the application - I.A No.1/2025, the same is allowed. The delay in filing the recall application is - 3 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 condoned. Since the office objections have been cured, the order dated 24.04.2025 dismissing the appeal is recalled. The appeal is restored to its file. Accordingly, I.A No.2/2025 is allowed. 2. Issue notice. Mr. Rohan Veeranna Tigadi, learned counsel accepts notice for respondent No.1. 3. The appellants have filed the present appeal impugning an order dated 27.08.2024 passed by the learned Single Judge in Writ Petition No.18245/2021 (GM-TEN). 4. The said petition was preferred by respondent No.1 [the Contractor] seeking return of the original Performance Bank Guarantee dated 28.06.2019 for a sum of Rs.1,41,25,600/- and the original Additional Performance Bank Guarantee dated 28.06.2019 for a sum of Rs.52,20,000/-. Additionally, the Contractor also prayed for refund of the bid security amount of Rs.35,32,000/- along with interest at the rate of 18% per annum from 04.01.2019 till the date of realisation. 5. The controversy involved has arisen in the following factual context: - 4 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 6. The appellants had invited tender on 01.03.2014 for the purpose of executing the work of laying of sewer network with construction of manhole chambers, construction of 2.64 MLD capacity Sewerage Treatment Plant and 0.15 KLD capacity septic tank with allied components, providing and laying of sewer lines across railway track and national highway under the Underground Development Scheme at Birur Town, Hassan, [hereafter referred to as "Birur Project"]. The Contractor has furnished his bid pursuant to the said notice. The said bid was accepted in terms of a letter of acceptance dated 03.11.2014 and the contract for executing the said work was awarded to the Contractor at a price of Rs.23,54,25,125/-. Thereafter, on 01.12.2014, the parties entered into a formal agreement setting out the terms and conditions of the contract. 7. There is no dispute that the Contractor successfully executed the Birur Project and discharged his performance and obligations. The appellants also cleared the Contractor's final bill. However, the appellants failed to return the bank guarantees and refund the bid security amount. Admittedly, the said amount was required to be refunded to the Contractor as it had successfully completed the - 5 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 Birur Project. The concerned officers of appellant No.2 authority had also recommended return of the bank guarantees and the bid security furnished by the Contractor. 8. Notwithstanding the above, by a letter dated 06.09.2019, the appellants communicated their decision not to release the bank guarantees on the ground that the Contractor had been awarded another contract in respect of UGD scheme to be constructed by the Contractor at Chikkamagaluru [Chikkamagaluru Project]. It is stated that in terms of the said contract, the Contractor was required to furnish a bank guarantee which the Contractor had furnished but, the same had expired on 14.11.2014. The appellants thus, decided to withhold return of the Performance Bank Guarantees and the bid security furnished in relation to the Birur Project on the ground that the bank guarantee given for Chikkamagaluru Project had expired. 9. It is the appellant's case that in terms of the contract entered into between the parties in respect of the Chikkamagaluru Project, the appellants could retain the said bank guarantees. The appellants relied on clause 49.4 of the contract relating to - 6 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 Chikkamagaluru Project. The said clause as set out in the impugned judgment is reproduced below: "49.4 Contractor's Failure to Carry out Instructions In case of default on the part of the Contractor in carrying out such instructions within a reasonable time, the Employer shall be entitled to employ and pay other persons to carry out the same and if such work is work which, in the opinion of the Engineer, the Contractor was liable to do at his own cost under the Contract, then all costs consequent thereon or incidental thereto shall, after due consultation with the Employer and Contractor, be determined by the Engineer and shall be recoverable from the Contractor by the Employer and may be deducted from any monies due or to become due to the Contractor and the Engineer shall notify the Contractor accordingly, with a copy to the Employer." 10. The learned Single Judge found that recourse to clause 49.4 was not available as there was no material placed on record to substantiate that any amount was determined as recoverable from the Contractor by the Engineer. 11. The learned counsel appearing for the appellants specifically contends that the only question to be considered is whether the appellants could withhold any amount payable to a person under a contract on account of debts owed by the said person in relation to another contract. He submits that the impugned judgement would - 7 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 set an erroneous precedent, which would curtail the right of the appellants to withhold the amounts notwithstanding that the person to whom the amounts are payable owes a debt to the appellants. 12. In our view, the said question does not arise in the present appeal. The learned Single Judge has allowed the writ petition on the finding that there was no material to indicate that any determined debt was owed by the Contractor to the appellants. The petition was not allowed on the basis of any general proposition as canvassed by the learned counsel for the appellants. 13. The learned counsel for the appellants fairly states that the same be clarified that the impugned order has been rendered in the facts of the present case. We have no hesitation in accepting the said request. 14. In view of the above, we dispose of the present appeal by clarifying that the impugned order has been rendered by the learned Single Judge in the given facts of the present case. - 8 - HC-KAR NC: 2025:KHC:49600-DB WA No. 1549 of 2024 15. The pending interlocutory applications also stand disposed of. Sd/- (VIBHU BAKHRU) CHIEF JUSTICE Sd/- (C.M. POONACHA) JUDGE AHB List No.: 1 Sl No.: 13