APHC010671122022 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3457] THURSDAY, THE 6th DAY OF AUGUST 2026 PRESENT THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION NO: 39920/2022 Between: 1. M/S. STERLITE TECHNOLOGIES LIMITED, HAVING ITS REGISTERED OFFICE AT. 4TH FLOOR, GODREJ MILLENNIUM, KOREGAON ROAD 9, STS 12/1, PUNE-411001, MAHARASHTRA ALSO AT, 3RD FLOOR, IFFCO TOWERS PLOT NO3, SECTOR -29, GURUGRAM - 122002 REPRESENTED BY MR. KARUNAKAR DASH STATE HEAD PROJECTS FOR TELANGANA AND ANDHRA PRADESH REGION, AGED ABOUT 52 YEARS, RIO 5TH FLOOR, SHANGRILA PLAZA, ROAD NO 2, BANJARA HILLS, HYDERABAD 500034. ...PETITIONER AND 1. THE STATE OF ANDHRA PRADESH, KAKINADA SMART CITY CORPORATION LIMITED REPRESENTED BY ITS, MANAGING DIRECTOR HAVING ITS REGISTERED OFFICE AT. 2-33-10, PEKETI VARI STREET, PERRAJUPETA, KAKINADA, ANDHRA PRADESH - 533003 2. STATE OF ANDHRA PRADESH, THROUGH, PRINCIPAL SECRETARY MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT SECRETARIAT, VELAGAPUDI, AMARAVATHI 3. STATE OF ANDHRA PRADESH, THROUGH PRINCIPAL SECRETARY FINANCE DEPARTMENT, SECRETARIAT, VELAGAPUDI, AMARAVATHI, THULLAR MANDAL, GUNTUR DISTRICT 4. IDBI BANK, REPRESENTED BY ITS, BANK MANAGER HAVING ITS BRANCH OFFICE AT. TRADE FINANCE DEPARTMENT, SPECIALISED CORPORATE BRANCH,PRIDE HOUSE, SECOND FLOOR, UNIVERSITY ROAD, GANESH KHIND, PUNE- 41101 ...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 topleased to issue a writ or writs in the nature of mandamus or such other writ, order or direction or any other appropriate writ or direction declaring inaction of the Respondent No. 1 in releasing Rs. 5.25 (Rupees Five Crore Twenty Five Lakh Only) which stands approved and admitted for the works executed by the Petitioner under the Contract for Development and Implementation of Smart City Solutions in Kakinada dated 30.06.2017, despite Respondent No. 1 admitting the bills and declaring the letter issued by 2 Respondent No 1 vide Lr No KSCCL /B .G. Encashment /2022, dt 20 -12 - 2022 thereby instructing Respondent No 4 to invoke the bank guarantee furnished by the Petitioner Company vide B. G. Nos. 170390IBGP00382 and 170390IBGP00385 amounting to Rs. 3. 78 Crores, dt 04 -05 -2017 to arm twist the Petitioner Company for demanding the abovesaid admitted amount of Rs. 5. 25 crores as illegal, unfair, unreasonable and arbitrary and in violation of Article 14 and Article 19 of the Constitution of India, and consequently to set aside the letter issued by Respondent No. 1 vide Lr No KSCCL /B .G. Encashment /2022, dt 20 -12 -2022 and direct the Respondent No 1 to release the admitted amount Rs. 5 .25 (Rupees Five Crore Twenty Five Lakh Only) to the Petitioner along with interest at 18 percentage from the date on which the payments became due till date of payment and pass Prayer is amended as per CO dt 26/12/2022 vide order passed in IA 03/2022. IA NO: 1 OF 2022 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. (a) Respondent No.1 to not threaten or encash the Petitioner's bank guarantee No. 170390IBGP00382 and 1703901BGP00385 amounting to Rs.3.78 Crores. (b) Respondent No.1 to stay the operation of letter dated 06.12.2022 and restrain from taking any coercive actions against the Petitioner in terms of the letter dated 06.12.2022 or any other letter later issued for a similar purpose. and (c) Respondent No 4 to not act upon any letter or instruction from Respondent No. 1 to encash the Petitioner's bank guarantee No. 170390IBGP00382 and 170390IBGP00385 amounting to Rs.3.78 Crores, (d) Respondent No 1 to expeditiously initiate and complete transfer if Rs. 5.25 (Rupees Five Crore Twenty Five Lakh Only) to the Petitioner. and (e) to pass IA NO: 2 OF 2022 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 direct the Respondent No.1 to not to encash the Petitioner's bank guarantee No. 170390IBGP00382 & 170390113GP00385 amounting to Rs.3.78 Crores, restrain from taking any coercive steps against the Petitioner pursuant to its letter dt. 20-12-2022 and Respondent No.4, to not act upon any letter or instruction from respondent. No.1 to encash the Petitioner's bank guarantee No. 170390IBGP00382 and 170390IBGP00385 amounting to Rs. 3.78 Crores pending disposal of the main writ petition and to pass IA NO: 3 OF 2022 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 permit the Petitioner Company to amend the main prayer of the writ petition as follows: "Hon'ble Court be pleased to issue a writ or writs in the nature of mandamus or such other writ, order or direction or any other appropriate writ or direction declaring inaction of the Respondent No. 1 in releasing Rs. 5.25 (Rupees Five Crore Twenty Five Lakh Only) which stands approved and admitted for the works executed by the Petitioner under the 3 Contract for Development and Implementation of Smart City Solutions in Kakinada dated 30.06.2017 despite Respondent No. 1 admitting the bills and declaring the letter issued by Respondent No. 1. vide Lr,No.KSCCL/B.G.Encashment/2022, dt.20-12-2022 thereby instructing Respondent No.4 to invoke the bank guarantee furnished by the Petitioner Company vide B.G,Nos. 170390IBGP00382 & 170390IBGP00385 amounting to Rs.3.78 Crores, cit, 04-05-2017 to arm twist the Petitioner Company for demanding the above said admitted amount of Rs,5.25 crores as illegal, unfair, unreasonable and arbitrary and in violation of Article 14 and Article 19 of the Constitution of India, and consequently to set aside the letter issued by Respondent No. 1 vide Lr.No.KSCCL/B.G.Encashment/2022, dt.20- 12-2022 and direct the Respondnet No. 1 to release the admitted amount Rs. 5.25 (Rupees Five Crore Twenty Five Lakh Only) to the Petitioner along with interest at 18% from the date on which the payments became due till date of payment; and pass Counsel for the Petitioner: 1. JAVVAJI SARATH CHANDRA Counsel for the Respondent(S): 1. M Krishna Rao SC for skl vzm kkd Municipal Corporations 2. GP FOR MUNCIPAL ADMN URBAN DEV The Court made the following: 4 THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION No.39920 of 2022 ORDER: 1. The petitioner has filed the writ petition seeking a direction to the respondent No.1 to release an amount of Rs.5,25,00,000/- being the approved and admitted amount payable to the petitioner towards the works executed by the petitioner under the Contract for development and implementation of Smart City Solutions in Kakinada and further declaration of letter dated 20.12.2022 issued by the respondent No.1 instructed the respondent No.4 to invoke the bank guarantee. 2. The learned counsel appearing for the petitioner submits that the petitioner is a company incorporated under the Companies Act, 1956 and is in the business of extending technological and infrastructure services. The petitioner was the successful bidder and selected as a systems integrator for the Kakinada Smart City Programme. 3. The scope of work of the petitioner was in following four Phases; a) Phase : 1 involved supply, installation, commissioning, training and operationalization of command and control center and data center (DC) with infrastructure needed to run Smart Lights, VMD, environmental Sensors, Waste Management, Smart parking, Disaster Management & Camera feed of existing surveillance deployment of Police on Video Wall, Smart Pole – Timeline: date of signing of agreement + 3 (three) months b) Phase : 2 – Supply and Commissioning of 100% Core and Aggregate ring electronics, passive infrastructure with network live. Supply and commissioning of 3 Access ring electronics, passive instrastructure with 30% installation and commissioning of CCTV and Wifi Access Points – Timeline : date of signing of agreement + 6 (six) months 5 c) Phase : 3 – 100% completion of Access & Service Layer and network Go Live. Commissioning of balance smart city solutions with Geographical Information System (GIS) & ERP integration. –Timeline : Date of signing of agreement + 9 (nine) months d) O& M Phase – Timeline : Go Live Phase of all phases i.e., Date of signing of agreement + 9 (nine) months + 60 (sixty) months. 4. The value of the contract is Rs.94,89,23,426/- which includes capital expenditure of Rs.66,48,74,880/- and operational expenditure of Rs.28,40,48,546/- which is payable to the petitioner for performance of its obligations. The scope of work was subsequently enhanced by Rs. 3,89,00,000/-. 5. The general conditions of the contract mandate payment by the respondent No.1 within a period of 60 days from the date of receipt of invoice or request for payment from the petitioner. It is submitted that the respondent No.1 failed to release the outstanding amount, which was admitted and undisputed. The respondent No. 1 was due an amount of Rs. 19,39,07,230/- since February, 2020. Though the petitioner received no payment, the petitioner continued to provide uninterrupted service through the COVID pandemic in the larger public interest. 6. It is submitted that the respondent No.1 had admitted the dues payable vide their letters dated 23.01.2021, 23.12.2021 and 09.03.2022. As no amounts were forthcoming from respondent No. 1, the petitioner was unable to meet the operational costs and faced acute financial difficulties in paying the staff and other vendors. Having no other option, 6 the petitioner exited from the project by addressing letters dated 05.03.2022 with effect from 09.03.2022. The petitioner sought for release of the bank guarantees. 7. Aggrieved by the inaction on part of the respondents in releasing the payments, the petitioner filed WP.No.8065 of 2022; this Court vide order dated 30.04.2022 directed the respondents to release the payments in six weeks. The respondent No.1 did not release any payments; however, admitted the liability of Rs.5,25,00,000/- in addition to the Rs.19.20 crores. It is specifically admitted by the respondents, vide their communication dated 16.06.2022, that the respondent is due Rs.19.20 crores, and they further confirmed an additional amount of Rs.5.25 crores, which is also approved for release. 8. The petitioner has invoked the dispute resolution clause for claiming the disputed amounts and insofar as the admitted amounts are concerned, the respondents would have to release the same. The Rs.19,39,00,000/- were belatedly released by the respondent No.1 in the second week of October, 2022, before contempt case No.2561 of 2022 was taken up for hearing. 9. The respondent No.1 vide letter dated 01.11.2022 called upon the petitioner to restore all elements of system integration projects. That failure to restore the services would render the petitioner liable for penalties and termination of the contract. It is submitted that the petitioner submitted a detailed response that the petitioner had 7 withdrawn from the contract with effect from 09.03.2022 and that the respondent No.1 is responsible for the petitioner to withdraw from the contract and that the outstanding dues were called upon to be paid and that the petitioner is open for discussions for resumption of work. 10. It is submitted that the respondent No.1, instead of releasing the admitted payments, kept on addressing letters calling upon the petitioner to resume the services. The respondent No.1 issued a letter dated 06.12.2022, holding out the threat of encashment of the bank guarantee amounting to Rs.3.78 crores in the event the petitioner does not resume the services. 11. The learned counsel for the petitioner submits that by an order dated 26.12.2022, this Court directed the respondents not to take any coercive steps regarding encashment of the bank guarantee. It is submitted that the bank guarantee was encashed, and that the petitioner shall claim a refund in the Arbitration proceedings, and that the writ petition seeking a direction to the respondent No.1 to release the admitted due amount of Rs.5.25 crores is restricted. 12. The respondent No.1 has filed a counter; it is not disputed that the petitioner was a successful bidder for the implementation of Smart City Solutions in Kakinada. It is also stated in the counter that on 12.01.2022, the petitioner submitted a letter of their intention to withdraw from the project with effect from 09.03.2022 if the outstanding payments are not made. 8 13. It is also stated that the petitioner has not complied with the exit management plan clause of the agreement. It is also stated that the respondent No.1 addressed a letter dated 15.03.2022 to complete the proper handover of the project and to ensure the smooth transfer of the system from the petitioner. It is also stated that the petitioner intentionally avoided the physical handover of the project solely to conceal the equipment's non-functionality. 14. The respondent No.1 in the counter has stated that the amount of Rs.5.25 crores could not be released as the petitioner failed to submit the detailed bills. The respondent No.1, again in the counter at paragraph No.8, submits that the admitted amount of Rs.5.25 crores was approved, the bills were uploaded on the CFMS portal, and the respondent No.3 is competent to release the approved bills. It is also stated in the counter that respondent No.1 has addressed letters to respondents Nos. 2 and 3 requesting the release of the petitioner's pending bills. It is also stated that the petitioner was also informed of the same. It is also stated that the bank guarantee of Rs. 3.78 crores was encashed on 21.12.2022, and the amount was credited to the account of the respondent No. 1 on 22.12.2022. 15. Heard the learned counsel for the petitioner and the learned standing counsel for the respondent No.1. Perused the material on record. 9 16. The short point for consideration is whether a direction to the respondent Nos.1 to 3 can be issued for release of the approved and admitted amount of Rs.5.25 crores. 17. The respondent No.1 has admitted Rs.5.25 crores as approved and due payable to the petitioner on several occasions. The respondent No.1 has categorically and unequivocally informed the petitioner about the amounts due and that their efforts to credit the amounts to the petitioner’s account are in progress. 18. The counter filed by the respondent No.1 and the annexures filed along with the counter also do not dispute the approved and admitted amount of Rs.5.25 crores due and payable to the petitioner. Correspondence from the respondent No.1 calling upon the petitioner to resume the services after lapse of eight (8) months after the petitioner withdrew from the project cannot accrue a fresh cause of action for the respondent No.1 for withholding the admitted payments. 19. It is left open for the petitioner to raise the grievance about encashment of bank guarantee by invoking the dispute resolution clause of the contract. Insofar as the approved and admitted amount is concerned, the respondent Nos.1 to 3 would have to release the same. 20. In light of these considerations, the writ petition is allowed in part, directing the respondent Nos.1 to 3 to verify and release the approved and admitted amount of Rs.5,25,00,000/- within a period of twelve 10 weeks from the date of receipt of this order. There shall be no order as to costs. As a sequel, miscellaneous applications pending, if any, shall stand closed. ___________________ JUSTICE HARINATH.N Date : 06.08.2026 RSD/KGM Whether the order is: Speaking Reasoned ☑ Reportable Non-reportable ☑ 11 135 THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION No.39920 of 2022 Date: 06.08.2026 RSD/KGM