Madras High Court
M/S.Mecon Limited vs The Government Of Tamil Nadu on 8 January, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
W.P(MD)No.25242 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 06.01.2025
PRONOUNCED ON : 08.01.2025
CORAM
THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN
W.P(MD)No.25242 of 2023
and
W.M.P(MD)No.21430 of 2023
M/s.Mecon Limited,
Represented by its General Manager,
89, South End Road,
Basavanakudi,
Bangalore – 560 004. ... Petitioner
Vs
1.The Government of Tamil Nadu,
Represented by its Principal Secretary to Government,
Municipal Administration and Water Supply
Department and Chairman,
TWAD Board,
Chennai – 600 009.
2.The Managing Director,
TWAD Board,
31, Kamarajar Salai,
Chepauk,
Chennai – 600 005.
3.The Chief Engineer (EE),
TWAD Board,
Ganesh Nagar,
Mattuthavani Bus Stand,
Madurai.
https://www.mhc.tn.gov.in/judis
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W.P(MD)No.25242 of 2023
4.The Executive Engineer (EE),
TWAD Board, RWS, Division,
Ex-Serviceman Building,
1st Floor, Collectorate Complex,
Ramanathapuram,
Tamil Nadu – 623 501. ... Respondents
PRAYER: Writ Petition filed under Article 226 of Constitution of
India, to issue a writ of Mandamus directing the TWAD board to
permit the petitioner to raise an invoice for the work done under the
Contract Agreement signed on 18.12.2019 and consequently direct
the TWAD Board to make payments which are due for the
completed services to the petitioner within a reasonable period to
be determined by this Court.
For Petitioner : Mr.N.Dilip Kumar
For R – 1 : Mr.S.Shanmugavel
Additional Government Pleader
For RR 2 to 4 : Mr.B.Vijay Karthikeyan
ORDER
This Writ Petition has been filed by the petitioner for a direction directing the respondents to permit the petitioner to raise an invoice for the work done under the contract agreement dated 18.12.2019 and disburse the payments which are due for the completed services.
https://www.mhc.tn.gov.in/judis 2/14 W.P(MD)No.25242 of 2023
2.The petitioner is a public sector company undertaking under the Government of India. It is a frontline engineering, consultancy and contracting organization, offering a full range of services required for setting up projects from concept to commissioning. While being so, the respondents were entrusted with the development of Water Supply and Sewerage facilities in the State of Tamil Nadu, except in the Chennai Metropolitan Development areas. The petitioner was being the lowest bidder in the auction, the respondents had accepted the petitioner as the qualified tender and issued a work order dated 15.11.2019 and the contract agreement was signed on 18.12.2019. As per the agreement, the consultancy services to conduct a demand study, pre-feasibility studies including environmental feasibility, preparation of a detailed project report, detailed engineering and bid documents for the Installation of 4.00 MLD capacity containerized sea water reverse osmosis desalination plant at Narippaiyur in Ramanathapuram District including the operation and maintenance of the plant and allied units for a period of 5 years from the date of installation. The total value of the contract was 1.16 crores. The completion of the project was 3 months from the date of the agreement. The payment details as per the contract agreement are as follows:
https://www.mhc.tn.gov.in/judis 3/14 W.P(MD)No.25242 of 2023 Sl.No. Schedule Payment 1.0 On submission and acceptance of 20% of contract inception report with a detailed amount work plan 2.0 On submission and acceptance of 25% of contract the interim report amount 3.0 On submission and acceptance of 25% of contract detailed project report and after amount technical sanction 4.0 On submission and acceptance of 25% of contract the final report along with the final amount bid document and approved by the Board As per the contract, upto 95% of the payment will be made to the consultant on submission and acceptance of the final report. The balance amount of 5% will be retained as a Performance Guarantee which will be paid to the consultant (without interest) after obtaining approval from the funding agency/concerned authority for approval of DPR.
3.Accordingly, the inception report was submitted to the respondents dated 19.12.2020 followed by the interim report dated 18.02.2020. As per Clause No.4.4 of the contract agreement, the Review Committee has to furnish necessary comments within a period of 7 days from the date of submission of the report and acceptance of the final report within 10 days. The petitioner also submitted reminders dated 22.01.2020 and 18.02.2020. The petitioner was advised by the notices dated 04.03.2020 and 09.03.2020 to obtain Coastal Regulation Zone clearance before finalization of the DPR and bid document. Thereafter, the petitioner https://www.mhc.tn.gov.in/judis 4/14 W.P(MD)No.25242 of 2023 submitted a revised inception report. The Review Committee submitted comments on the inception and interim report during COVID-19. Therefore, the petitioner requested the respondents to extend the time of the contract till 30.12.2020. It was granted on 06.07.2020 valid up to 30.12.2020 and further extension was also granted on 17.03.2021 up to 30.09.2021 and on 12.04.2022 valid up to 30.09.2022. The petitioner submitted a detailed project report. Subsequently, after the completion of environmental studies, the reports were prepared and submitted to The Tamil Nadu Pollution Control Board, Ramanathapuram for Coastal Regulation Zone clearance on 28.09.2022. While being so, by the communication dated 17.11.2022, the respondents suspended the project citing administrative reasons. Further, by the communication dated 17.08.2023, the entire contract itself was closed by the State Level Technical Committee by its meeting dated 03.11.2022 for the preparation of a new multi-Village scheme for Ramanathapuram District with the river Cauvery as source by including all the 117 rural habitations in Kamuthi Union of Ramanathapuram District.
Accordingly, the respondents decided to call upon the project of desalination itself. Therefore, the petitioner submitted a representation requesting to finalize its due i.e., release of 5% withheld amount for the already released payment amounting to Rs. https://www.mhc.tn.gov.in/judis 5/14 W.P(MD)No.25242 of 2023 3,67,886.00/- and also to allow the petitioner to raise the invoice against the third milestone amounting to Rs.34,34,980.00/- and also to release the Bank Guarantee to the tune of Rs.2,61,000.00/-.
4.The learned counsel appearing for the petitioner would submit that as per Clause 2.9.1(f) of the contract agreement, if the client, in its sole discretion and for any reason whatsoever decides to terminate the contract, the termination can be invoked. Therefore, by invoking Clause 2.9.1 of the contract agreement, the respondents informed the petitioner to furnish consent for the termination of the contract as per Clause 2.9.1(f) of the contract agreement. Further, the petitioner was requested not to initiate any further activities related to the contract work and furnished the work done details as on date by communication dated 17.11.2022. Therefore, the petitioner is entitled to raise invoice for the work already done ie., on submission and acceptance of the detailed project report and after technical sanction, the petitioner is entitled for a further 25% of the contract work.
5.Heard the learned counsel appearing on either side and perused the materials placed before this Court. https://www.mhc.tn.gov.in/judis 6/14 W.P(MD)No.25242 of 2023
6.On perusal of the counter-affidavit filed by the second respondent and on the submissions made by the learned counsel appearing for the respondents 2 to 4 would reveal that the petitioner was issued work order and entered into a contract agreement dated 18.12.2019 to conduct pre-feasibility studies including environmental feasibility, preparation of detailed project report, detailed engineering including processing for sanction and bid documents for the installation of 4.00 Million Litres per Day capacity containerized Sea Water Reverse Osmosis Desalination plant at Narippaiyur Union in Ramanathapuram District including the operation and maintenance of the plant and allied units for a period of 5 years. The said project was crucial for providing potable water to drought hit 117 habitations of Kamuthi Union in Ramanathapuram District. The petitioner was given 90 days time to complete the project. However, subsequently, on three occasions, the petitioner was granted extensions only based on the petitioner's request. According to the respondents, the petitioner failed to submit the inception report and interim report within the stipulated time frames. The final revised inception report and interim report were submitted on 18.03.2021. Accordingly, the payment was released for stages 1 and 2. As per the inception report, the petitioner had faced challenges in demarcating the Coastal https://www.mhc.tn.gov.in/judis 7/14 W.P(MD)No.25242 of 2023 Regulation Zone concerning the 4.00 Million Litres per Day Sea Water Reverse Osmosis Plant. Therefore, the respondents by their minutes of the meeting dated 05.02.2020 identified certain remarks in the inception report and accordingly instructed the petitioner to complete the entire work on or before 17.03.2020. Even then, the petitioner delayed the work. As per the contract agreement, the petitioner has to obtain all clearances including Coastal Regulation Zone clearance. However, the detailed project report of the Sea Water Reverse Osmosis Desalination Plant at Narippaiyur was received on 17.03.2022 that too without the necessary field data. Further, the petitioner failed to provide a complete Environmental Impact assessment study, including impact assessments, as required. Finally, the petitioner submitted the final revised inception report for stage 1 on 18.03.2021. Only after clearance from the Coastal Regulation Zone, a detailed project report can be proceeded. Further, the petitioner was also informed by the Tamil Nadu Pollution Control Board that the proposed 4.00 Million Litres per Day Containerized Sea Water Reverse Osmosis Desalination plant at Narippaiyur falls under non-permissible activity as per Coastal Regulation Zone Notification, 2011. Therefore, the failure on the part of the petitioner to obtain Coastal Regulation Zone clearance in a timely manner, the State Level Technical Committee https://www.mhc.tn.gov.in/judis 8/14 W.P(MD)No.25242 of 2023 of Tamil Nadu Water Supply and Drainage (TWAD) Board deferred the proposal. Therefore, the third milestone payment could not be released due to various reasons, including the deferred detailed project report and technical sanction. Therefore, the issues involved in this Writ Petition are disputed questions of facts and they cannot be gone into in this Writ Petition that too under Article 226 of the Constitution of India.
7.In this regard, the learned counsel appearing for the respondents 2 to 4 relied upon the Judgment of the Hon'ble Supreme Court of India reported in AIR 2024 SC 2855 in the case of Municipal Committee Katra and others Vs. Ashwani Kumar, wherein it is held as follows:
“22.Furthermore, the relief which was sought by the respondent in the writ petition was purely by way of damages. By no stretch of imagination, such relief could have been subject matter of extra ordinary writ jurisdiction of the High Court under Article 226 of the Constitution of India. The quantification of the damages would require entering into disputed questions of facts and hence, the High Court ought to have relegated the writ petitioner(respondent herein) to the competent Court for claiming damages, if so advised. https://www.mhc.tn.gov.in/judis 9/14 W.P(MD)No.25242 of 2023
23. Law is well settled that disputes arising out of purely contractual obligations cannot be entertained by the High Court in exercise of the extra ordinary writ jurisdiction. In the case of Union of India and Ors. v. Puna Hinda reported in (2021) 10 SCC 690, this Court held as follows:
“24. Therefore, the dispute could not be raised by way of a writ petition on the disputed questions of fact. Though, the jurisdiction of the High Court is wide but in respect of pure contractual matters in the field of private law, having no statutory flavour, are better adjudicated upon by the forum agreed to by the parties. The dispute as to whether the amount is payable or not and/or how much amount is payable are disputed questions of facts. There is no admission on the part of the appellants to infer that the amount stands crystallised.” Therefore, in the absence of any acceptance of joint survey report by the competent authority, no right would accrue to the writ petitioner only because measurements cannot be undertaken after passage of time. Maybe, the resurvey cannot take place but the measurement books of the work executed from time to time would form a reasonable basis for assessing the amount due and payable to the writ petitioner, but such process could be undertaken only by the agreed forum i.e. arbitration and not by the writ court as it does not have the expertise in respect of measurements or construction of roads.” https://www.mhc.tn.gov.in/judis 10/14 W.P(MD)No.25242 of 2023
8.The above Judgment is squarely applicable to the case on hand since the contractual obligations cannot be entertained in the Writ Petition exercising the extra-ordinary writ jurisdiction under Article 226 of the constitution of India.
9.The learned counsel appearing for the petitioner also relied upon the Judgment of the Hon'ble Supreme Court of India reported in (2008) 3 SCC 440 in the case of Food Corporation of India and another Vs. Seil Limited and others, in which the Hon'ble Supreme Court India held that contractual disputes involving public law elements are amenable to writ jurisdiction. Though the dispute is related to the public law element in this Writ Petition the contractual obligations cannot be entertained by way of Writ Petition. Therefore, the Judgment relied upon by the petitioner is not helpful to the case on hand.
10.That apart, as per the contract agreement Clause 8 says about 'Settlement of Disputes'. Accordingly, in order to ensure a dispute redressal mechanism, a Committee headed by the https://www.mhc.tn.gov.in/judis 11/14 W.P(MD)No.25242 of 2023 Managing Director / Joint Managing Director and consisting of Engineering Director, Tamil Nadu Water Supply and Drainage Board and Engineering Director, CMWSS Board as Member, will comprise the 'Disputes Redressal Committee' for each package in order to resolve any disputes between the client / Engineer-in-charge concerned and the consultants. In the event of non-settlement of any dispute by the Disputes Redressal Committee, the parties are at liberty to approach the jurisdictional civil Court for appropriate relief. Therefore, the direction sought for in this Writ Petition cannot be considered and the Writ Petition itself is liable to be dismissed. Accordingly, this Writ Petition is dismissed. There shall be no order as to costs. Consequently, connected Miscellaneous Petition is closed.
08.01.2025
NCC : Yes / No
Index : Yes / No
Internet : Yes
ps
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W.P(MD)No.25242 of 2023
To
1.The Government of Tamil Nadu,
Represented by its Principal Secretary to Government, Municipal Administration and Water Supply Department and Chairman, TWAD Board, Chennai – 600 009.
2.The Managing Director, TWAD Board, 31, Kamarajar Salai, Chepauk, Chennai – 600 005.
3.The Chief Engineer (EE), TWAD Board, Ganesh Nagar, Mattuthavani Bus Stand, Madurai.
4.The Executive Engineer (EE), TWAD Board, RWS, Division, Ex-Serviceman Building, 1st Floor, Collectorate Complex, Ramanathapuram, Tamil Nadu – 623 501.
https://www.mhc.tn.gov.in/judis 13/14 W.P(MD)No.25242 of 2023 G.K.ILANTHIRAIYAN, J.
ps Order made in W.P(MD)No.25242 of 2023 08.01.2025 https://www.mhc.tn.gov.in/judis 14/14