Andhra Pradesh High Court - Amravati
Between vs Oil And Natural Gas Corporation Limited ... on 8 May, 2026
Author: K Sreenivasa Reddy
Bench: K Sreenivasa Reddy
Date on which judgment was reserved : 09.03.2026
Date on which judgment was pronounced : 08.05.2026
Date on which judgment was uploaded
on the website of the High Court : 08.05.2026
APHC010434182024
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3327]
(Special Original Jurisdiction)
FRIDAY,THE EIGHTH DAY OF MAY
TWO THOUSAND AND TWENTY SIX
PRESENT
THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY
WRIT PETITION NO: 22088/2024
Between:
Jsc Golla Engineering Private Limited and Others ...PETITIONER(S)
AND
Oil And Natural Gas Corporation Limited and ...RESPONDENT(S)
Others
Counsel for the Petitioner(S):
1. M/S INDUS LAW FIRM
Counsel for the Respondent(S):
1. The Advocate General for Sri D S SIVADARSHAN
2
THE HON‟BLE SRI JUSTICE K. SREENIVASA REDDY
WRIT PETITION No.22088 of 2024
ORDER :
This Writ Petition is filed seeking to declare the action of respondent No.1 in issuing termination Order dated 03.08.2024 under Section 3 Part(1) of the Integrity Pact and Clause 8.3.4 of the Agreement dated 7.11.2022 and the subsequent actions of issuance of Notice of Enquiry dated 09.08.2024 for blacklisting the petitioner company by putting it on a „holiday‟, without any ground of violation being made out, in terms of the Integrity Pact, or without conducting an enquiry into the said matter, including in terms of the Integrity Pact, or without even duly considering the reply of the petitioner dated 23.07.2024 regarding the alleged infractions, as being illegal and arbitrary and consequently set aside the same.
2. Pursuant to a Tender Notice issued by 1st respondent for the purpose of carrying out the work of surveys, design, detailed engineering, procurement, transportation, fabrication, installation/erection, laying, 3 hook up, hydro-testing, testing, pre-commissioning, commissioning along with associated terminal facilities and systems for „creation of gas dehydration and DPD facilities at (a) Tatipaka and Mandapeta GCS of Rajahmundry asset („Group A contract‟) and (b) Ramnad GCS of Cauvery asset („Group B contract‟) of LSTK basis, and subsequent Operations and Management responsibility for the created facilities for 7 years, 1st petitioner company submitted its offer dated 16.02.2022. The offer submitted by 1st petitioner company was accepted and 1st respondent issued two Letters of Intent, both dated 05.07.2022, and two agreements, both dated 07.11.2022, were entered into between 1st petitioner company and 1st respondent in respect of the Group A and Group B contracts.
Majority shareholder in 1st petitioner company is one Jondishapour Company, which is a company registered under the Laws of Iran, holding 51% of the shareholding. In terms of the tender conditions itself, the bidding entity is entitled to provide details of „supporting company‟ for fulfilling the necessary criteria of financial and technical 4 eligibilities listed therein. At the time of submitting its offer, 1st petitioner company furnished details of 1st petitioner company along with agreements and undertakings by its supporting company viz. Jondishapour Company. In fact, on evaluation of the technical and financial eligibility conditions and after satisfying that the technical and financial eligibility conditions are fulfilled by the supporting company, the contracts were awarded by respondent No.1 to 1st petitioner company.
As per the Notification of Intent, 1st petitioner and the supporting company were to issue Performance Bank Guarantee (PBG) for due performance of the contract, for 3% each, totalling 6% of the total contract price, for each of the contracts. As the supporting company has no office of establishment in India, since it was incorporated in the State of Iran, no Bank in India came forward to issue Bank Guarantee at its behest. Therefore, 1st petitioner itself issued both the PBGs for the entire requisite amount as required under the Notification of Award, and the same was accepted by 1st respondent and the same is recorded as 5 part of the Contracts dated 07.11.2022. Pursuant to the same, the work was awarded and 1st petitioner started undertaking the works after incurring huge costs.
3. It is stated in the writ affidavit that after 298 days of accepting the PBGs for the entire value from 1st petitioner, 1st respondent issued a letter dated 11.08.2023 to 1st petitioner company seeking additional PBGs directly to be provided by the supporting company. Though 1st petitioner company made endeavours to obtain PBG from the supporting company, due to sanctions in place against the State of Iran, it could not obtain the same. The same was duly explained by 1st petitioner company in its letter dated 18.10.2023 addressed to 1st respondent, to which letters issued by the Banks regarding their inability to issue PBGs in the name of the supporting company were enclosed, and offered to provide Demand Draft for the said entire guarantee amounts which the supporting company was to provide, to secure the interest of 1st respondent, which is in line with the guidelines issued by the Ministry of Finance. 1st petitioner company also explained that it 6 had already issued Purchase Orders for majority of items and construction was also under progress, and thus, requested not to take any adverse action, as, anyway, PBGs for the entire requisite amounts were already provided to secure interest of 1st respondent. Pursuant to the explanation and undertakings, 1st petitioner company was given to understand that only upon acceptance of the said explanation, pending payments receivable to 1st petitioner company were released.
It is stated that in terms of Clause 6.3.1.1 of the Agreements, the scheduled completion date of the works is 5.5.2024 i.e. 22 months from the date of issue of Notification of Award. In view of various reasons beyond the control of 1st petitioner company, including the delay caused by 1st respondent in providing access of the site to the petitioners and delay in approval of equipment designs and drawing by 1st respondent, the works could not be completed by the said date, and so, vide letter dated 12.04.2024, 1st petitioner company sought extension till 31.3.2025. Considering the same and without seeking any 7 further explanation, 1st respondent extended the contract period up to 04.08.2024 and sought to extend the validity of the Bank Guarantees, without even any mention of requirement of additional PBGs directly to be provided by the supporting company. Thus, till April, 2024, there was no whisper of any alleged violation by 1st petitioner company and the works undertaken were in full swing.
It is further stated that after 22 months of issuance of the Notification of Award, 1st petitioner company received a letter dated 23.05.2024 from 1st respondent whereunder the following 3 clarifications were sought viz. (i) in relation to the regulatory filings being completed for the invested amount by 1st petitioner‟s supporting company at the time of incorporation of the petitioner; (ii)regarding the prior disqualifications of Mr. Siva Kumar Golla, who is one of the Directors of 1st petitioner company, and (iii) copy of the power of attorney/authorization granted to Mr. Siva Kumar Golla by the Iranian supporting company, and it was requested to provide the information by 27.5.2024. 1st petitioner company, vide letter dated 27.05.2024, sought 8 extension of time till 10.06.2024, for providing the information. 1st respondent gave reply dated 28.5.2024, extending time therefor till 29.05.2024. 1st petitioner company sent clarifications vide e-mail dated 29.05.2024 and sought 10 days‟ time till 10.06.2024, to provide further information with respect to filing of Form FC-GPR. The petitioner applied for the same and was awaiting issuance of the same from the RBI. 1st respondent sent an e-mail dated 01.06.2024, rejecting the request for the additional time, without indicating whether the information provided was insufficient or irrelevant. 1st Petitioner company received e-mail dated 03.06.2024 from Bank of Maharashtra regarding invocation of the PGBs, attaching letter dated 03.06.2024 issued by the respondents to the Bank seeking to invoke and encash the subject PGBs. On 05.06.2024, it came to the knowledge of 1st petitioner company that a Letter of Termination dated 03.06.2024, was e-mailed to 1st petitioner company at late hours on 03.06.2024, whereby the respondents sought to terminate the Contract both in terms of Clause 8.3.4 of the General 9 Conditions of Contract and Paragraph (1) of Section 3 of the Integrity Pact. Challenging the same, 1st petitioner company filed Writ Petition No.12243 of 2024 before this Court, and vide Order dated 09.07.2024, this Court disposed of the said Writ Petition, directing to treat the Letter of Termination dated 03.06.2024 as show-cause notice, to which 1st petitioner company was asked to submit reply within a period of two weeks. Accordingly, 1st petitioner company submitted reply dated 23.07.2024. But, without considering the explanation that there is no illegality committed with respect to the manner of incorporation of 1st petitioner company, the respondents, as a part of their premeditated scheme, passed the impugned Letter of Termination dated 03.08.2024, terminating the contract, in terms of Clause 8.3.4 of the General Conditions of Contract and Paragraph (1) of Section 3 of the Integrity Pact, on the following grounds.
(i) Mr. Siva Kumar Golla, while being appointed as Director of M/s. JSC Golla Engineering Private Limited, was a defaulting Director under Section 10 164 (2) (a) of the Companies Act, 2013 and was disqualified from 01.11.2016 to 31.10.2021;
(ii) Non-compliance of statutory provisions related to NDI Rules and FC GPR putting the reliability and credibility of Contractor in question;
(iii) Non-submission of PBG by supporting company M/s. Jondishapour Company, Tehran, Iran;
(iv)Very minimal progress of 31.64% as on date. Challenging the same, the present Writ Petition is filed.
4. (a) Respondents filed counter affidavit denying the material averments in the writ affidavit and contending inter alia that the parties to the subject contract agreed that all disputes or differences arising out of the subject contract, are amenable to the Courts in Delhi, and in view of the same, this Court has no jurisdiction to entertain the Writ Petition; that a Writ Petition under Article 226 of the Constitution of India is not maintainable in a private contractual matter like the present one, wherein the 11 respondents acted solely in accordance with the terms of a private contract entered into, between the parties.
(b) It is further stated that M/s. Jondishapour Company, an Iranian Company, is majority shareholder, holding 51% share in 1st petitioner company, and 1st petitioner company relied on technical and financial credentials of the said company for fulfilment of the bidding criteria set out in the present tender process, but the statutory auditors of ONGC made certain observations that the 51% shareholding of 1st petitioner company subscribed by the Iranian Company was not subscribed through remittance of funds from foreign sources, rather the remittance was made from Indian sources i.e. by Ms. Jasmi, as is evident from e-form 20A and the bank statement available in public domain. ONGC referred the issue to internal committee, Fraud & Risk Management Committee (FRMC) under „Audit Committee‟ of the Board of Directors of ONGC, for further examination. The FRMC requested 1st petitioner company to provide documents to support its case that the Iranian Company made relevant 12 inward remittance of foreign funds for acquisition of the shareholding of the petitioner company, and that Mr. Siva Kumar Golla, Director of the company was not disqualified under Section 164 of the Companies Act, 2013 at the time of his appointment as Director of 1st petitioner company. Upon reviewing the information provided by 1st petitioner company, it was concluded that there are no supporting documents to support version of 1st petitioner company and therefore it was recommended for termination of the contract. Accordingly, termination order dated 03.06.2024 was issued terminating the contract inter alia on the ground of element of fraud arising in subscription of the shareholding of 1st petitioner company by the Iranian Company. Challenging the same, the petitioners filed W.P. No. 12243 of 2024 before this Court, and pursuant to the Order dated 09.07.2024 passed by this Court in W.P.No.12243 of 2024, ONGC, on receipt of reply dated 23.07.2024, passed the impugned termination order. The impugned termination order was issued after considering 13 all the contentions of 1st petitioner company in detail in accordance with the settled principles of law.
(c) As regards the 2nd ground of termination, it is further stated that 1st petitioner company admitted that as per the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, it was required to file FC-GPR within 30 days of subscription of the Iranian Company shares as the Iranian Company qualifies as a non-resident shareholder as per the NDI Rules, but it had inadvertently missed filing of Form-FC-GPR post subscription of the Iranian Company shares. After receipt of letter dated 23.05.2024 from ONGC, 1st petitioner company filed an application for submission of Form FC-GPR with its authorized dealer bank along with late fee submission payable under the Guidelines issued by the RBI and it is awaiting the acknowledgement of submission of the said Form, from the RBI.
As per Rule 3 of the NDI Rules, except as provided in the Foreign Exchange Management Act, 1999 (FEMA) or the Rules and Regulations made thereunder, no person 14 residing outside India will make any investment in India, and as per Paragraph 1 (d) (iii) of Schedule I read with Rule 6 of the NDI Rules, a non-resident is permitted to subscribe to the equity shares of an Indian company incorporated by it against the pre-incorporation expenses incurred by the non-resident for incorporation of the Indian company subject to the Rules and Guidelines issued by the Government of India and with the approval of the RBI. The directions issued by the RBI do not prescribe guidelines for issuance of equity shares by a company incorporated in India to a non-resident entity, and such issuance of equity shares is governed solely by the provisions of the NDI Rules and the FDI Policy read with FEMA. If the shares were allotted to the Iranian Company against its alleged pre-incorporation expenses, petitioner should have provided proof of such subscription at the time of filing INC 20A. Therefore, issuance of equity shares by 1st petitioner company to the Iranian Company will not be considered as „remittance to a non-resident‟ under the aforementioned directions. Issuance of shares to the 15 Iranian Company will be required to comply with the provisions of the NDI Rules and the FDI Policy, and in view of the above, the issuance of the shares by the JSC Golla to the Iranian Company is in contravention of the NDI Rules and the FEMA.
Initially, when petitioner No.1 was asked to produce FC-GPR, on one hand, it requested time till 10.06.2024 to furnish a copy of FG-GPR, but even after so many days thereafter the petitioners did not provide the said document, and on the other hand, it furnished a copy of the opinion issued by a Company Secretary along with the Writ Petition, wherein it was stated that the investment from the foreign entity did not occur in the foreign money. This shows that the petitioners do not have FC-GPR and they approached this Court with unclean hands. These factors put credibility and reliability of 1st petitioner company in question, and continuance of the contract with such a company is undoubtedly harmful to the execution of the contract and requires immediate termination. 16
(d) As regards 1st ground of termination, it is stated that the list of disqualified Directors for the financial years 2013-14, 2014-15 and 2015-16 issued by the Registrar of Companies, Hyderabad shows the period of disqualification of the Director from 1.11.2016 till 31.10.2021, and the date of incorporation of 1st petitioner company is on 17.08.2021, by which date Mr. Siva Kumar Golla was disqualified under Section 164 (2) (a) of the Companies Act, 2013. As per the publicly available records, the Ministry of Corporate Affairs (MCA) has not issued any Notification on its web portal removing the Director from the list of disqualified Directors under Section 164 (2) (a) of the Companies Act, 2013. Therefore, the documents submitted by the petitioners along with the reply, are not sufficient to prove that the Director was not disqualified under Section 164 (2) (a) of the Companies Act, 2013.
(e) As regards the 3rd ground of termination, it is sated that although the PBGs furnished by 1st petitioner company was momentarily recorded in the agreement, ONGC never waived requirement of furnishing the PBGs by the Iranian 17 foreign entity. In fact, ONGC asked the petitioner No.1 company on multiple occasions after the agreement, to furnish such bank guarantee, but the petitioner failed to do so. It is a justifiable reason for terminating the contract.
(f) As regards 4th ground of termination, it is stated that the petitioners completed only 31.64% of the work under the contract for Group A, but not 60%, as contended by the petitioners. The extension of time given to 1st petitioner company was only until 04.08.2024, by reserving the right of the ONGC to levy liquidated damages. Though ONGC requested the petitioner No.1 company to expedite completion of the works and complete the project within the stipulated date of completion, it failed to do so within the scheduled date of completion of the project.
(g) It is further stated that Clause 8.3.7 of the Tender as well as the Contract contemplates initiation of the inquiry proceedings consequent upon termination of a contract, and pending such inquiry proceedings, the defaulting party would be subject to temporary holiday proceedings. The petitioners did not raise any objection to 18 such clauses at the time of entering into the contract or during the tender process. Now, the petitioners cannot challenge the validity of the clauses, after they have been duly invoked by the ONGC. When the inquiry proceedings are ongoing, the defaulting party will not be allowed to participate in tender proceedings. The petitioners have a suitable alternative remedy in terms of the contract to claim suitable damages in the event they are able to establish that the termination is illegal. Instead of participating in the process of inquiry, the petitioners chose to approach this Court. The Writ Petition is premature. Hence, it is prayed to dismiss the Writ Petition.
5. Petitioners filed reply affidavit to the counter affidavit filed by the respondents, denying the material averments in the counter affidavit and stating inter alia as follows:
(a) The Writ Petition is filed challenging the arbitrary and unjust action of the respondents, which are public entities, and the same is maintainable even in the contractual field. The main subject contract of which the 19 Integrity Pact is also to be read as part and parcel, is in relation to the works being undertaken at places of Tatipaka and Mandapet of Dr. B.R. Ambedkar Konaseema District, which is also being supervised and performed in the State of AP. The petitioners are challenging the arbitrary manner in which the termination was carried out by the respondents, being an instrumentality of State, and notwithstanding the claim for damages and availability of alternative remedies, the Writ Petition is maintainable.
(b) As regards non-filing or delay in filing of FC-GPR, it is stated that as per the extant law, non-filing of FC-GPR (Foreign Currency-Gross Provisional Return) is a curable defect and the violation is compoundable even when there is delay, and non-filing thereof does not make the actual investment illegal or the shareholding illegal. The said reporting infraction does not amount to contravention of the provisions of the Integrity Pact. There is no misrepresentation or suppression by the petitioners, as the same is by oversight. The delay in its issuance is that because sanctions are in place against the State of Iran, the 20 Authorized Dealer Bank, which has to process the said FC-
GPR on behalf of the RBI, is taking more time, and the petitioners escalated the issues with FDI Cell (Foreign Investment Facilitation Portal), and after processing the same, the Ministry of Petroleum and Oil & Natural Gas conveyed through OEM that the investment is in line with the FDI Policy and indicated that since the FC-GPR is compliance issues, advised the petitioners to approach the RBI directly. Accordingly, the petitioners approached the RBI and the same is under active consideration. The respondents raised the issue of FC-GPR after nearly 2 years of the Award of the Contract, and even without understanding the nitty-grittys that are associated with the filing of the FC-GPR, the contract was terminated by attributing the violation of Integrity Pact. The respondents appear to pre-determined to terminate the contract.
Further, INC-20A form is filed to signify the commencement of business but it does not mean that the transactions mentioned therein are reflective of the subscription amount.
21
(c) As regards disqualification of Mr. Siva Kumar Golla, it is stated that there was no disqualification attached to Mr. Siva Kumar Golla at the time of incorporation of the company and to the said effect, the Registrar of Companies issued a letter of good standing. DIR No.3, INC-9 or DIR-8, DIR-9 or DIR-10 forms need not even be provided to the ONGC as the query regarding Sivakumar Golla‟s disqualification at the time of incorporation of the petitioner company, was already answered. When ROC, after ensuring all compliances, duly incorporated the petitioner company, the respondents are raising frivolous objections when no such objections or compliance related issues were ever raised by the ROC/Ministry of Corporate Affairs, which is the competent authority.
(d) As regards furnishing of PBGs, it is stated that the PBGs were accepted by the respondents and the same were recorded in the agreement and thus not they cannot contend that the same were not provided in the manner as required under the NOA. After having accepted the PBGs, 22 recording the same in the agreement and also after legally invoking the same and receiving the amounts, the respondents cannot allege the same to be a justifiable reason for termination of the contract.
The respondents are unable to conclusively state if the present dispute is a breach of contractual terms or a violation of Integrity Pact, which has nothing to do with the performance of the contract, and having admitted that the termination was primarily based on the alleged breach of Integrity Pact, they cannot now seek to rely on the alleged breach of the terms of the contract.
(e) As regards delay, it is stated that multiple delays were caused at the instance of the respondents and it was due to such delay that the execution of the contract got delayed. The conduct of the respondents is mala fide, arbitrary and against the principles of natural justice. The petitioners undertook the work at the site by employing its men and machinery by incurring huge amounts, and there is no loss or injury whatsoever caused to the respondents. The petitioners placed huge orders for purchase of 23 exclusive/customised machinery and necessary equipment, and they are in an advanced stage of manufacturing and some are ready to be delivered at the site as they were imported and lying at Mumbai Port, and some are ready for despatch from vendor works and some are ready for final inspection, and at that stage, ONGC stopped responding. Hence, it is prayed to allow the Writ Petition.
6. The 1st petitioner filed an additional affidavit stating inter alia that the respondents filed Transfer Petition (Civil) No.3360 of 2024, seeking transfer of the present Writ Petition to the High Court of Delhi, primarily in view of jurisdiction clause as specified under the Integrity Pact annexed to the Agreement dated 07.11.2022, and also filed another Transfer Petition seeking transfer of a Writ Petition pending before the Madurai Bench of Madras High Court, and the Hon‟ble Supreme Court vide Order dated 27.3.2025 dismissed the Transfer Petitions.
It is further stated that during pendency of the Writ Petition, the petitioner, vide letter dated 08.12.2024, requested resolution of the matter through mediation by 24 the Outside Expert Committee, but the same was rejected by the respondents on 02.01.2025. It is further stated that even thereafter, the petitioner, without prejudice to the contentions raised in the present Writ Petition, filed a claim vide letter dated 21.01.2025, for amicable settlement of the dispute, pursuant to which, several meetings took place, but as on date, there is no concrete resolution. It is further stated that as of now, the works have come to a complete stand still, and had the petitioners allowed to continue the works, the works would have been completed by now and the same would have become functional as of date. It is stated that the entire termination process and the manner in which the same was issued is fraught with arbitrariness and mala fides, and the same is unjust and illegal. As a result of the same and in view of the illegal encashment of the bank guarantees, the petitioners had fallen in huge debt trap and is in severe financial and legal distress, as it had already placed purchase orders towards fulfilment and performance of the contract, and the 25 requisite equipment is now made ready to be used. Hence, it is prayed to allow the Writ Petition.
7. Heard the learned counsel for the petitioners and the learned Advocate General appearing for the respondents. Perused the record.
8. Learned counsel for the petitioners contended that the grounds on which the impugned termination order dated 03.08.2024 was passed by the respondents are fraught with arbitrariness and mala fides. He submits that the first ground that Mr.Siva Kumar Golla was a defaulting Director by the date of incorporation of 1st petitioner company does not stand, in view of the intimation dated 04.09.2024, issuing „Certificate of Good Standing‟ by the Registrar of Companies, Telangana, Hyderabad; that the second ground with regard to non-filing of FC-GPR form with the Reserve Bank of India for subscription of the supporting Iranian copany, is permitted to be compounded by the Reserve Bank of India and the petitioners paid penalty therefor, as such, the same is not a ground to 26 terminate the contract; that 51% shareholding to the supporting Iranian company was issued as against the pre- incorporation expenses incurred by the said company, and the amount involved therein is far less than the expenses incurred by the supporting Iranian company towards pre- incorporation expenses.
It is his submission that reason for non-submission of the PBGs by the supporting Iranian company was explained by the petitioners, and the petitioners furnished PBGs for the entire requisite amount, including the amounts of PBGs to be provided by the supporting Iranian company, and the same was incorporated in the contract agreement dated 07.11.2022, pursuant to which 1st petitioner company commenced the work. He submits that in fact, the time for execution of the works was extended by the respondents, without there being any such condition, but only instructing to extend the validity of the existing PBGs, and in fact, the respondents invoked and encashed the PBGs pursuant to the earlier letter of termination dated 03.06.2024, and therefore, at this stage, the respondents 27 are estopped from raising the said ground as a reason for termination of the contract. He submits that the other ground with regard to very minimal progress, is not tenable, as the petitioners completed more than 60% work, but not 31.64% as contended by the respondents, and had it been allowed to continue the work, the same would have been completed by now. He submits that the entire action of respondents is tainted with arbitrariness and mala fides and hence, he prayed to set aside the impugned order.
9. On the other hand, the learned Advocate General appearing for the respondents contended that existence of arbitration clause is a bar to entertain the Writ Petition, and in view of Clause 1.3.2 of the General Conditions of Contract annexed to the contract agreement dated 7.11.2022, the parties agreed to resolve the disputes through arbitration. He submits that the petitioners failed to complete the subject work within the scheduled completion date and they only completed 31.64% of work, and ONGC is not fault for the delay in execution of the work by the petitioners. He submits that 51% 28 shareholding subscribed by the supporting Iranian company was not funded through foreign remittance, it was funded through Indian sources, through intermediary agency Ms.Jasmi, and the same is non-compliance with the said statutory requirement, and hence, issuance of equity shares by 1st petitioner company to the supporting Iranian company will not be considered as remittance to a non- resident, and the same is violation of Integrity Pact. It is his further submission that the respondents never waived the requirement of furnishing of Additional PBG by the supporting Iranian company, and mere recording the PBGs furnished by 1st petitioner company in the contract agreement dated 07.11.2022 does not amount of waiver of the said requirement, which is incorporated not merely to secure monetary obligations, but to ensure the genuine participation and commitment of the supporting Iranian company in execution of the contract. Considering these aspects, the contract of 1st petitioner company was rightly terminated by the respondents vide the impugned 29 termination order dated 03.08.2024, and there are no grounds to interfere with the same. `
10. Now, the point that arises for consideration in this Writ Petition is whether the grounds on which the impugned termination order dated 03.08.2024 was passed by the respondents are sustainable in the eye of law and whether the same requires interference in exercise of judicial review by this Court under Article 226 of the Constitution of India ?
11. The factual matrix is not in dispute. Pursuant to the Tender Notice issued by 1st respondent for the Group A and Group B contracts, the offer submitted by 1st petitioner company was accepted and 1st respondent issued two Letters of Intent, both dated 05.07.2022, and two agreements, both dated 07.11.2022, were entered into between 1st petitioner company and 1st respondent in respect of the Group A and Group B contracts. Majority shareholder in 1st petitioner company is one Jondishapour Company, which is a company registered under the Laws of 30 Iran, holding 51% of the shareholding. 1st petitioner issued the PBGs for the entire requisite amount as required under the Notification of Award, and the same was accepted by 1st respondent and the same is recorded as part of the contract agreement dated 07.11.2022, pursuant to which 1st petitioner started undertaking the works. Thereafter, 1st respondent issued a letter dated 11.08.2023 to 1st petitioner company seeking additional PBGs directly to be provided by the supporting company. 1st petitioner informed 1st respondent through letter dated 18.10.2023 that though 1st petitioner company made endeavours to obtain PBG from the supporting company, due to sanctions in place against the State of Iran, it could not obtain the same. In terms of Clause 6.3.1.1 of the Agreements, the scheduled completion date of the works is 5.5.2024 i.e. 22 months from the date of issue of Notification of Award. It is stated by the petitioners that in view of various reasons beyond the control of 1st petitioner company, including the delay caused by 1st respondent in providing access of the site to the petitioners and delay in approval of equipment 31 designs and drawing by 1st respondent, the works could not be completed by the said date, and so, vide letter dated 12.04.2024, 1st petitioner company sought extension till 31.3.2025. Pursuant to the said request, 1st respondent extended the contract period up to 04.08.2024 and sought to extend the validity of the Bank Guarantees. 1st petitioner company received a letter dated 23.05.2024 from 1st respondent whereunder the following 3 clarifications were sought viz. (i) in relation to the regulatory filings being completed for the invested amount by 1st petitioner‟s supporting company at the time of incorporation of the petitioner; (ii)regarding the prior disqualifications of Mr. Siva Kumar Golla, who is one of the Directors of 1st petitioner company, and (iii) copy of the power of attorney/authorization granted to Mr. Siva Kumar Golla by the Iranian supporting company. 1st Petitioner company received e-mail dated 03.06.2024 from Bank of Maharashtra regarding invocation of the PGBs, attaching letter dated 03.06.2024 issued by the respondents to the Bank seeking to invoke and encash the subject PGBs. 1st 32 respondent issued Letter of Termination dated 03.06.2024, to 1st petitioner company. Challenging the same, 1st petitioner company filed Writ Petition No.12243 of 2024 before this Court, and vide Order dated 09.07.2024, this Court disposed of the said Writ Petition, directing to treat the Letter of Termination dated 03.06.2024 as show-cause notice, to which 1st petitioner company was asked to submit reply within a period of two weeks. Accordingly, 1st petitioner company submitted reply dated 23.07.2024. Thereafter, the respondents passed the impugned termination Order dated 03.08.2024. Hence, the present Writ Petition.
12. The first ground on which the impugned termination order dated 03.08.2024 was passed by the respondents is that Mr. Siva Kumar Golla, while being appointed as Director of the 1st petitioner company, was a defaulting Director under Section 164 (2) (a) of the Companies Act, 2013, and was disqualified from 01.01.2016 to 31.10.2021. According to the respondents, the list of disqualified Directors for the Financial Years 33 2013-14, 2014-15 and 2015-16, issued by the Registrar of Companies, Hyderabad, shows that the period of disqualification of the said Director was from 01.11.2016 to 31.10.2021, and the Ministry of Corporate Affairs has not issued any Notification on its web portal removing the said Director from the disqualified Directors, and as such, by the date of incorporation of the 1st petitioner company on 17.08.2021, he was disqualified under Section 164 (2) (a) of the Companies Act, 2013. On the other hand, it is the contention of learned counsel for petitioners that there was no disqualification attached to the said Mr. Siva Kumar Golla, at the time of incorporation of the 1st petitioner company and that when the Registrar of Companies duly incorporated 1st petitioner company, after ensuring all compliances, it is not open to the respondents to raise such a query. A perusal of the material on record discloses that the Registrar of Companies, after observing all necessary statutory compliances, issued the Certificate of Incorporation in respect of the 1st petitioner company. Further, on a perusal of the intimation vide File No. 34 MISC/ROCH/00520922/1317, dated 04.09.2024, issued by the office of the Registrar of Companies, Telangana, Hyderabad, whereby „Certificate of Good Standing‟ was issued to the said Mr. Siva Kumar Golla, it is clear that as per the records maintained by the said office, Mr. Siva Kumar Golla, who digitally signed Form INC 35 and INC 9 for the process of incorporation of the 1st petitioner company, which was incorporated on 17.08.2021, had valid DIN (00520922) which was approved. It is further clear from the said Intimation that as per the MCA Portal, the present status of the DIN: 00520922 of Mr. Siva Kumar Golla, is approved. In view of the intimation given by the Registrar of Companies that Mr. Siva Kumar Golla had valid DIN which was approved, by the date of the 1st petitioner company, the said ground is unfounded and not tenable.
13. The second ground on which the impugned termination order dated 03.08.2024 was issued is with regard to non-filing of FC-GPR form with RBI for 35 subscription of shares by Jondishapour Company (Iranian Company) in 1st petitioner Company.
It is the case of the petitioners that non-compliance of filing of FC-GPR is a curable defect and cannot be deemed to be a statutory violation leading to termination of the contract. He further submits that pursuant to the application made by the petitioners, the Reserve Bank of India passed order dated 25.02.2026, compounding the said contravention, and in view of the same, the second ground for termination does not stand to the legal scrutiny.
14. FC-GPR (Foreign Currency-Gross Provisional Return) is a form which has to be filled with the Reserve Bank of India to report receipt of Foreign Direct Investment into a company when the said company issues shares to a foreign entity. As per the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, 1st petitioner company was required to file FC-GPR within 30 days of subscription by the Iranian Company shares, as the Iranian Company (supporting company) is a non-resident shareholder as per the NDI Rules. In the event of non-reporting within the 36 time, it can be done with delay and the contravention is compoundable.
15. Regulation 4 (1) of the Notification No. FEMA 395/2019-RB dated 17.10.2019, an Indian company issuing equity instruments to a person resident outside India in accordance with the said Regulations, shall submit to the Reserve Bank of India, a report in Form FC-GPR, along with documents prescribed therein, within a period of 30 days from the date of issue of the equity instruments. In the case on hand, there is a contravention of the said Regulation by the petitioners whereby 1st petitioner company failed to submit the report in Form FC-GPR in respect of issue/allotment of 5,100 equity shares, worth Rs.51,000/- in favour of the supporting Iranian Company viz. Jondishapour Company, Iran on 22.11.2021. The same was reported on 19.12.2025 with a delay of 3 years 11 months and 27 days. In terms of Section 15 of the Foreign Exchange Management Act, 1999, a person committing any contravention under Section 13 of the said Act, shall be eligible to be compounded upon submission of 37 an application and as prescribed under the Compounding Proceedings Rules, 2024. Pursuant to the application dated 20.12.2025 submitted by 1st petitioner company, the Reserve Bank of India passed Order dated 25.02.2026, in exercise of the powers conferred under section 15 (1) of the Foreign Exchange Management Act, 1999 (FEMA) and the Rules/ Regulations/ Notifications made thereunder, stating that the contravention i.e. delay in submission of FC-GPR after issue of shares to a person resident outside India, shall be compounded by payment of penalty amount of Rs. 6,375/-. A copy of the said Order dated 25.02.2026 passed by the Reserve Bank of India, along with online payment receipt of the penalty amount, has been filed by the petitioners before this Court, along with a Memo (vide WP SR 25321 of 2026), on 26.02.2026. The same is placed on record. Admittedly, the same is a curable defect and the same is permitted to be compounded by virtue of the Order passed by the Reserve Bank of India. Therefore, it cannot, under any stretch of imagination, be a ground to terminate the contract.
38
16. According to the respondents, 51% shareholding subscribed by the supporting company was not funded through foreign remittances, but it was done through Indian sources i.e. payments made by one Ms. Jasmi through IMPS from IDFC Bank as reflected in Form INC 20A and bank statements available in the public domain. Even in respect of allotment of the shares to a non-resident against pre-incorporation expenses, it is the contention of the respondents that as per the FDI Policy, only a wholly owned subsidiary is permitted to issue shares against the pre-incorporation expenses to non-resident parent company, and further, the value of the equity shares issued by the Indian company to the non-resident against pre- incorporation expenses cannot exceed 5% of the paid up share capital of the Indian Company or USD 5,00,000, whichever is lower.
17. Whereas it is the contention of the petitioners that the receipt of share subscription amount in foreign currency is not mandatory for issuance of shares by an Indian Company, but shares can be issued against pre- 39 incorporation expenses undertaken by the said non- resident/foreign company; that in the case on hand, in respect of the pre-incorporation expenses incurred by the supporting company, the shares were allotted to the supporting company and that the amount involved is nominal i.e. Rs. 51,000/- which is far less than the expenses incurred by the supporting company.
18. The learned counsel places reliance on Paragraph 6 (ii) of the Consolidated FDI Policy Circular of 2020 issued by the Department of Promotion of Industry and Internal Trade (FDI Division), Ministry of Commerce and Industry, Government of India. Paragraph 6 of the Circular deals with „Conversion of ECB/Lump sum Fee/Royalty, etc. into Equity‟. Paragraph 6 (ii) reads that general permission is also available for issue of shares/preference shares against lumpsum technical know-how fee, royalty due for payment, subject to entry route, sectoral cap and pricing guidelines (as per the provision of para 2 above) and compliance with applicable tax laws. It also makes it clear that issue of equity shares 40 against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any Rules/Regulations framed or directions issued thereunder, or has been permitted by the Reserve Bank under the Act or the Rules and Regulations framed or directions issued thereunder is permitted. Further, a perusal of clause (iii) of the General Conditions mentioned under the said Paragraph makes it clear that for sectors under automatic route, issue of equity shares against import of capital goods/machinery/ equipment (excluding second-hand machinery) and pre-operative/pre- incorporation expenses (including payments of rent, etc.) is permitted under automatic route subject to compliance with respective conditions mentioned above, and reporting to RBI in Form FC-GPR as per the prescribed under the FDI Policy. Admittedly, in the case on hand, the contravention of non-filing of Form FC-GPR is compounded by the competent authority viz. Reserve Bank of India, vide the Order dated 25.02.2026, referred supra. Therefore, from 41 the recitals in Paragraph 6 (ii) read with clause (iii) of the General Conditions mentioned thereunder, of the Consolidated FDI Policy Circular of 2020 issued by the Department of Promotion of Industry and Internal Trade (FDI Division), Ministry of Commerce and Industry, Government of India, coupled with the compounding Order dated 25.02.2026 passed by the Reserve Bank of India, general permission is also available for issue of shares/preference shares against the amounts mentioned therein, including pre-incorporation expenses. As such, the contention of the learned Advocate General on this aspect is untenable and not sustainable.
19. The other ground on which the impugned order of termination dated 03.08.2024 was issued is non- submission of PBGs by the supporting company. 1st petitioner company was incorporated as a Joint Venture Company between Jondishapour Company, an Iranian Company, with 51% stake, and Mr. Venkatachalam Gedupudi, who was the promoting Director and promoter. The paid-up capital of 1st petitioner company is Rs. 42 1,00,000/-, with 51% (Rs. 51,000/-) held by the Iranian Company and 49% held by the said promoter Director, Mr. Venkatachalam. Admlittedly, 1st petitioner participated in the subject tender process and was issued Group A Contract and Group B contract vide separate Letters of Intent dated 05.07.2022 and two agreement, both dated 07.11.2022, were entered into, between 1st petitioner company and 1st respondent Corporation in respect of Group A and Group B contracts. As per the Notification of Intent, 1st petitioner company and the supporting Iranian company have to submit PBGs for 3% each, totalling 6% of the total contract price, for each of the contracts, for due performance of the contract. In view of the fact that the supporting company was incorporated in the State of Iran and as no bank in India came forward to issue Bank Guarantee at its behest, 1st petitioner company furnished PBGs for the entire requisite amount as required under the Notification of Award. 1st respondent Corporation accepted the PBGs furnished by the 1st petitioner company for the entire amount to a tune of Rs. 9.72 Crores and the same 43 was recorded in the said contracts. Clause 3.3 of the General Conditions of the Contract annexed to Contract Agreement dated 07.11.2022, which deals with Performance Guarantee, reads as under:
"3.3. Performance Guarantee:
3.1.1. The Contractor has furnished to the company the following Performance Bank Guarantee (PBG) for due performance of the contract:
a) PBG NO. 0200222IPG011396, dated 19.10.2022, for Rs. 4,86,08,548.00 issued by Bank of Maharashtra, Miyapur Branch, Telangana valid up to 05.07.2025.
b) PBG NO. 0200222IPG011379, dated 19.10.2022, for Rs. 4,86,08,548.00 issued by Bank of Maharashtra, Miyapur Branch, Telangana valid up to 05.07.2025.
On successful commissioning and at start of O & M contract, the contractor shall be required to submit another PBG valid for 7 years + 60 days duration and of the value of 3% average annualised O & M contract value within 15 days from the date of completion of 72 hrs. PGTR."
44
20. The reason offered by the 1st petitioner company for not providing the PBG by the supporting company is that the supporting company was incorporated in Iran and in view of the sanctions, the Banks in India did not come forward to provide PBG on behalf of the said supporting company in spite of best efforts being made, and in view of the same, 1st petitioner furnished the PBGs for the entire requisite amount by including the amount of PBG to be furnished by the supporting company. Admittedly, no objection was raised for the same by the 1st respondent Corporation and the same was incorporated in the contract entered into between the parties, pursuant to which the 1st petitioner company started executing the contract work. About 10 months thereafter, 1st respondent Corporation issued a letter dated 11.08.2023 to the 1st petitioner company, seeking additional PBGs from the supporting Iranian company. It is the case of the petitioners that they could not obtain PBGs on behalf of the supporting Iranian company in view of the sanctions in place against the State of Iran, and that they explained the same to 1st respondent 45 Corporation vide letter dated 18.10.2023, duly supported by the letters issued by the Banks expressing their inability to issue PBGs. It is their further case that they offered to provide even demand drafts for the entire amount which the supporting Iranian company, was asked to provide by way of PBGs, to the respondent No.1 Corporation, in line with the guidelines of the Ministry of Finance on PBGs. It is their further case that on the issue of the PBGs, 1st respondent Corporation stopped allowing the petitioners to execute the project from August, 2023 to December, 2023, and in the month of December, 2023, the petitioners were allowed to continue to execute the project without raising any issue regarding PBGs.
21. It is the further case of the petitioners that as the schedule date of completion of project in terms of Clause 6.3.1.1. of the contract was coming to an end by 05.05.2024, the petitioners addressed letter dated 12.04.2024, to extend the time for completion of the project till 31.03.2025, for which 1st respondent Corporation, vide 46 letter dated 29.04.2024, extended the time for completion of the works till 04.08.2024. The said letter reads thus:
"You failed to complete the entire work within the contract completion period. In your letter under reference, you have asked for extension of time for completion. In view of the circumstances stated in your above referred letter, the time for completion is extended from 05.05.2024 to 04.08.2024, reserving ONGC‟s right to levy liquidated damages from you for delay in the completion of work after the expiry of the contract completion period as mentioned in clause 6.3.2 for the extended period, notwithstanding the grant of this extension.
The above extension of completion date shall also be subject to the right of ONGC to claim a reduction in prices on account of reduction in statutory duties/taxes, etc. which may take place during the extended period of completion. However, increase in prices during extended completion period on account of increase in statutory duties/taxes, etc. admissible under Change in Law clause of this work order/contract shall be granted, only if extension is due to delay on the part of ONGC.47
In view of above, validity date of all the Bank Guarantees submitted under contract be extended accordingly and submitted at the earliest."
A perusal of the recitals of the aforesaid letter goes to show that 2nd respondent extended the time for completion of project, from 05.05.2024 to 04.08.2024, reserving ONGC‟s right to levy liquidated damages for the delay in completion of work as mentioned under Clause 6.3.2 of the contract, and making it clear that the same is subject to right of ONGC to claim reduction in prices on account of reduction in statutory duties, taxes, etc., which may take place during the extended period of completion. It is also stated in the said letter that validity date of all the Bank Guarantees submitted under the contract shall be extended accordingly by the petitioners. A perusal of the said letter goes to show that even at the time of extending the period of contract after completion of the original scheduled completion date, nowhere in the said letter it is mentioned about the additional PBGs directly to be furnished by the supporting Iranian company. Therefore, without there being any objection raised with regard to replacement of the 48 PBGs already furnished or with regard to furnishing of additional PBGs directly by the supporting company, the respondents extended the time for completion of the contract from 05.05.2024 to 04.08.2024, but the only condition laid with regard to Bank Guarantee is that the petitioners shall extend validity date of all the Bank Guarantees submitted under the contract.
22. A perusal of the material on record further goes to show that 1st respondent Corporation addressed letter dated 23.05.2024 to the 1st petitioner company seeking clarification on three aspects viz. (i) in relation to the regulatory filings being completed for the invested amount by 1st petitioner‟s supporting company at the time of incorporation of the petitioner; (ii) regarding the prior disqualifications of Mr. Siva Kumar Golla, who is one of the Directors of 1st petitioner company, and (iii) copy of the power of attorney/authorization granted to Mr. Siva Kumar Golla by the Iranian supporting company. The said information was sought to be furnished by 27.05.2024, and on the request of the petitioners, the time of extended till 49 29.05.2024. the petitioners sent reply dated 29.05.2024, furnishing certain information and sought time till 10.06.2024 to provide further information with respect to filing of Form FC-GPR. Vide Email dated 01.06.2024, 1st respondent rejected the request for granting of further time and thereafter issued a letter dated 03.06.2024, terminating the contract and also invoked the PBGs furnished by the petitioners and encashed the same. So, from the material on record, it is clear that the respondents have already encashed the PBGs furnished by the petitioners for the entire requisite amounts, including the share of the supporting Iranian company. Thereafter, as stated supra, the petitioners filed W.P. No. 12243 of 2024 before this Court challenging the termination letter dated 03.06.2024 and this court, vide order dated 09.07.2024, disposed of the said Writ Petition, directing to treat the Letter of Termination dated 03.06.2024 as show-cause notice and directing the petitioners to furnish explanation therefor within two weeks. Pursuant to the explanation submitted by the petitioners, the impugned termination 50 letter dated 03.08.2024 came to be passed by the respondents leading to filing of the present Writ Petition.
23. There cannot be any dispute that Clause 6.0 of the Notification of Award (NOA) dated 05.07.2022 issued by the 2nd respondent stipulates that 1st petitioner company has to furnish unconditional and irrevocable PBG for due performance of the contract as per the provisions and proforma as mentioned in Clause 3.3 of GCC, for a sum of Rs. 4,86,08,548/- which is equivalent to 3% of the total contract price. Clause 6.1 of the said NOA stipulates that since 1st petitioner company took financial support from the supporting Iranian company for meeting the financial parameters of the tender, the supporting company was required to furnish additional PBG for Rs. 2,43,04,274/-, which is equivalent to 50% of the PBG to be furnished by the 1st petitioner company. Clause 6.2 of the said NOA stipulates that since 1st petitioner company took technical support from the supporting Iranian company for meeting the technical experience criteria of the tender, the supporting company was required to furnish additional 51 PBG for Rs. 2,43,04,274/-, which is equivalent to 50% of the PBG to be furnished by the 1st petitioner company. However, the material on record makes it clear that 1st petitioner company furnished the PBGs for the entire amount viz. Rs. 9,72,17,096/-, as stipulated supra, and the same was incorporated in the Clause 3.3 of the General Conditions of the Contract annexed to Contract Agreement dated 07.11.2022. The reason offered by the petitioners for not providing PBG by the supporting company is that the said company is incorporated in Iran and no Bank in India came forward to provide PBG for the said company. The respondents did not object at the initial stage, for providing PBGs by the 1st petitioner company for the entire requisite amount, and allowed the petitioners to execute the work without raising any issue regarding providing PBGs by the supporting company. If really submission of the PBGs by the supporting Iranian company is so essential, the respondents ought not to have entered into the contract agreement with 1st petitioner company at the earliest point of time. Further, when the petitioners requested for 52 extension of time for completion of works till 31.03.2025, vide their letter dated 12.04.2023, respondents, vide letter dated 29.04.2024, extended time for completion of works till 04.08.2024. In the said letter dated 29.04.2024, extending the time for completion of the work, there is no mention or condition or stipulation, with regard to providing PBGs by the supporting Iranian Company. As observed supra, without there being any reference or insistence with regard to replacement of the PBGs already furnished or with regard to furnishing of additional PBGs directly by the Iranian company, time for completion of work was extended by the respondents by way of letter dated 29.04.2024, i.e. nearly one and half year after execution of the contract agreement dated 07.11.2022.
24. On this aspect, it is the contention of the learned counsel for the petitioners that as per Clauses „b‟ and „c‟ of the contract agreement dated 07.11.2022, the terms of the contract supersede the terms of the Notification of Award as the terms of the contract have the priority over the NoA. 53
He relied on a decision in JSIW Infrastructure Pvt. Ltd. v ONGC Ltd., 1 wherein it is held thus: (paragraphs 29 to 33) "29. Annexure A, containing the General Conditions of Contract (GCC), explicitly supersedes and prevails over Annexure B, in case of any discrepancy, conflict, dispute between the two. Consequently, clause 3.4.1.5 of the GCC, a provision within the Annexure A, should have taken precedence over any potentially conflicting language contained within the letter dated 27.08.2008, a document within Annexure B. The priority accorded in the Contract itself, as reproduced aforesaid, has not even been noticed in the impugned award.
30. Moreover, reliance on pre-contractual communications by the learned arbitrator to interpret clause 3.4.1.5 results in contravention of clause 1.2.5 of the GCC, which states:
"1.2.5 Entire Agreement The Contract constitutes the entire agreement between the Company and the Contractor with respect to the subject matter of the Contract and supersedes all communication, negotiations and agreement (whether written or oral) of the parties with respect thereto made prior to the date of this Agreement."
31. This provision of the GCC, explicitly declaring the contract as an entire agreement, has not even been noticed in the impugned award. By prioritizing pre-contractual communications, the arbitrator disregards the fundamental principle that all prior discussions and agreements would stand superseded, as expressly agreed to by the parties in clause 1.2.5 of the GCC.
1 2023 SCC Online Delhi 8172 54
32. The judgments cited by the respondent are of no avail and do not detract from the above position. While there is no quarrel with the proposition that an interpretation considering both the express terms of the contract and the surrounding circumstances can sometimes be necessitated, the same does not apply when no ambiguity exists in the first place. Resorting to external factors/correspondence in the absence of ambiguity would be unwarranted and undermine the sanctity of contract. Additionally, as already stated above, in the present case, clause 1.2.5 of the GCC specifically states that the contract supersedes all communication, negotiations and agreement made prior to the date of the contract. Therefore, the unambiguous contractual provision/s would prevail over any contrary understanding as may be discernible during the contract formation stage. Further as noticed hereinabove, as per stipulation (b) of the contract, clause 3.4.1.5 of the GCC and the direct implication flowing therefrom, has precedence over the letter dated 27.08.2008. As such the judgments cited by the respondent are clearly distinguishable.
33. In the circumstances, the impugned arbitral awards are set aside. Accordingly, the present petitions stand allowed. All pending applications also stand disposed of."
He also relied on a judgment of the Hon‟ble Supreme Court of India in State of Madhya Pradesh v. M/s. Sew Construction Limited & others2, wherein it is held thus:
(paragraph 24) 2 judgment dated 18.11.2022 in Civil Appeal No.8571 of 2022 55 "In the context of discretion, we may reiterate this principle. The rights and duties of the parties to the contract subsist or perish in terms of the contract itself. Even if a party to the contract is a government authority, there is no place for discretion vested in the officers administering the contract. Discretion, a principle within the province of administrative law, has no place in contractual matters unless, of course, the parties have expressly incorporated it as a part of the contract. It is the bounden duty of the court while interpreting the terms of the contracts, to reject the exercise of any such discretion that is entirely outside the realm of the contract."
25. A perusal of the averments in the contract agreement dated 07.11.2022 entered into between the parties goes to show that clause b) thereof reads as follows:
"b) The following documents annexed herewith shall be taken as mutually explanatory of one another and shall be deemed to form and be read and construed as integral parts of this Contract and in case of any discrepancy, conflict, dispute, they shall be referred to in the order of priority as cited below.
1.Agreement;
56
2.Annexure „IIA‟ General Conditions of Contract & Annexure „IIB‟ General Conditions of Contract @ SCC (applicable for O&M portion).
...."
Clause c) of the contract agreement dated 07.11.2022 reads as under:
"The contract constitutes that entire Agreement between the Company and the Contractor, with respect to the subject matter of the Contract and supersedes all communication, negotiations and Agreement (whether written or oral) of the parties with respect thereto made prior to the date of Agreement"
26. A perusal of clause b) of the contract agreement goes to show that the documents annexed therewith shall be taken as mutually explanatory of one another and deemed to form and be read and construed as integral parts of the contract. It makes further clear that in case of any discrepancy, conflict, dispute, they shall be referred to in the order of priority given in the said clause. According to the priority of the documents mentioned thereunder, the terms of the agreement will have priority over the „Annexure 57 „II A‟ General Conditions of Contract & Annexure „II B‟ General Conditions of Contract and SCC‟. Further, Clause
c) of the contract agreement states that the contract constitutes the entire agreement between the parties with respect to the subject matter of the contract and it supersedes all communication, negotiations and agreement of the parties, with respect thereto made prior to the date of the agreement. A reading of the aforesaid clauses makes it clear that in case of discrepancy, conflict or dispute, the terms of the Agreement will have priority over the General Conditions of Contract. Further, the contract supersedes all communications, negotiations and agreement of the parties made prior to the date of the agreement.
27. On the other hand, it is the contention of the learned Advocate General appearing for the respondents that simply because Clause 3.3 of the Contract Agreement records the factum of submission of PBGs by Indian Company, it does not mean that the respondents waived off the requirement of furnishing additional PBG by the supporting foreign company, and that when 1st respondent 58 Corporation, vide letter dated 11.08.2023, called upon the petitioners to furnish additional PBG by the supporting Iranian company, the petitioners vide letters dated 07.09.2023 and 08.10.2023 sought further time to resolve the issue relating to furnishing of additional PBGs by the supporting Iranian company and hence, the said condition is not waived.
28. The explanation offered by the petitioners for its inability to secure PBGs by the supporting Iranian company that because of the sanctions, no bank in India came forward to furnish the same as the said company is incorporated in Iran, is plausible. In order to secure the monetary obligations and secure the financial interest of the respondents, the petitioners furnished the PBGs for the entire requite amount. In fact, the said explanation appears to have been accepted by the respondents and thereby the petitioners were allowed to continue to execute the work. The same was recorded in the contract agreement entered into between the parties; pursuant to the same, 1st petitioner company was allowed to commence 59 execution of the works and as the petitioners could not complete the works within the scheduled time under the contract agreement, the respondents also extended the time for the completion of the works without insisting or raising any objection on the furnishing of PBGs by the supporting Iranian company and in fact pursuant to the earlier termination order dated 03.06.2024, the respondents invoked the said PBGs furnished by the 1st petitioner company for the entire requisite amount, towards its share and towards the share of the supporting Iranian company, and encashed the Bank Guarantees. Further more, while recording the PBGs, which are dated 19.10.2022, furnished by 1st petitioner for the entire requisite amount vide PBG NO. 0200222IPG011396 for Rs. 4,86,08,548.00 and PBG NO. 0200222IPG011379 for Rs. 4,86,08,548.00, both issued by Bank of Maharashtra, Miyapur Branch, Telangana valid up to 05.07.2025, in Clause 3.3 of the contract agreement, which is dated 07.11.2022, admittedly, no condition was stipulated in the said contract agreement with regard to replacement of the PBGs with the ones issued by the supporting Iranian company at a subsequent point of time. 60 As a matter of fact, in the letter dated 29.04.2024, extending the time for execution of work, the respondents directed the 1st petitioner company to extend the validity date of all the Bank Guarantees submitted under the contract accordingly.
29. If really submission of the PBGs by the supporting Iranian company is so essential, the respondents ought not to have entered into the contract agreement with 1st petitioner company at the earliest point of time. Having allowed the petitioner to execute the work and after extending the time period for execution of the works by the petitioners, and having waited for a period of more than two years, issuance of the impugned termination by respondents speaks volumes. According to the petitioners, the reason for the respondents to terminate the contract is that ONGC is interested in giving short-term contracts to some other persons, on whom they are interested and because of the said reason, the present termination order was passed arbitrarily. Further, as stipulated in the terms of the contract agreement viz. 61 Clauses „b‟ and „c‟, the contract supersedes all communications, negotiations and agreement (whether written or oral) of the parties with respect thereto, made prior to the date of the agreement. It is stipulated in the contract. Therefore, at this stage, after recording the PBGs in the contract agreement, allowing the petitioners to execute the works, extending the time for completion of the works and after invoking and encashing the PBGs, the respondents cannot now contend, and are estopped from raising, the objection with regard to non-furnishing of PBGs by the supporting Iranian company and this Court is of the opinion that the same is nothing but arbitrary and is not a ground to terminate the contract. Accordingly, this point is answered.
30. The last ground for termination of the contract is delay in execution of the contract. According to the ONGC, the schedule date of completion of works by 1st petitioner company, in terms of Clause 6.3.1.1. of the contract is 05.05.2024. At the request of 1st petitioner company seeking extension of time till 31.03.2025 for 62 completion of works, 1st respondent Corporation, vide letter dated 29.04.2024, extended the time for completion of the works till 04.08.2024. According to the respondents, the petitioners completed only 31.64% of work by the scheduled completion date, and that despite repeated communications, petitioners failed to accelerate the progress of work so as to meet the contractual timelines. It is the case of the respondents that they have fulfilled all pre-requisites under the contract like notifying the contractor multiple times to rectify the deficiencies and speed up the progress to complete the contract within the timeline and issuing 30 days‟ notice in writing to the contractor, inasmuch as this Court directed vide order dated 09.07.2024 in W.P. No. 12243 of 2024, that the previous termination order dated 03.06.2024 be treated as show-cause notice for which the petitioners were asked to submit an explanation.
31. On the other hand, it is the contention of the petitioners that as of date more than 60% of the works are undertaken (both onsite and offsite) and the alleged delay is 63 attributable to the respondent at each stage of execution of the project, like delay in handing over the site, delay caused by the respondents in commencement of Engineering, in review/ approval of designs, basic engineering documents, issues that arose due to lack of and inefficient coordination between the different disciplines/departments of respondent No. 1 Corporation, etc. It is their further case that delay in execution, as a ground for termination, was first mentioned only when the first letter of termination was issued on 03.06.2024. It is the further case of the petitioners that if the termination was based on the reason of delay in execution, 1st respondent Corporation is obligated to issue a 30 days‟ notice to that effect in terms of Clause 8.3.4. of the General Conditions of Contract annexed to Contract Agreement dated 07.11.2022.
32. This Court perused the pleadings and documents filed by the parties to the Writ Petition. There is variance in the pleadings of the parties with regard to percentage of the work completed by the petitioners. In that connection, what quantum of work done by the 64 petitioner precisely, cannot be adjudicated by this Court. The issues with regard to delay in execution of the contract; as to whether the petitioners completed only 31.64% of works as on date, as contended by the respondents, or more than 60% of the works are completed by the petitioners (both onsite and offsite), as contended by the petitioners, and whether the alleged delay in execution of the works is attributable to the respondents or the petitioners, are all disputed questions of fact which arose in the course of the execution of works under agreement entered into, between the petitioners and respondents pursuant to the Notification of Intent dated 05.07.2022 issued by the respondents. They are disputed questions of fact, which cannot be decided in a Writ Petition filed under Article 226 of the Constitution of India. Ordinarily, this Court will not decide, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India, the disputed questions of fact. On this aspect, it is pertinent to refer to a decision in M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar 65 India Private Limited & others,3 wherein it is held thus:
(paragraphs 89.1 to 89.9).
"82. We may cull out our conclusions in regard to the points, which we have framed:
82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.
82.2. The principle laid down in Bareilly Development Authority [Bareilly Development Authority v. Ajai Pal Singh, (1989) 2 SCC 116] that in the case of a non- statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal [Radhakrishna Agarwal v. State of Bihar, (1977) 3 SCC 457] , may not continue to hold good, in the light of what has been laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] and as followed in the recent judgment in Sudhir Kumar Singh [State of U.P. v.
Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020 SCC OnLine SC 847] .
3 (2023) 2 SCC 703 66 82.3. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary.
82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] ). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] .
82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition.
82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, 67 ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence.
82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22] , by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] ]. 82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, 68 particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit.
82.9. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant."
33. According to the respondents, Clause 1.3.2 of the General Conditions of Contract annexed to the contract agreement dated 07.11.2022, the parties agree to resolve the disputes through Arbitration. Clause 1.3.2 of the General Conditions of Contract annexed to the contract agreement dated 07.11.2022, provides for „Arbitration‟. A perusal of the said Clause goes to show that the said Clause provides for resolution in respect of the disputes arose between the parties in regard to monetary claims. The same is not apt for resolution of the issues in the case on hand.
34. A perusal of Clause 1.3.4 of the General Conditions of Contract annexed to the contract agreement 69 dated 07.11.2022 deals with „Resolution of disputes through conciliation by OEC (Outside Expert Committee). In fact, as seen from the averments in the Additional affidavit filed by the petitioners, vide letter dated 08.12.2024, the petitioners requested resolution of the matter through mediation by OEC. In terms of Clause 1.3.4 (2) thereof, if any dispute, difference, question or disagreement arises between the parties hereto or their respective representatives or assignees, in connection with construction, meaning, operation, effect, interpretation of the contract or breach thereof which parties are unable to settle mutually, the same may first be referred to conciliation through Outside Expert Committee to be constituted by CMD, ONGC, as provided thereunder. Therefore, there is a mechanism provided for resolution of the subject disputes arising between the parties. Accordingly, the parties are relegated to avail the mechanism provided in the General Conditions of Contract annexed to the contract agreement dated 07.11.2022, for resolution of the said dispute viz. the percentage of work 70 completed by the petitioners, reasons for delay in execution of the contract, etc.. The point is answered accordingly.
35. In view of the foregoing discussion, this Court is of the opinion that the impugned termination order dated 03.08.2024, is not sustainable on the grounds mentioned therein and the same is liable to be set aside.
36. Accordingly, the Writ Petition is allowed, setting aside the impugned order No. DLH/OES/MM/GDU/RJY & CAV/X11VC21007/2021/Group A, dated 03.08.2024 issued by 2nd respondent and all other consequential proceedings pursuant thereto. No costs.
Miscellaneous petitions pending, if any, in the Writ Petition shall stand closed.
(JUSTICE K. SREENIVASA REDDY) DRK 08.05.2026 71 THE HON‟BLE SRI JUSTICE K.SREENIVASA REDDY WRIT PETITION No. 22088 of 2024 08.05.2026 DRK 72 HIGH COURT OF ANDHRA PRADESH AT AMARAVATI **** WRIT PETITION No.22088 of 2024 Between:
Jsc Golla Engineering Private Limited and Others ...PETITIONER(S) AND Oil And Natural Gas Corporation Limited and ...RESPONDENT(S) Others DATE OF ORDER PRONOUNCED : 08.05.2026 SUBMITTED FOR APPROVAL:
THE HONOURABLE SRI JUSTICE K. SREENIVASA REDDY
1. Whether Reporters of Local Newspapers may be allowed to see the Order? Yes/No
2. Whether the copy of Order may be marked to Law Reporters/Journals? Yes/No
3. Whether His Lordship wish to see the fair copy of the Order? Yes/No JUSTICE K.SREENIVASA REDDY 73 * HONOURABLE SRI JUSTICE K.SREENIVASA REDDY + WRIT PETITION No.22088 of 2024 % 08.05.2026 Between:
Jsc Golla Engineering Private Limited and Others ...PETITIONER(S) AND Oil And Natural Gas Corporation Limited and ...RESPONDENT(S) Others Counsel for the Petitioner(S):
1. M/S INDUS LAW FIRM Counsel for the Respondent(S):
1. The Advocate General for Sri D S SIVADARSHAN < Gist:
> Head Note:
? Cases referred:
1) 2023 SCC Online Delhi 8172
2) judgment dated 18.11.2022 in Civil Appeal No.8571 of 2022
3) (2023) 2 SCC 703