M/S PSK Enterprises vs Union Of India And 7 Ors

Heard Mr. BJ Talukdar, the learned counsel for the petitioner. Also heard Mr. N. N. B. Choudhury, the learned Additional Advocate General,

Arunachal Pradesh assisted by Mr. A. Chandran, the learned Additional Senior Government Advocate, Arunachal Pradesh appearing for the

respondent No. 3 and Mr. C. Baruah, the learned Standing Counsel for the NHAI and also representing the respondent Nos. 1, 2, 6 and 8.

The petitioner is the sub contractor under the respondent No. 7 and the contract in respect of “2-laning of Longding-Tissa-Khonsa Road (NH-215)

on EPC Mode in the State of Arunachal Pradesh†was awarded to the said respondent No. 7. The petitioner entered into a contract with the

respondent No. 7 to carry out the said work as a sub contractor. As required under the contractual agreement between the respondent No. 7 and the

respondent No. 3 which stipulates a condition for information by the respondent No. 7 about the engagement of any sub contractor/agent, it was duly

informed about the engagement of the petitioner as the sub contractor.

It is submitted by Mr. Talukdar that there was due intimation to the respondent No. 3 in respect of the engagement with the present petitioner. In

terms of the contract entered into between the respondent No. 7 and the petitioner, the security performance of the contract which is of substantial

amount was paid by the present petitioner as sub contractor through the respondent No. 7. On the basis of the agreement entered into by the

respondent No. 7 and the respondent No. 3 and the petitioner on the strength of the agreement entered with the respondent No. 7 as the sub

contractor the work was carried out.

In the agreement between the respondent No. 7 and the petitioner it was stipulated that the respondent No. 7 shall open an Escrow account through

which the payment made by the respondent No. 3 as against the contractual work shall be diverted in order to maintain transparency of the financial

transaction between the respondent No. 7 and the respondent No. 3 which was purportedly for the benefit of the petitioner. There was violation in

respect of the said clause by the respondent No. 7 as no such Escrow account was opened and apprehending diversion of the contractual amount by

the respondent No. 7 as against the work completed as of now by the petitioner, it is before this court by filing this writ petition for a specific direction

for enforcement of the said particular clause of opening of an Escrow account through the respondent No. 7.

Mr. Choudhury, learned Additional Advocate General, Arunachal Pradesh along with Mr. Baruah submitted that this writ petition is not maintainable

inasmuch as the petitioner being sub-contractor and purportedly having entered into an agreement with the private respondent No. 7 cannot sought for

a writ of mandamus against the private respondent No. 7 for specific performance of private agreement between the respondent No. 7 and the

petitioner. Mr. Talukdar refuting the submission of the said counsel projects that relief sought for in this writ petition is not in respect of specific

enforcement of the private agreement but to enforce clause 7 (iv) of the guideline dated 01.07.2021 (Annexure-11) which stipulates direct payment to

approved Sub-Contractor through Escrow Account. The said submission is countered by Mr. Baruah that in order to attract the said guideline the Sub-

Contractor must be approved by the competent authority and in order to disprove the fact that the petitioner is not approved Sub-Contractor Mr.

Baruah relied the letter dated 12.07.2021 issued by the respondent No. 7 to the Superintending Engineer, Highway Zone, PWD, Arunachal Pradesh

(annexure 1 to affidavit in opposition of respondent Nos. 1,6 and 8).

Mr. Chandran, learned State counsel for the Arunachal Pradesh received a written instruction from the Executive Engineer, Khonsa Highway

Division, PWD AP, Khonsa wherein it is specifically stated that there was no information about engagement of any Sub-Contractor nor any request

letter for approval of Sub-Contractor by the competent authority as per relevant clauses of the agreement entered into by the said PWD Department

and the private respondent No. 7. It is also informed that neither any RA bill had been paid nor any RA bill received from the authorities Engineer in

favour of the private respondent No. 7 and as per the data available the work progressed to the extent 2.66% only up to June, 2021. The respondent

Nos. 1,2,6 and 8 i.e. Ministry of Road Transport of Highways (MoRT&H) filed their affidavit and as per letter dated 12.07.2021 (annexure No. 1)

issued to the Superintending Engineering, Highway Zone, PWD, Arunachal Pradesh by the respondent No. 7 specifically mentioned that the sub-

contracting work for the project was still at the negotiation stage and yet to be finalized as on 12.07.2021 and accordingly no such sub-contracting

work agreement with regard to the project is in existence and moreover the respondent No. 7 as the contractor had not made any application to the

authority seeking prior approval for engagement of Sub-Contractor as per clause 4.2 of the EPC agreement. From the contents of the said letter dated

12.07.2021 issued by the respondent No. 7 there is a total denial of engaging of any Sub-Contractor including the petitioner by the respondent No. 7.

I have perused the contents of the writ petition along with annexures annexed to it. Annexure 8 is the purported sub-contract agreement executed by

the respondent No. 7 and the petitioner. Clause 6 of the said agreement which was shown to be executed on 09.02.2021, mentioned that the

contractor (respondent No. 7) should ensure the smooth transition of cash flow with the sub-contractor (petitioner) as per the agreement. Clause 7

stipulates that the contractor (respondent No. 7) and the sub-contractor (petitioner) would open an Escrow account in the name of the respondent No.

7 (contractor) after seeking permission from employers (respondent Nos. 3/ 1,2,6 and 8). The petitioner has filed this writ petition in order to enforce

clause 7 with a direction to the respondent No. 7 for opening an Escrow account for a transparency in respect of financial matter. The relief sought

for in this writ petition is for the specific enforcement of clause 7 of the said agreement executed by the respondent No. 7 and the petitioner. The

stand of the learned counsel for the respondents in respect of the maintainability of this writ petition has its force inasmuch as in the event the relief is

granted to the petitioner it would be a relief for specific performance of contract between two private parties and this court is exercising jurisdiction

under Section 226 of the Constitution cannot issue a writ of mandamus to a private party.

The submission of Mr. Talukdar that the writ petition is also filed for enforcement of clause 7 of the guideline dated 01.07.2021 referred above also

cannot be considered as the petitioner is not an approved sub-contractor of the state respondents.

In view of same, this writ petition stands dismissed. However, the petitioner is granted the liberty to approach appropriate civil court in order to get

appropriate relief including enforcement of the agreement entered into by the respondent No. 7 and the petitioner and the various clauses mentioned

therein. Needless to say the present respondents may be impleaded as proforma defendants in the event the petitioner prefers a suit in the appropriate

court. The bar in passing the relief by this court shall not be there before the civil court and in the event any interim protection sought for by the

petitioner by filing injunction petition the same may be heard and disposed of accordingly.