Calcutta High Court: In a petition filed for payment of withheld final bills, performance security, and retention amounts, a single-judge bench comprising of Sabyasachi Bhattacharyya,* J., partly allowed the petition and held that the petitioners are entitled to the refund of the admitted performance security deposit and retention money, however, deferred on other claims, including final bills and additional performance security, which is to be resolved through a civil suit. The Court directed the respondents to pay the specified amount within a specified time frame and held that the rest of the claims are to be pursued through a civil suit.
Factual Matrix
In the instant matter, the petitioners successfully won a tender for hiring Heavy Earth Moving Machinery and Extraction of Coal and were awarded the contract. The petitioners completed the work in June 2022 and received a Job Completion Certificate on 19-11-2022. However, the respondents withheld the final bills, performance security, and retention amounts from the petitioners. The petitioners aggrieved by the respondents’ action filed the present petition. The petitioners argued that they are entitled to the refund of the security deposit as per Clause 4.7 of the contract. The petitioners assert that the respondents’ delay in payment of claiming dues beyond the stipulated period is unjustified. However, the respondents contended they have the right to deduct or appropriate dues against the contractor under the present or other contracts. It was argued that the disputed issues require detailed enquiry and should be decided in a civil suit.
Moot Point
Whether the respondents were justified in withholding the final bills, performance security, and retention amounts from the petitioners, contrary to the terms of the contract?
Court’s Reasoning
The Court interpreted Clause 4.7 of the contract to determine the petitioners’ entitlement to the refund of the security deposit. The Court noted that “since no deficiency or defect in the work of the petitioners was informed to them within the six months’ performance guarantee period, there could not be any justifiable reason to withhold the security refund from the petitioners.” The Court emphasised that the respondents’ claim for deduction or appropriation of dues should have been made within the specified time frame and held the respondents’ delay in claiming dues beyond the stipulated period is unjustified.
The Court rejects the respondents’ argument that the disputed issues require detailed enquiry and should be decided in a civil suit. The Court held that while the final bill claims should be adjudicated in a civil court, the petitioner is entitled to the refund of the admitted performance security deposit and retention money and directed the payment to the petitioners based on the terms of the contract and applicable legal principles.
Court’s Decision
The Court allowed the petition in part and directed the respondents to pay the petitioners the amount of Rs. 2,96,94,618/- within 12-04-2024, along with interest at the rate of 8% per annum. The Court held that the rest of the claims of the petitioners must be pursued through a civil suit. No costs are awarded.
[UCC – RLA – STA (JV) v. Eastern Coalfields Ltd., 2024 SCC OnLine Cal 2715, order dated 13-03-2024]
*Judgment by Justice Sabyasachi Bhattacharyya
Advocates who appeared in this case :
Mr. Subhabrata Datta, Mr. Subhojit Seal, Mr. Debasish Sarkar, Counsel for the Petitioners
Mr. Jishnu Chowdhury, Mr. Syed Nurul Arefin, Mr. Syed Moyeenul Arefin, Counsel for the Respondents