Final Order 6

Order Details: COPY OF JUDGMENT
Pdf Text: OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 1 of 9 Patiala House Court, New Delhi
IN THE COURT OF PULASTYA PRAMACHALA,
DISTRICT JUDGE (COMMERCIAL COURT-01),
PATIALA HOUSE COURTS, NEW DELHI
OMP (I) (COMM.) 72/2025
M/s Haque Construction Company
Through its Sole Proprietor
Sh. Esrarul Haque,
Building No. 992-72/32/12,
Muslim Basti, Old Bowenpally,
Secunderabad, Telangana-500011
Email- globalinfra2906@gmail.com
...Petitioner
Versus
Union Of India
Through Executive Engineer,
Parliament Works Division-1, CPWD,
C-329, I.P. Bhawan, New Delhi-110002
Email Id: eepawd1@gmail.com
...Respondent
26.07.2025
JUDGMENT
1. The present petition under Section 9 of the Arbitration and
Conciliation Act, 1996 has been filed by the petitioner against the
respondent seeking urgent directions of interim
protection/injunction thereby restraining the respondent from
invoking/encashing the performance bank guarantee in the form
of FDR bearing No. 25212198 dated 13.09.2024.
2. Briefly stated the relevant facts of the case are that the petitioner
is a sole proprietorship having experience in infrastructure
projects and having successfully executed infrastructure projects
for various government department. The respondent company is
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 2 of 9 Patiala House Court, New Delhi
a Central Government department entrusted with discharge of
several public functions, which provides services from project
concept to completion, consultancy and maintenance
management. The respondent had invited tenders for upgradation
of MP’s Flats/Bunglows under Sub Div. I of PaWD-1 and Sub-
Div-I of DED-201 dg 2024-2025 (Sub Head: Upgradation of
Balance Bungalows Windsor Place, HCM Lane Telegraph Lane
and Atul grove Road Bungalows under Sec-II in respect of
services of Civil and Electrical Works). The petitioner submitted
its bid to the said tender and was declared as the successful
bidder and letter of acceptance dated 07.09.2024 and letter of
start dated 17.09.2024 were issued by respondent in favour of the
petitioner. Agreement no. 60/EE/PaWD-I/A-I/2024-25 was
executed between the petitioner and respondent and the said
agreement contains an Arbitration Clause in Clause 25 of the
Agreement. In terms of Clause 1 of the Agreement, the petitioner
submitted Performance Guarantee in the form of FDR bearing
No. 25212498 dated 13.09.2024 amounting to Rs.22,01,000/-
(Rupees Twenty-Two Lakhs One Thousand Only) against
required amount of Rs.22,00,542/-. The total period for execution
of work under the agreement was 8 months from 17.09.2024 to
16.05.2025 i.e. completion of work under the agreement.
3. Petitioner has pleaded that on award of work, petitioner
mobilized its manpower and machinery at site and was in
readiness to execute the work within the time stipulated. The
Contract contains several reciprocal obligations on the part of the
respondent, including the obligation to hand over the site, give
timely approval for drawings, designs, decisions pertaining to
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 3 of 9 Patiala House Court, New Delhi
extra or deviated item etc. Right from the outset, the respondent
miserably failed in discharging the said obligations resulting in
inordinate delay and causing the petitioner, who had mobilized
its manpower and machinery, to incur significant losses. As per
the site availability, the petitioner started the execution of work.
However, the respondent continued to delay in its obligations and
even after completion of painting works and wooden doors, the
respondent sought to change its decision and which ultimately,
the petitioner was constrained to re-do the said item, which
resulted in delay on the part of respondent. The petitioner was
shocked to receive show cause notice dated 08.04.2025,
purportedly issued under clause 3(a) & (b) of the agreement
which sought to call upon the petitioner to show cause as to why
an action against clause 3(a) &(b) of the agreement should not be
taken against the petitioner. The said show cause notice was
immediately refuted by the petitioner vide its reply dated
16.04.2025, wherein it was highlighted that there was no delay
on the part of the petitioner and that the work had only been
delayed due to the delay in decisions/changes in decisions of the
respondent etc. However, the items as per the contract were
already executed by the petitioner to the extent of 100% in March
2025 i.e. even before the issuance of the alleged show cause
notice dated 08.04.2025. The progress of the execution of work
at the work site by the petitioner had never been an issue due to
the very fact that work to the extent of 100% was already
executed by the petitioner by March 2025 as per the site
availability. Thus, there was no delay and lapse on the part of the
petitioner. Petitioner duly replied the show cause notice vide its
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 4 of 9 Patiala House Court, New Delhi
letter dated 16.04.2025 citing hindrance at site, delay/default
attributable to the respondent, which were not paid heed to and
were significantly ignored by the respondent while unlawfully
terminating the contract on 25.04.2025 even before the stipulated
date of completion i.e. 16.05.2025. Respondent arbitrarily and
unlawfully proceeded to terminate the contract and took action
under clause 3 of the agreement, as communication by its letter
dated 25.04.2025. Same was duly replied vide letter dated
29.04.2025 and it was stated that the action taken under clause 3
of the agreement was without any consideration of the
petitioner’s letter dated 16.04.2025 and the action under clause 3
of the agreement has been arbitrarily and unilaterally taken by
the respondent.
4. In the petition, the petitioner has mentioned the grounds and also
averred that the respondent played a fraud upon the petitioner for
procuring the performance guarantee and the security deposit in
as much as the scope of work under the contract was
subsequently hugely varied by the respondent and its now
seeking to encash the performance Guarantee and forfeit the
security deposit purely to unjustly enrich itself and to assuage the
financial woes of petitioner, while itself not abiding the very
terms of the contract on the basis of which the security deposit
and performance guarantee were given in good faith by the
petitioner. The performance guarantee and forfeiture of security
deposit will cause irretrievable injustice to the petitioner and
threatens the very solvency of the petitioner as the petitioner has
already been deprived of payments of nearly Rs.2 Crores, which
the respondent continues to withhold and has had to bear the cost
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 5 of 9 Patiala House Court, New Delhi
of the project on its own. Forfeiture/encashing of the
performance guarantee and Security deposit will result in
wrongful loss to the petitioner and wrongful gain to the
respondent thereby unjustly enriching respondent at the
petitioner’s expense. In the present petition, the petitioner has
also averred that the petitioner has not filed any similar petition
on the subject matter therein contained before any court of law.
On these premises, instant petition has been filed by the
petitioner praying therein to pass an ad interim exparte injunction
order restraining the respondent from encashing the Security
deposit/performance guarantee in form of FDR dated 13.09.2024
mentioned in Para 1 of the petition. In alternative petitioner also
prayed to restrain the Punjab National Bank, Branch-C, Block
Market, Community Centre, C Block, Kailash Hills, East of
Kailash, New Delhi from proceeding with the encashment of the
performance guarantee/FDR dated 13.09.2024. Petitioner also
prayed to pass an injunction order restraining the respondent
from proceeding further with the letter dated 25.04.2025 and
26.04.2025.
5. Notice was issued to the respondent and ld. counsel Sh. Ajay
Kumar along with Sh. Roop Singh, Executive Engineer appeared
and filed their reply. In reply, respondent averred that as per
scope of work as mentioned in the agreement, total 10
flats/bungalows were taken for upgradation work and 2 flats were
taken for partial upgradation work. Petitioner right from the start,
delayed the work and in this regard, respondent sent various
letters through Executive Engineer (Electrical) regarding the
delay and slow progress of work to the petitioner, which are
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 6 of 9 Patiala House Court, New Delhi
annexed with the reply. It is further replied that despite giving
various notice to petitioner for slow progress of work, petitioner
failed to increase the manpower and resources and failed to
execute the work in the given timelines. Accordingly, the
respondent was left with no option but to show cause the
claimant vide letter no. 54(137)/AE-1/PaWD-1/2025-26/894
dated 08.04.2025 and the respondent under the relevant
provisions of agreement determined the contract. Upon
determination security deposit was already recovered and
performance guarantee stand absolutely forfeited to the
government and shall be absolutely at the disposal of
Government.
6. I have heard the learned Counsels for both the parties and have
perused the record with due care.
7. From the material on record, it is evident that the work was
awarded to the petitioner on 07.09.2024, and the work was
commenced on 17.09.2024 by the petitioner. However, it is noted
that after commencement, petitioner failed to maintain the
required pace of execution and progress and delayed the work.
The respondent had issued several communications to the
petitioner, including letters dated 08.10.2024, 22.10.2024,
19.11.2024, 03.12.2024, 13.03.2025, 21.03.2025, 27.03.2025,
29.03.2025, 05.04.2025, and 07.04.2025, calling upon the
petitioner to deploy the necessary resources and expedite the
progress of work. Despite such repeated reminders, petitioner
failed to deploy sufficient manpower and resources. In letter
dated 10.12.2024, it is mentioned that respondent also reviewed
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 7 of 9 Patiala House Court, New Delhi
the work progress with the petitioner and the petitioner agreed to
handover the bungalows on certain dates, but the petitioner failed
to handover the bungalows due to inadequate progress.
8. Although the petitioner has asserted that the work was completed
in March 2025, this claim stands contradicted by a legal notice
dated 08.04.2025 issued by Shri Devesh Chandra Thakur,
Member of Parliament, who had been allotted Bungalow No. 12,
Windsor Place. The said notice, addressed to both the petitioner
and the respondent, raises specific concerns regarding the
inordinate delay in the upgradation work being carried out by the
petitioner in the said bungalow. The said legal notice
substantiates the respondent’s contention that the petitioner had
failed to hand over the completed work within the stipulated
period and had been delaying the execution on one pretext or
another. Even otherwise, on completion of work, contractor has
to hand over the site of work against confirmation/satisfaction
report from the department. None of such reports, if any, has
been placed on the record.
9. The primary ground urged by the petitioner is that the delay was
attributable to the respondent’s own lapses, such as delay in
approvals, change of decisions, restricted site access, and denial
of entry to labourers due to VIP movement. In letter dt.
16.04.2025, petitioner wrote to respondent giving justification for
delay, mentioning inter alia that it was not provided any place to
keep labor, store the goods etc. In the notice of termination dated
25.04.2025, respondent referred to Clause 29 of the agreement at
point no. 3 which expressly states that: -
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 8 of 9 Patiala House Court, New Delhi
“
Site is located in sensitive and high security & VVIP area,
where movement and routes are restricted. The Contractor shall
have to appply for passes well in advance for carrying out the
work. No claim whatsoever shall be entertained for any loss on
this account. Some restrictions may be imposed by the Security
Staff, Delhi police on the working and for movement of labour,
materials Etc.”
10. Similarly, respondent also referred to clause 31 of the agreement
to mention that no labor huts were allowed, and tenderes were to
give their quotation accordingly. Thus, the petitioner was aware
of and had accepted the nature of the worksite and the
corresponding limitations. Hence, the justifications of the
petitioner do not hold merit in the eyes of law. Moreover, in the
petition attributed different reasons to the respondent, which
were not so agitated in aforesaid letter of the petitioner.
11. It is not in dispute that the work under the contract suffered
delays. It is also not disputed that the respondent issued a show
cause notice dated 08.04.2025 under Clause 3 of the agreement,
and upon receiving response from the petitioner, respondent
terminated the contract vide communication dated 25.04.2025.
Clause 3 of the agreement clearly empowers the Engineer-in-
Charge to terminate the contract in the event of failure of the
contractor to complete the work or a section within the stipulated
time. The issuance of the show cause notice and the subsequent
termination, in this case, appear to have been in conformity with
the said clause of the agreement.
12. Though this Court is not called upon to adjudicate upon the
detailed merits of the dispute at this stage, it is apparent from the
correspondence and documents on record that there were
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OMP (I) (COMM) 72/2025
(Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page 9 of 9 Patiala House Court, New Delhi
repeated defaults by the petitioner and which were duly reminded
by the respondents through various letters. The respondent
appears to have acted in accordance with the contractual terms in
terminating the contract and proceeding with forfeiture of the
performance guarantee. Moreover, conduct of petitioner in filing
only selected part of the agreement with the petition, and
suppressing the other part, disentitles him for equitable relief.
13. In the light of foregoing discussions, I am of the considered
opinion that the petitioner has failed to make out a prima facie
case for grant of interim relief under Section 9 of the Arbitration
and Conciliation Act, 1996. Accordingly, the present petition is
dismissed.
Pronounced in the (PULASTYA PRAMACHALA)
Open Court on this District Judge (Commercial Court)-01,
26th day of July, 2025 Patiala House Court, New Delhi
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