Madras High CourtWP(MD)/30713/2024disposed of

The Indian Hume Pipe Company Limited v. The Principal Secretary,

2025-08-07Honourable Mr Justice C. Saravanan20 pages

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 07.08.2025

CORAM

THE HON'BLE MR.JUSTICE C.SARAVANAN W.P.(MD)Nos.30713, 30705 & 30025 of 2024 and W.M.P(MD)Nos.25785, 25786, 25788, 25778, 25779, 25784, 25279, 25280 & 25281 of 2024 W.P.(MD)No.30713 of 2024 The Indian Hume Pipe Company Limited, Rep. by General Manager, S.Arunachalam, No.7, EVR Street, Sivagaminagar, Gowarivakkam, Chennai - 73.

...Petitioner

Vs.

1.The Principal Secretary, Government of Tamil Nadu, Municipal Administration and Water Supply Department, Fort St. George, Chennai - 600 009.

2.Directorate of Municipal Administration, Through its Director of Municipal Administration Urban Administrative Office Campus, No.75, Santhome High Road, Raja Annamalaipuram, M.R.C.Nagar, Chennai - 600 028.

3.Madurai City Municipal Corporation, Through its Commissioner, Aringnar Anna Maaligai, Thallakulam, Madurai - 625 002.

4.Voyants Solutions Private Limited, NJS/Engineers India Private Limited, CMSC Office, First Floor, Aringnar Anna Maaligai, Madurai City Municipal Corporation Outpost, Thallakulam, Madurai - 625 002.

...Respondents

1/20

PRAYER: Writ Petition is filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records of the Respondent Nos.3 and 4, culminating in the impugned communication dated 15.10.2024, of respondent No.4, to unilaterally apply the G.O.(Ms).No.227, dated 23.11.2009, to the Contract dated 27.05.2020, between the petitioner and the Respondent No.3, and introducing new terms to the Contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O.(Ms).No.227, dated 23.11.2009, is not applicable to the Contract dated 27.05.2020, between the petitioner and the respondent No.3, and consequently quash the letter dated 15.10.2024, issued by Respondent No.

4 to Respondent No.3 and consequently directing the respondent No.3 to calculate dues payable to the petitioner dehors the G.O.(MS)NO.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 23 including reduced payment of Rs.13,65,867/- for contract dated 27.05.2020, in Package 1.

W.P.(MD)No.30705 of 2024 The M/s. Koya and Company, Construction Limited, Rep. by General Manager (Projects), Mr.Abubacker Ariff M.T., 12-2-831/38, 72, Migh Mehdipatnam, Hyderabad - 500 028, Telangana.

...Petitioner

Vs.

1.The Principal Secretary, Government of Tamil Nadu, Municipal Administration and Water Supply Department, Fort St. George, Chennai - 600 009.

3.Madurai City Municipal Corporation, Through its Commissioner, Aringnar Anna Maaligai, Thallakulam, Madurai - 625 002.

4.Voyants Solutions Private Limited, NJS/Engineers India Private Limited, CMSC Office, First Floor, Aringnar Anna Maaligai, Madurai City Municipal Corporation Outpost, Thallakulam, Madurai - 625 002.

...Respondents

PRAYER: Writ Petition is filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus calling for the records of the respondent Nos.3 and 4, culminating in the impugned communication dated 03.12.2024, of respondent No.4, to unilaterally apply the G.O.(MS)No.227 3/20

dated 23.11.2009, to the contract dated 27.05.2020, between the petitioner and the respondent No.3, and introducing new terms to the contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O.(MS)No.227, dated 23.11.2009, is not applicable to the contract dated 27.05.2020, between the petitioner and the respondent No.3 and consequently quash the letter dated 03.12.2024, issued by Respondent No.4, to Respondent No.3 and consequently directing the respondent No.3, to calculate dues payable to the petitioner dehors the G.O.(MS)No.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 21, i.e. Rs.38,07,522.56/-, for contract, dated 27.05.2020, in Package 3.

For Petitioner : Mr.AR.L.Sunderesan Senior Counsel Assisted by Mr.R.Sudhinder for M/s.K.Ashok Kumar For Respondents : Mr.D.Ghandiraj Special Government Pleader for R1 & R2 Mr.F.Deepak Standing Counsel for R3 No appearance for R4 * * * * * W.P.(MD)No.30025 of 2024 The Indian Hume Pipe Company Limited, Rep. by General Manager, S.Arunachalam, No.7, EVR Street, Sivagaminagar, Gowarivakkam, Chennai - 73.

...Petitioner

Vs.

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1.The Principal Secretary, Government of Tamil Nadu, Municipal Administration and Water Supply Department, Fort St. George, Chennai - 600 009.

3.Madurai City Municipal Corporation, Through its Commissioner, Aringnar Anna Maaligai, Thallakulam, Madurai - 625 002.

4.Voyants Solutions Private Limited, NJS/Engineers India Private Limited, CMSC Office, First Floor, Aringnar Anna Maaligai, Madurai City Municipal Corporation Outpost, Thallakulam, Madurai - 625 002.

...Respondents

PRAYER: Writ Petition is filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records of the Respondent Nos.3 and 4, culminating in the impugned communication dated 14.10.2024, of respondent No.4 to unilaterally apply the G.O.(Ms).No. 227 dated 23.11.2009, to the Contract dated 13.08.2021, between the petitioner and Respondent No.3, and introducing new terms to the Contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O.(Ms).No.227, dated 23.11.2009, is not applicable to the Contract dated 13.08.2021, between the petitioner and respondent No.4, to respondent No.3 and consequently directing the respondent No.3 to calculate 5/20

dues payable to the petitioner dehors the G.O.(MS)No.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 16, i.e. Rs.32.11 lakhs, for contract, dated 13.08.2021, in Package IV.

For Petitioner : Mr.AR.L.Sunderesan Senior Counsel Assisted by Mr.R.Sudhinder for M/s.K.Ashok Kumar For Respondents : Mr.D.Ghandiraj Special Government Pleader for R1 & R2 M/s.Devasena Standing Counsel for R3 No appearance for R4 * * * * * COMMON ORDER W.P(MD)No.30713 of 2024, has been filed to issue a Writ of Certiorarified Mandamus, calling for the records of the Respondent Nos.3 and 4, culminating in the impugned communication dated 15.10.2024, of respondent No.4, to unilaterally apply the G.O.(Ms).No.227, dated 23.11.2009, to the Contract dated 27.05.2020, between the petitioner and the Respondent No.3, and introducing new terms to the Contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O. 6/20

(Ms).No.227, dated 23.11.2009, is not applicable to the Contract dated 27.05.2020, between the petitioner and the respondent No.3, and consequently quash the letter dated 15.10.2024, issued by Respondent No.4 to Respondent No.3 and consequently directing the respondent No.3 to calculate dues payable to the petitioner dehors the G.O.(MS)NO.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 23 including reduced payment of Rs.13,65,867/- for contract dated 27.05.2020, in Package 1.

2.W.P(MD)No.30705 of 2024, has been filed to issue a Writ of Certiorarified Mandamus calling for the records of the respondent Nos.3 and 4, culminating in the impugned communication dated 03.12.2024, of respondent No.4, to unilaterally apply the G.O.(MS)No.227 dated 23.11.2009, to the contract dated 27.05.2020, between the petitioner and the respondent No.3, and introducing new terms to the contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O.(MS)No. 227, dated 23.11.2009, is not applicable to the contract dated 27.05.2020, between the petitioner and the respondent No.3 and consequently quash the letter dated 03.12.2024, issued by Respondent No.4, to Respondent No.3 and 7/20

consequently directing the respondent No.3, to calculate dues payable to the petitioner dehors the G.O.(MS)No.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 21, i.e. Rs.38,07,522.56/-, for contract, dated 27.05.2020, in Package 3. 3.W.P(MD)No.30025 of 2024, has been filed to issue a Writ of Certiorarified Mandamus, calling for the records of the Respondent No. 3 and 4, culminating in the impugned communication dated 14.10.2024, of respondent No.4 to unilaterally apply the G.O.(Ms).No. 227 dated 23.11.2009, to the Contract dated 13.08.2021, between the petitioner and Respondent No.

3, and introducing new terms to the Contract without the consent of the petitioner and arbitrarily reducing the amounts duly payable to the petitioner in terms of the Contract as being unfair, arbitrary, unlawful and declare that the G.O.(Ms).No. 227, dated 23.11.2009, is not applicable to the Contract dated 13.08.2021, between the petitioner and respondent No.4, to respondent No.3 and consequently directing the respondent No.3 to calculate dues payable to the petitioner dehors the G.O.(MS)No.227, dated 23.11.2009, and in accordance with the terms of the contract and to release the amounts withheld against RA Bill 16, i.e. Rs.32.11 lakhs, for contract, dated 13.08.2021, in Package IV.

4.In these writ petitions, the respective petitioner(s) (The Indian Hume Pipe Company Limited and M/s.Koya and Company have challenged the impugned communication therein, dated 15.10.2024, 03.12.2024 and 14.10.2024 and G.O.Ms.No.227, dated 23.11.2009, of the Municipal Administration and Water Supply (MA3) Department. The petitioners have participated in a tender floated by the third respondent, namely, Commissioner, the Madurai City Municipal Corporation. The petitioners in W.P.(MD)Nos. 30025 and 30713 of 2024, had offered a bet for package Nos.1 and 4 apart from package No.2. There is no dispute as far as package No.2 is concerned. M/s.Koya and Company, the petitioner in W.P(MD)No.30705 of 2024, had made a bet for package No.3. As far as Package Nos.1, 3 and 4, which are the subject matter of the present Writ Petitions are concerned, the estimated value and the amount floated by the petitioners in the respective package read as under:- Sl.

No.

Estimate Case Number and Petitioner's Name Tender floated date 1.

Rs.357,53,42,127/- W.P(MD)No.30713 of 2024, The Indian Hume Pipe Company Limited, Rep. by General Manager, S.Arunachalam, No.7, EVR Street, Sivagaminagar, Gowarivakkam, Chennai - 73.

27.05.2020 9/20

Rs.483,78,47,660/- W.P(MD)No.30705 of 2024 The M/s. Koya and Company, Construction Limited, Rep. by General Manager (Projects), Mr.Abubacker Ariff M.T., 12-2-831/38, 72, Migh Mehdipatnam, Hyderabad - 500 028, Telangana.

27.05.2020 3.

Rs.257,59,79,220/- W.P(MD)No.30025 of 2024 The Indian Hume Pipe Company Limited, Rep. by General Manager, S.Arunachalam, No.7, EVR Street, Sivagaminagar, Gowarivakkam, Chennai - 73.

13.08.2021 5.After work was completed by these petitioners, in Package Nos.1, 3 and 4, the third respondent has appointed the fourth respondent as an agency to order of the running bills raised by the petitioners in connection with the works executed in the respective packages mentioned above. The fourth respondent, in turn, by the impugned communication dated mentioned above has asked the third respondent to advise the respective petitioners to rise invoices including GST in terms of impugned G.O.Ms.No.227, dated 23.11.2009, the Municipal Administration and Water Supply(MA3) Department. The relevant clause which has been referred to in the impugned communication from the impugned Government order regarding price variation reads as under:- 10/20

"(1) Price Adjustment (a) Contracts of more than 12 months:

Full price adjustment on all the components including cement, steel, bitumen and Petroleum, Oil and Lubricants (POL) shall be applicable to the works with contract period of more than 12 months instead of the present system of 18 months. (b) Contracts of 12 months and below:

In respect of contracts of 12 months and below, price adjustment shall be applicable in respect of cement, steel, bitumen and Petroleum, Oil and Lubricants (POL) only. (i)) Price adjustment clause will be applicable for all works where value of work put to tender is costing Rs. 100 lakhs and above. However, No Price Adjustment will be applicable for Maintenance and Repair works.

(ii) Price adjustment will apply only when the rates exceed or decrease by 3% or more as compared to the estimate rates (RBI Index Price).

(iii) The Price adjustment shall be calculated only on the departmental estimated cost of the work.

(iv) In respect of bitumen and POL, it may be considered on 'pass through' basis with payment of actual rates / price at the rates charged by Indian Oil Corporation.

(v) All works for which price escalation / variation is contemplated must have milestones fixed in physical terms and have a prefixed time-line for use of inputs-clearly indicating the nature and quantum of eligible inputs to be used for the work for the relevant period between two mile stones. Price variation / escalation will be applicable for those quantities 'actually' used by the contractor including additional quantities, if any, used or achieved ahead of the time-line. However, if the contractor does a certain quantity of the work in the third quarter which ought to have been done in earlier quarter, price 11/20

variation / escalation will still be applicable on that quantity at the rates applicable in the relevant quarter as per time-line or period of actual use whichever is less.

(vi) Liquidated damages will be imposed on the contractor for the lapses /shortfall in achieving the rate of progress as per existing schedule.

(vii) The price adjustment mechanism will cease to operate for value of work executed beyond the agreement period. But agreement period shall include the actual period" for which the work was "suspended officially" and extension of time permitted for any valid reasons such as, war, natural calamities, like flood, earthquake and other risks arising out of acts of God during the agreement period, work delayed due to the land acquisition process; change in design, change in scope of work, etc., which is given in writing by the Tender Calling Officer of the respective work.

(c) Price variation will be calculated once in a quarter (i) in respect of cement and steel for the works with contract period upto 12 months and (ii) in respect of all components except bitumen and Petroleum, Oil & Lubricants (POL), for the works with contract period of more than 12 months, as per the specified formula from the last date of submission of bid, upto the end of agreement period provided, if the agreement is signed within the specified time, failing which, the price variation will be applicable from the date of agreement only, based on the wholesale price indices of RBI. The quarter would be reckoned with reference to the quarter of the calendar year in which the last date on bid submission is fixed. In case of delayed agreement, the quarter in which the agreement is signed will be reckoned for the purpose of calculation of price adjustments." 12/20

6.The relevant portion from the impugned communication dated 14.12.2024, is extracted below for the sake of clarity:- 13/20

14/20

7.Thus, as against the running bill No.XVI, price variation for a total sum of Rs.2,45,94,807/-. An amount of Rs.2,13,83,684/- has been paid and the balance amount is Rs.32,11,123/-. This is on account of the impugned communication of the fourth respondent by applying the above mentioned clause in G.O.Ms.No.227, dated 23.11.2009, of the Municipal Administration and Water Supply (MA3) Department.

8.The contract that was signed between the petitioner in the respective Writ Petitions and the third respondent pursuant to the tender floated on 20.10.2020, for package Nos.1, 3 and 4, contemplate an alternative mechanism for resolving the dispute. They are from clause Nos.20.2 to 20.6. For the sake of clarity, the headings alone are reproduced:- "i) Appointment of the Dispute Board ii)Failure to agree on the composition of the Dispute Board iii)Obtaining Dispute Board's Decision iv)Amicable Settlement v) Arbitration vi)Failure to comply with Dispute Board's Decision vii)Expiry of Dispute Board's Appointment"

9.The learned Senior Counsel appearing for the petitioners would submit that imposition of condition prescribed in G.O.Ms.No.227, dated 23.11.2009, of 15/20

the Municipal Administration and Water Supply (MA3) Department, cannot be imposed on the petitioner(s) in the respective writ petition(s) contrary to the terms and conditions of the agreement signed between the petitioner(s) in the respective Writ Petitions.

10.It is submitted that even in the tender document there was no reference to the Government Order and therefore, imposition of the above Government Order is arbitrary and unfair and therefore, it is amenable to jurisdiction of this Court under Article 226 of the Constitution of India. 11.The learned Senior Counsel appearing for the petitioners has relied upon the decision of the Hon'ble Supreme Court in Gas Authority of India Limited, Vs. Indian Petrochemicals Corporation Limited and others, reported in (2023) 3 SCC 629, wherein it has been reiterated that mere altering the remedy would not be a par for the Court to exercise its power under Article 226 of the Constitution of India. That apart, it is submitted that the petitioner has prayed for quashing the Government order, which would not be within the limitation of the arbitrator exercising the power under the provision of the Arbitration and Conciliation Act, 1996. Hence, he prayed for allowing the Writ Petition.

16/20

12.Defending the impugned order, the learned Counsel appearing for the respondents submits that the petitioner(s) in the respective petitions have participated in the tender floated by the third respondent on 15.09.2019, ought to have been aware in the above said order as all the amounts that are to be paid under the Contract or to be applied with the Government order that are prevailing in this case. It is submitted that the petitioner cannot fail feign ignorance of the above said Government order and therefore, there is no merit challenged to the Government order. That apart, impugned communication of the fourth respondent is mere communication of an agent appointed by the third respondent.

It is the Government order and gave an advice to the above said order and therefore, there is no merit to be challenged to the above said communication of the fourth respondent. It is submitted that the above said communication is not a Government Order, perceptible, amenable in the jurisdiction of the Court under Article 226 of the Constitution of India. 13.It is submitted that the petitioners have already remitted as per the clause mentioned above and therefore, on this account also, the Writ Petitions are liable to be dismissed.

17/20

14.Having considered the submission made by the learned Senior Counsel appearing for the petitioners and the learned Counsel appearing for the respondents, I am of the considered view that prima facie pressing the content of G.O.Ms.No.227, dated 23.11.2009, of the Municipal Administration and Water Supply(MAS), Department, which has been mentioned above cannot be imposed on the respective petitioner(s). As the above said Government order was neither forming part of the tender document in September 2019, and the contract singed between the petitioner(s) in the respective writ petitions. 15.

Therefore, the recovery that is sought to be made on account of the price stipulation took variation based on the communication of the fourth respondent and based on the aforesaid circular, prima facie appears to be arbitrary and contrary to the contract singed between the petitioners and the respondents. However, considering the fact that there is alternative mechanism prescribed for resolving the dispute between the petitioner(s) in the respective writ petitions and the third respondent to review that there shall be a direction to the respondents to process the payment without reference to the Government order. Simultaneously, it is open for the third respondent to issue recovery notice within the period of limitation and thereafter, agitate the issue before the arbitrator to resolve the issue.

18/20

16.Since the impugned Government order is applicable to various Departments of the State Government, there shall be no order to quash the same. The impugned communication of the fourth respondent is merely recommendatory in nature and therefore, the same is quashed. 17.Accordingly, this Writ Petition stands disposed of by directing the third respondent to clear all the payments on the pending RA Bills, if they are otherwise in order without referring to the content of the paragraph 4(1)(b)(iii) of the above said Government Order. No costs. Consequently, connected Writ Miscellaneous Petitions are also closed.

07.08.2025 NCC : Yes/No Index : Yes/No Internet: Yes/No RJR 19/20

C.SARAVANAN , J.

RJR To 1.The Principal Secretary, Government of Tamil Nadu, Municipal Administration and Water Supply Department, Fort St. George, Chennai - 600 009.

3.Madurai City Municipal Corporation, Through its Commissioner, Aringnar Anna Maaligai, Thallakulam, Madurai - 625 002.

4.Voyants Solutions Private Limited, NJS/Engineers India Private Limited, CMSC Office, First Floor, Aringnar Anna Maaligai, Madurai City Municipal Corporation Outpost, Thallakulam, Madurai - 625 002.

W.P.(MD)Nos.30713, 30705 & 30025 of 2024 07.08.2025 20/20