# M/S Bharat Entp v. State of U.P. & Ors

- **Citation:** (2025) 3 ILRA 800
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-03-10
- **Case number:** Writ C No. 31628 of 2024
- **Bench:** Shekhar B. Saraf, Vipin Chandra Dixit
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-bharat-entp-v-state-of-u-p-ors-53239
- **Pages:** 4

## Headnote

(A) Constitutional Law - Writ Jurisdiction -
Arbitrary withholding of bank guarantee
despite completion of work and absence
of determined liability - Constitution of
India
-
Article 226
Writ
court
can
intervene when authority acts in arbitrary
or malafide manner dehors the contract -
Writ
Court
may
exercise
jurisdiction
despite existence of arbitration clause if
authority acts arbitrarily or disputed facts
can be verified by affidavits - Arbitrary
action - Withholding of bank guarantee -
Disputed liability - Alternative remedy -
Withholding
entire
bank
guarantee
without established liability is arbitrary;
partial security may be retained in terms
of contract.(Para - 2 to 8)

Bank
guarantee
submitted
by
contractor
withheld by respondents citing possible liabilities
from employee deaths and GST dues - though
such liabilities
were neither accrued
nor
3 All. M/S Bharat Entp. Vs. State of U.P. & Ors.
801
determined - petitioner contested arbitrariness
of withholding.(Para - 2,3,4,5,6)

HELD: - The retaining of the entire bank
guarantee appears to be arbitrary and without
any basis in law. Certain amount is required to
be detained by the respondent authorities
keeping in mind Clause 14.3 of the agreement.
Petitioner is directed to deposit Rs. 50 lakhs
with the respondent authorities within four
weeks. Upon deposit, the bank guarantee will
be released.(Para -8)

Writ petition disposed of. (E-7)

## Text

800 INDIAN LAW REPORTS ALLAHABAD SERIES
under Clauses 18(iv) and 18(v) of the
brochure. It is a case where the petitioner
got compelled to request for cancellation of
the allotment and return of registration
money, in view of a condition not
specifically provided for in the brochure
but imposed subsequently vide letter dated
08.11.2023 i.e., ten months after the
issuance of allotment letter. It seems that
YEIDA
also
never
contemplated
a
situation, which has emerged in the present
case and, therefore, no provision was made
to deal with such applications. In its
subsequent residential scheme floated on
05.07.2024,
YEIDA
has
specifically
provided
for
filing
of
no-objection
certificate, in such a situation. The
condition is as follows:

"If the farmer (whose land
has been acquired/purchased) has
died, then all the legal heirs will
give consent in favor one legal heir
and will also provide the death
certificate and legal heir certificate
of the farmer. Only one plot will be
allotted by the authority"

14. Had any such condition been
part of the Brochure and the petitioner
would have failed to comply with the same,
YEIDA may be justified in forfeiting the
registration money. However, in the instant
case, as already noted, in the absence of
any such condition in the brochure, the
petitioner cannot be made to suffer by way
of forfeiture of the registration money nor
his case would fall under Clause 18(iv) or
18(v) of the brochure.

15. Accordingly, the impugned
order forfeiting the allotment money is
hereby
quashed.
Respondent
no.2
is
directed to refund the registration money to
the petitioner within three weeks from the
date of communication of the instant order
alongwith the account details and upon
completion of other formalities, if any.

16. The writ petition is allowed
accordingly.
----------
(2025) 3 ILRA 800
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.03.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE VIPIN CHANDRA DIXIT, J.

Writ C No. 31628 of 2024

M/S Bharat Entp. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sr. Advocate, Sri Vaibhav Shandilya

Counsel for the Respondents:
C.S.C., Sri Udit Chandra

(A) Constitutional Law - Writ Jurisdiction -
Arbitrary withholding of bank guarantee
despite completion of work and absence
of determined liability - Constitution of
India
-
Article 226
Writ
court
can
intervene when authority acts in arbitrary
or malafide manner dehors the contract -
Writ
Court
may
exercise
jurisdiction
despite existence of arbitration clause if
authority acts arbitrarily or disputed facts
can be verified by affidavits - Arbitrary
action - Withholding of bank guarantee -
Disputed liability - Alternative remedy -
Withholding
entire
bank
guarantee
without established liability is arbitrary;
partial security may be retained in terms
of contract.(Para - 2 to 8)

Bank
guarantee
submitted
by
contractor
withheld by respondents citing possible liabilities
from employee deaths and GST dues - though
such liabilities
were neither accrued
nor
3 All. M/S Bharat Entp. Vs. State of U.P. & Ors.
801
determined - petitioner contested arbitrariness
of withholding.(Para - 2,3,4,5,6)

HELD: - The retaining of the entire bank
guarantee appears to be arbitrary and without
any basis in law. Certain amount is required to
be detained by the respondent authorities
keeping in mind Clause 14.3 of the agreement.
Petitioner is directed to deposit Rs. 50 lakhs
with the respondent authorities within four
weeks. Upon deposit, the bank guarantee will
be released.(Para -8)

Writ petition disposed of. (E-7)

(Delivered by Hon'ble Shekhar B. Saraf, J.
& Hon'ble Vipin Chandra Dixit, J.)

1. Heard learned counsel appearing on
behalf of the parties.

2. This is a writ petition under
Article 226 of the Constitution of India
wherein the writ petitioner has made the
following prayers:-

"It
is
therefore
most
respectfully prayed that this hon'ble
Court may be pleased to issue a
writ of Mandamus directing the
respondents no.2 and 3 to release
the
bank
guarantee
no.200081lBGP00004
dated
05.3.2020
submitted
by
the
petitioner
at
the
time
of
execution of the agreement for
SE,EDC,Ghazipur issued from
IDBI Bank Limited Sigra branch
Varanasi against security deposit
in
favor
of
Administrative
officer for managing director
Purvanchal Vidyut Vitran Nigam
Limited Varanasi submitted by
the
petitioner,
with
the
respondent
no.
3
within
a
specific period fixed by this
hon'ble Court.
And/or pass any other order
or direction as this hon'ble court
may deem fit and proper."

3. The factual matrix in the present
case
indicates
that
the
respondent
authorities
have
withheld
the
bank
guarantee that was submitted by the
petitioner at the time of the execution of the
agreement in lieu of certain sums that may
become payable by the contractor to seven
employees who had died during the
execution of the works. Further more,
respondents have raised an issue with
regard to payment of G.S.T. liability of a
sum of Rs.11,80,79,376/- along with
interest which has not been paid by the
petitioner. The respondent authorities have
relied on Clause 14.3 of the agreement that
reads as follows:-

"14.3 : In the event of any
accident and/or injury, in respect of
which compensation may become
payable
under
the
Workmen's
Compensation Act-VIII of 1923
including all amendments thereof,
Authorized officer of Discom shall
have full powers to retain out of
any
sums
payable/becoming
payable to the Contractor, any sum
as may be deemed sufficient to
meet such liability on receipt of
award of compensation from the
competent authority under the said
act, and the same shall be adjusted
from this amount. Any shortfall
shall be recovered and any excesses
shall be refunded. The opinion of
the Authorized officer of Discom
shall be final in regard to all
matters arising under this clause."

4. Learned counsel appearing on
behalf of the respondents submits that there
802 INDIAN LAW REPORTS ALLAHABAD SERIES
being an alternative remedy in the form of
an arbitration clause, the petitioner should
be relegated to the forum of arbitration.

5. Sri Udit Chandra, learned
counsel appearing on behalf of the
respondent
authorities
has
further
submitted that there are several issues with
regard to non-payment of provident fund
by the petitioner/contractor, non-payment
of G.S.T. and liability that may arise out of
death of seven employees being the reason
for retaining the bank guarantee as security.

6. Per contra, learned counsel
appearing on behalf of petitioner has
submitted that the liability arising out of
payments to be made by the petitioner for
the death of seven employees still has not
been ascertained and the matter is pending
before
the
Commissioner,
Employees
Compensation. He further submits that with
regard to the G.S.T., appeal has been filed
by the petitioner and the same is pending
before the Appellate Authority, Prayagraj.
In light of above, he submits that the
respondents' actions of not releasing the
bank
guarantee
for
a
sum
of
Rs.2,24,00,000.00 is absolutely malafide
and arbitrary. He further submits that the
liability that has been calculated by the
respondent authorities for a sum of
Rs.1,51,29,371.41/- with regard to payment
for the death of the workmen is unsubstantiated and without any basis in law.

7. We have perused the documents
placed before us and also heard the learned
counsel appearing on behalf of the parties.
It is trite law that when an authority acts in
an arbitrary or malafide manner dehors the
contract entered into between the authority
and the private party, the writ court can
intervene to nullify such malafide action.
However, one is to realize that the extra
ordinary writ jurisdiction is a discretionary
jurisdiction wherein this Court is required
to exercise judicial discretion relying upon
the law laid down as per the judgments of
the Supreme Court. Further more, when an
alternative remedy is available in the form
of arbitration, this Court would only
intervene when the facts are not disputed or
the disputed facts are such that can be
examined and verified by this Court upon
exchange of affidavits. In the present case,
we find that even after completion of the
works the bank guarantee for a sum of
Rs.2,24,00000.00 has been detained for
liabilities that have not yet accrued and not
determined. Even from the perusal of
counter affidavit filed by the respondents
we have not been able to understand the
basis
of
the
calculation
of
Rs.1,51,29,371.41.

8. This Court is duty bound to
ensure that the equitable justice is done
between the parties and in the present case
the retaining of the entire bank guarantee
on the pretext that certain liabilities may
arise, appears to be far-fetched in nature. It
is to be kept in mind that even the liabilities
payable to the employees is covered by the
Employees State Insurance Act and the
Employees Provident Fund Act. Although,
the retaining of the entire bank guarantee
appears to be arbitrary and without any
basis in law, nonetheless, we are of the
view that certain amount is required to be
detained by the respondent authorities
keeping in mind Clause 14.3 of the
agreement. Upon suggestion given by the
Court, learned counsel appearing on behalf
of the petitioner is willing to deposit a sum
of Rs.50,00,000/- to be kept as security for
any liability that may accrue with regard to
the
labour
dues
and
G.S.T.
dues.
Accordingly, the petitioner is directed to
deposit Rs.50,00,000/- with the respondent
3 All. Seema Padalia & Anr. Vs. State of U.P. & Ors.
803
authorities within a period of four
weeks from date. Immediately upon deposit
of the said amount of Rs.50,00,000/-, the
bank guarantee will be released by the
respondent authorities preferably within 48
hours of the said deposit.

9. We make it clear that our
findings above are only tentative in nature
and these findings should not be used in
any proceedings that may take place at a
later stage including the proceedings of
arbitration, if the petitioner so chooses to
go for such arbitration.

10. With the above directions, the
writ petition is disposed of.

11. We make it clear that this order
is peremptory in nature and no further time
shall be granted to the petitioner to deposit
the above Rs.50,00,000/-. In case of default
of deposit of the said amount within the
time frame as aforesaid, the authority shall
be at liberty to act in accordance with law.
----------
(2025) 3 ILRA 803
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.03.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE VIPIN CHANDRA DIXIT, J.

Writ C No. 39180 of 2024

Seema Padalia & Anr. ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Sri Rahul Sahai, Sri Saumitra Anand

Counsel for the Respondents:
C.S.C., Sri Kaushalendra Nath Singh

(A)
Constitutional
Law
-
Writ
Jurisdiction - Refund of Stamp Duty -
Indian Stamp Act, 1899 - Article 226
Constitution of India; Rule 218, U.P.
Stamp
Rules
as
amended
by
5th
Amendment Rules, 2021
- Law of
Limitation
is
procedural
and
retrospective unless it extinguishes a
vested right - Refund cannot be denied
merely
on
technical
grounds
of
limitation - Expiry of limitation may bar
the
remedy
but
not
the
right
-
Technicalities cannot
defeat a
just
claim. (Para -7)

Petitioners purchased stamps in 2015 for
execution of tripartite sale and sublease deed
but agreement could not be executed due to
NOIDA's refusal - application for refund filed in
2024 was rejected on ground of Rule 218 as
amended by U.P. Stamp (5th Amendment)
Rules, 2021 - Claim held time-barred by
authority. (Para - 3,4,5,6)

HELD: - Impugned order rejecting refund on
technical
grounds
quashed.
Agreement
preceded amendment. Refund justified as per
Supreme Court ruling. Authority to reconsider
refund within three months. (Para - 9,10)

Writ petition disposed of. (E-7)

List of Cases cited:

1. Harshit Harish Jain & anr. Vs St. of Maha. &
ors., 2025 Law Suit (SC) 105

2. M.P. Steel Corporation Vs Commissioner of
Central Excise, 2015 7 SCC 58

(Delivered by Hon'ble Shekhar B. Saraf, J.
& Hon'ble Vipin Chandra Dixit, J.)

1. Heard learned counsel for the
parties and perused the record.

2. This writ petition under Article
226 of the Constitution of India has been
filed by the petitioners with the following
reliefs :-