Statutory bodies can't opt different ways to clear dues, says Telangana HC

 Hyderabad: The Telangana High Court on Wednesday said the Hyderabad Metropolitan Development Authority (HMDA) and the Hyderabad Growth Corridor Limited (HGCL) cannot demand differential treatment in paying money owed to contractors for works done by them.

A division bench comprising Chief Justice Alok Aradhe and Justice N.V. Shravan Kumar said exemptions cannot be given to a statutory body, controlled by the government, in paying their debts. Exemption, the bench said, can be given only on furnishing of security.

The bench was dealing with an appeal filed by the HMDA challenging the orders of a Commercial Court, which had directed the HMDA and the HGCL to pay Rs 180 crore along with 12 per cent interest to Cyberabad Expressway Ltd, a contractor, for completing the works allotted by HMDA.

Cyberabad Expressway had executed the works before 2012. But due to the delay in payment of arrears, the issue went for arbitration. In 2019, the Arbitration Authority directed the HMDA to pay the contract amount of Rs 140.89 crore and a bonus annuity of Rs 39.50 crore, totaling Rs 180 crore along with interest in four months.

Later, the HMDA challenged the bonus annuity, stating that bonus can be granted only if the project was completed within the scheduled date of completion, whereas Cyberabad Expressway had completed its work with a delay of  over two years. Hence, HMDA requested for a stay on the arbitration award.

On the other side, Senior Counsel A. Venkatesh, representing the contractor, contended that the contractor had invested a substantial sum of Rs 180 crores in the project and was entitled to an annuity on this investment, as determined by the arbitral tribunal.

It was further pointed out that the contractor had succeeded before the Arbitral Tribunal, and objections raised by HMDA under Section 34 of the Arbitration and Conciliation Act, 1996, had been dismissed. The counsel said the contractor should not be deprived of the benefits of the award while the appeal was pending, suggesting that the court could impose reasonable conditions.

After considering the arguments, the High Court directed HMDA to deposit 50 per cent of the award money within six weeks and made it clear that its observations in the order were made solely for the purpose of deciding the Interlocutory Application  and had no bearing on the merits of the case.