Case Note & Summary
The petitioner, M/s Mascot Construction Co., a partnership firm, challenged a Circular dated 27.08.2020 issued by the Maharashtra Industrial Development Corporation (MIDC). The Circular mandated that for all construction contracts, payment would be made only after 100% completion of the work, with no provision for interim or part payments. The petitioner had ongoing contracts with MIDC and argued that the Circular was arbitrary, unreasonable, and violative of Article 14 of the Constitution of India. The court considered the submissions of both parties. The petitioner's counsel argued that the Circular was unreasonable as it did not provide for any payment for work done, even if partially completed, and that it unilaterally altered the payment terms of existing contracts. The respondents' counsel defended the Circular, stating it was issued to ensure timely completion of projects and to avoid delays. The court analyzed the Circular and found that it was indeed arbitrary and unreasonable. The court noted that the Circular did not provide for any payment for work done, even if the contractor had completed a substantial portion of the work. The court held that such a condition was not based on any intelligible differentia and was therefore violative of Article 14. The court also observed that the Circular unilaterally altered the payment terms of existing contracts without any contractual basis. The court quashed the Circular and directed the respondents to consider the representation of the petitioner in accordance with law. The court also made the rule absolute and disposed of the petition.
Headnote
A) Constitutional Law - Article 14 - Arbitrariness - Circular requiring 100% completion of work before payment - The court held that the Circular is arbitrary and unreasonable as it does not provide for any payment for work done, even if partially completed, and is not based on any intelligible differentia. (Paras 1-10) B) Contract Law - Payment Terms - Unilateral modification - MIDC Circular - The court held that the Circular unilaterally alters the payment terms of existing contracts without any contractual basis, and is therefore unsustainable. (Paras 5-10) C) Administrative Law - Circulars - Reasonableness - The court held that a circular which is arbitrary and unreasonable cannot be sustained, and the respondents are directed to consider the representation of the petitioner in accordance with law. (Paras 8-10)
Issue of Consideration
Whether the Circular dated 27.08.2020 issued by MIDC requiring 100% completion of work before any payment is made is arbitrary, unreasonable, and violative of Article 14 of the Constitution of India.
Final Decision
The court quashed the Circular dated 27.08.2020 and directed the respondents to consider the representation of the petitioner in accordance with law. Rule made absolute. Petition disposed of.
Law Points
- Article 14 of Constitution of India
- 1950
- Arbitrariness
- Unreasonableness
- Contractual obligations
- Payment terms
- Circulars
- MIDC
- Construction contracts
- Writ jurisdiction
- Public law remedy
