Oral Order

1. Heard Ms. Aishwarya Nagula, learned Counsel for the Writ Petitioner, Sri M. Srinu Babu, learned Assistant Government Pleader for MAUD and Sri A.S.C. Bose, learned Standing Counsel for the Municipal Corporation.

2. Having regard to the facts of the case, at the very outset, this Court is constrained to observe the sorry state of affairs prevailing in the Respondent No.2 - Corporation.

3. The case of the Petitioner is that the Petitioner has executed contractual works, which are described in Para 3 of the Affidavit; and that the said works were initially allotted on 09.03.2011 and were completed by the petitioner strictly following the terms and conditions, without any delay or remark from any quarter.

4. It is stated that the total valuation of the work as per the Agreement is Rs.43,53,019/, and out of the said amount, Respondent No.2 paid only Rs.23,87,972/- after the lapse of one year. The Petitioner approached this Court for recovery of the due amount of Rs.23,71,000/- by filing Writ Petition No.8258 of 2013. Vide Judgment dated 06.03.2024, this Court had directed the Respondent Corporation to pay the balance amount of Rs.23,71,000/- to the Petitioner within a period of three months from the date of receipt of a copy of the Order.

5. It is submitted that during the commencement of the Contract in the first week of March, 2011, the Petitioner had deposited the Earnest Money Deposit of Rs.2,41,532/, and the Respondents were obligated to refund the same after completion of the defect liability period of 24 months as per the terms and conditions of the Agreement. The said defect liability period was completed on 10.03.2013. Despite the passage of more than 13 years, the Respondent Corporation has not refunded the Earnest Money Deposit of Rs.2,41,532/-.

6. When the present Writ Petition came up for hearing on 22.01.2026, this Court had called up for Written Instructions. The Commissioner has rendered Written Instructions on 23.01.2026 stating that the then Commissioner, vide Proceedings dated 30.12.2011, had recommended payment of 50% of the bill amount due to the Petitioner and that the issue was to be enquired into by the Vigilance Department. The Written Instructions have not stated anything about the return of EMD. However, it is stated in the Written Instructions that the EMD has not been returned, since the amount has been kept as security to await the outcome of the Vigilance enquiry.

7. Having noted the contentions in the Written Instructions, this Court had called for entire records with a direction to ensure appearance of responsible Officer who is familiar with the records.

8. Sri P. Venu Gopal, E.E., Guntur, is present along with the records. He stated that except in the written noting dated 30.12.2011 of the Commissioner, there is no Proceedings on the file by which Vigilance Enquiry has been initiated. Thus noting has been done on the report submitted by the EOA with certain observations.

9. On perusal of the said note submitted by the EOA, it transpires that the EOA has made certain observations with regard to fixation of rates, which has nothing to do with the Contractor/Petitioner, who has performed the Contract. Para No.8 of the said Note would indicate that the Pre Audit accepts the fact that the Agreement Rate has to be paid to the Contractor. However, it is also noted that there is an abnormal difference between the APSPDCL SSR rates/Market rates and the rate adopted by the Engineering Authorities, causing huge loss to the Institution.

10. In any case, the said note would only indicate that the fixation of rates by the Authorities is defective, and this aspect has nothing to do with the work performed by the Contractor. The Enquiry is purely internal in nature and has no connection with the performance of the work done by the Contractor. Surprisingly, the Respondent Corporation has not initiated any further action with regard to any internal enquiry, nor has it initiated any departmental action against the Officers involved in fixation of the rates much less any Vigilance Enquiry.

11. It is on the strength of the noting by the Commissioner dated 30.12.2011 that the Respondent Corporation has irrationally withheld the EMD amount of Rs.2,41,532/- for nearly about 14 years.

12. In the light of the above findings, this Court deems it appropriate to remind the Authorities as regard the duty and responsibility that is cast upon the Authorities in addressing the grievances of citizens. In Para Nos.78 to 82 in Eureka Forbes Limited vs Allahabad Bank and Others : (2010) 6 SCC 193, the Hon’ble Apex Court held as under:

               “78. The concept of public accountability and performance is applicable to the present case as well. These are instrumentalities of the State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to the government department, if not with a greater rigour. The well-established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office. In State of Bihar v. Subhash Singh [(1997) 4 SCC 430] , this Court, in exercise of the powers of judicial review stated that, the doctrine of full faith and credit applies to the acts done by officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose.

               79. Inaction, arbitrary action or irresponsible action would normally result in dual hardship. Firstly, it jeopardises the interest of the Bank and public funds are wasted and secondly, it even affects the borrower's interest adversely provided such person was acting bona fide. Both these adverse consequences can easily be avoided by the authorities concerned by timely and coordinated action. The authorities are required to have a more practical and pragmatic approach to provide solution to such matters. The concept of public accountability and performance of functions takes in its ambit proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State instrumentalities and/or by the financial institutions.

               80. In Centre for Public Interest Litigation v. Union of India [(2005) 8 SCC 202 : (2006) 1 SCC (Cri) 23] this Court declared the dictum that State actions causing loss are actionable under public law and this is as a result of innovation to a new tool with the court, which are the protectors of civil liberty of the citizens and would ensure protection against devastating results of State action. The principles of public accountability and transparency in State action even in the case of appointment, which essentially must not lack bona fides were enforced by the Court. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable both for their inaction and irresponsible actions. What ought to have been done, if not done, responsibility should be fixed on the erring officers then alone the real public purpose of an answerable administration would be satisfied.

               81. The doctrine of full faith and credit applies to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithful discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. It is a known fact that, in transactions of government business, none would own personal responsibility and decisions are leisurely taken at various levels (refer State of A.P. v. Food Corporation of India [(2004) 13 SCC 53 : 2006 SCC (L&S) 873] .)

               82. Principle of public accountability is applicable to such officers/officials with all its vigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, but are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects not only in the decision-making process but in the decision as well. Every public officer is accountable for its decision and actions to the public in the larger interest and to the State administration in its governance.”

13. In Para Nos.17 & 18 in Lok Prahari vs. State of Uttar Pradesh and Others : (2018) 6 SCC 1, the Hon’ble Apex Court held as under :

               “17. The resolve of “the People of India” to have a republican form of Government is a manifestation of the constitutional philosophy that does not recognise any arbitrary sovereign power and domination of citizens by the State. The republican liberty and the doctrine of equality is the central feature of the Indian democracy.

               18. It is, therefore, axiomatic that in a democratic republican Government, public servants entrusted with duties of public nature must act in a manner that reflects that ultimate authority is vested in the citizens and it is to the citizens that holders of all public offices are eventually accountable. Such a situation would only be possible within a framework of equality and when all privileges, rights and benefits conferred on holders of public office are reasonable, rational and proportionate.”

14. In Para No.49 in the case of DIRECTIONS IN THE MATTER OF DEMOLITION OF STRUCTURES, IN RE : (2025) 5 SCC 1, the Hon’ble Apex Court has reiterated the same, which is not extracted herein for the sake of brevity.

15. In Kishan Chand Jain vs. Union of India and Others : 2023 SCC OnLine SC 1021, the Hon’ble Apex held at Para No.22 as under:

               22. Power and accountability go hand in hand. While declaring that all citizens shall have the ‘right to information’ under Section 3 of the Act, the co-relative ‘duty’ in the form of obligation of public authorities is recognized in Section 4. The core of the right created under Section 3 in reality rests on the duty to perform statutory obligations. Public accountability is a crucial feature that governs the relationship between ‘duty bearers’ and ‘right holders’. Recognizing the importance of accountability as a measure of administrative law, this Court in Vijay Rajmohan v. CBI, held as follows:

               “34. Accountability in itself is an essential principle of administrative law. Judicial review of administrative action will be effective and meaningful by ensuring accountability of the officer or authority in charge.

               35. The principle of accountability is considered as a cornerstone of the human rights framework. It is a crucial feature that must govern the relationship between “duty bearers” in authority and “right holders” affected by their actions. Accountability of institutions is also one of the development goals adopted by the United Nations in 2015 and is also recognized as one of the six principles of the Citizens Charter Movement.

               36. Accountability has three essential constituent dimensions : (i) responsibility, (ii) answerability, and (iii) enforceability. Responsibility requires the identification of duties and performance obligations of individuals in authority and with authorities. Answerability requires reasoned decision-making so that those affected by their decisions, including the public, are aware of the same. Enforceability requires appropriate corrective and remedial action against lack of responsibility and accountability to be taken. Accountability has a corrective function, making it possible to address individual or collective grievances. It enables action against officials or institutions for dereliction of duty. It also has a preventive function that helps to identify the procedure or policy which has become non- functional and to improve upon it.”

16. This Court, having considered these facts, is of the view that the action of the Respondent in not returning the EMD for 13 years is not only gross in nature, but also amounts to dereliction of duty by the Officers concerned at various levels and at various points of time. The conditions of the Contract would also indicate that the EMD amount is to be returned after completion of the defect liability period of 24 months, but the same has not been done. Even the noting made by the Commissioner on 30.12.2011 that the issue required Vigilance Enquiry, although has nothing to do with the Contractor/Writ Petitioner, has not even been further proceeded with and taken to its logical end.

17. In the above premise, this Court deems it appropriate to award interest on the delayed return of the EMD in accordance with the law laid down by the Hon’ble Apex Court in Poornima Advani v. State (NCT of Delhi) : (2025) 7 SCC 269 : 2025 SCC OnLine SC 419. The Hon’ble Apex Court, in Para Nos.14 to 22, held as under:

               “14. The concept of awarding interest on delayed payment has been explained by this Court in Karnataka Bank v. RMS Granites (P) Ltd. [Karnataka Bank v. RMS Granites (P) Ltd., 2024 SCC OnLine SC 4695] , we quote the following observations: (SCC OnLine SC para 16)

               “16. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say ten years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B ten years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B. [See: Alok Shanker Pandey v. Union of India [Alok Shanker Pandey v. Union of India, (2007) 3 SCC 545 : (2007) 136 Comp Cas 258] .]”

               15. Thus, when a person is deprived of the use of his money to which he is legitimately entitled, he has a right to be compensated for the deprivation which may be called interest or compensation. Interest is paid for the deprivation of the use of money in general terms which has returned or compensation for the use or retention by a person of a sum of money belonging to other.

               16. As per Black's Law Dictionary (7th Edn.): “interest” is the compensation fixed by agreement or allowed by law for use or detention of money or for the loss of money of one who is entitled to its use, especially, the amount owned to a lender in return for the use of the borrowed money.

               17. As per Stroud's Judicial Dictionary of Words and Phrases (5th Edn.): interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money.

               18. In Irrigation Deptt., State of Orissa v. G.C. Roy [Irrigation Deptt., State of Orissa v. G.C. Roy, (1992) 1 SCC 508] , a Constitution Bench of this Court opined that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is also the principle of Section 34 of the Civil Procedure Code.

               19. The essence of interest as held by Lord Wright in Riches v. Westminster Bank Ltd. [Riches v. Westminster Bank Ltd., 1947 AC 390 (HL)] , at AC p. 400, is that it is a payment, which becomes due because the creditor has not had his money at the due date. It may be recorded either as representing the profit he might have made if he had had the use of the money, or, conversely, the loss he suffered because he had not that use.

               20. In CIT v. Sham Lal Narula [CIT v. Sham Lal Narula, (1963) 50 ITR 513 : 1962 SCC OnLine Punj 35 : AIR 1963 P&H 411] , a Division Bench of the High Court of Punjab articulated the concept of interest as under: (SCC OnLine Punj) “The words “interest” and “compensation” are sometimes used interchangeably and on other occasions they have distinct connotation. “Interest” in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. In its narrow sense, “interest” is understood to mean the amount which one has contracted to pay for use of borrowed money. … In whatever category “interest” in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money belonging to another, or for the delay in paying money after it has become payable.”

               (emphasis supplied)

               21. The appeal filed against the aforesaid decision was dismissed by this Court in Sham Lal Narula v. CIT [Sham Lal Narula v. CIT, (1964) 53 ITR 151 : 1964 SCC OnLine SC151: AIR 1964 SC 1878] .

               22. In Hello Minerals Water (P) Ltd. v. Union of India [Hello Minerals Water (P) Ltd. v. Union of India, 2004 SCC OnLine All 2187 : (2004) 174 ELT 422] , ELT paras 15 & 16, aDivision Bench of the Allahabad High Court explained the concept of interest as under: (SCC OnLine All paras 31-33)

               “31. We may mention that we are passing the direction for interest since interest is the normal accretion on capital.

               32. Often there is misconception about interest. Interest is not a penalty or punishment at all. For instance, if A had to pay a certain sum of money to B at a particular time, but he pays it after a delay of several years, the result will be that the money remained with A and he would have earned interest thereon by investing it somewhere. Had he paid that amount at the time when it was payable then B would have invested it somewhere, and earned interest thereon. Hence, if a person has illegally retained some amount of money then he should ordinarily be directed to pay not only the principal amount but also the interest earned thereon.

               33. Money doubles every six years (because of compound interest). Rupees hundred in the year 1990 would become rupees two hundred in the year 1996 and it will become Rs 400 in the year 2002. Hence, if A had to pay B a sum of Rs 100 in the year 1990 and he pays that amount only in the year 2002, the result will be that A has pocketed Rs 300 with himself. This clearly cannot be justified because had he paid that amount to B in the year 1990, B would be having Rs 400 in the year 2002 instead of having only Rs 100. Hence, ordinarily interest should always be awarded whenever any amount is detained or realised by someone, otherwise the person receiving the amount after considerable delay would be losing the entire interest thereon which will be pocketed by the person who managed the delay, it is for this reason that we have ordered for payment of interest along with the amount realised as export pass fee.”

18. Having considered these facts, this Writ Petition is allowed with a direction to Respondent No.2 Corporation to refund the EMD of Rs.2,41,532/- within two weeks from today, along with simple interest @ 8% per annum from 10.03.2013 up to 16.02.2026. It is indicated that further delay (beyond 16.02.2026) will carry interest at the rate of 14% till the date of payment. No order as to costs.

Interlocutory Applications, if any, stand closed in terms of this order.