Date on which judgment was reserved : 09.03.2026

Date on which judgment was pronounced : 08.05.2026

Date on which judgment was uploaded

on the website of the High Court : 08.05.2026

APHC010434182024

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

(Special Original Jurisdiction)

[3327]

FRIDAY,THE EIGHTH DAY OF MAY

TWO THOUSAND AND TWENTY SIX

PRESENT

THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY

WRIT PETITION NO: 22088/2024

Between:

Jsc Golla Engineering Private Limited and Others ...PETITIONER(S)

AND

Oil And Natural Gas Corporation Limited and

Others

...RESPONDENT(S)

Counsel for the Petitioner(S):

1. M/S INDUS LAW FIRM

Counsel for the Respondent(S):

1. The Advocate General for Sri D S SIVADARSHAN

2

THE HON‟BLE SRI JUSTICE K. SREENIVASA REDDY

WRIT PETITION No.22088 of 2024

ORDER :

This Writ Petition is filed seeking to declare the action

of respondent No.1 in issuing termination Order dated

03.08.2024 under Section 3 Part(1) of the Integrity Pact and

Clause 8.3.4 of the Agreement dated 7.11.2022 and the

subsequent actions of issuance of Notice of Enquiry dated

09.08.2024 for blacklisting the petitioner company by

putting it on a „holiday‟, without any ground of violation

being made out, in terms of the Integrity Pact, or without

conducting an enquiry into the said matter, including in

terms of the Integrity Pact, or without even duly considering

the reply of the petitioner dated 23.07.2024 regarding the

alleged infractions, as being illegal and arbitrary and

consequently set aside the same.

2. Pursuant to a Tender Notice issued by 1

st

respondent for the purpose of carrying out the work of

surveys, design, detailed engineering, procurement,

transportation, fabrication, installation/erection, laying,

3

hook up, hydro -testing, testing, pre-commissioning,

commissioning along with associated terminal facilities and

systems for „creation of gas dehydration and DPD facilities

at (a) Tatipaka and Mandapeta GCS of Rajahmundry asset

(„Group A contract‟) and (b) Ramnad GCS of Cauvery asset

(„Group B contract‟) of LSTK basis, and subsequent

Operations and Management responsibility for the created

facilities for 7 years, 1

st petitioner company submitted its

offer dated 16.02.2022. The offer submitted by 1

st petitioner

company was accepted and 1

st respondent issued two

Letters of Intent, both dated 05.07.2022, and two

agreements, both dated 07.11.2022, were entered into

between 1

st petitioner company and 1

st respondent in

respect of the Group A and Group B contracts.

Majority shareholder in 1

st petitioner company is one

Jondishapour Company, which is a company registered

under the Laws of Iran, holding 51% of the shareholding.

In terms of the tender conditions itself, the bidding entity is

entitled to provide details of „supporting company‟ for

fulfilling the necessary criteria of financial and technical

4

eligibilities listed therein. At the time of submitting its

offer, 1

st petitioner company furnished details of 1

st

petitioner company along with agreements and

undertakings by its supporting company viz. Jondishapour

Company. In fact, on evaluation of the technical and

financial eligibility conditions and after satisfying that the

technical and financial eligibility conditions are fulfilled by

the supporting company, the contracts were awarded by

respondent No.1 to 1

st petitioner company.

As per the Notification of Intent, 1

st petitioner and the

supporting company were to issue Performance Bank

Guarantee (PBG) for due performance of the contract, for

3% each, totalling 6% of the total contract price, for each of

the contracts. As the supporting company has no office of

establishment in India, since it was incorporated in the

State of Iran, no Bank in India came forward to issue Bank

Guarantee at its behest. Therefore, 1

st petitioner itself

issued both the PBGs for the entire requisite amount as

required under the Notification of Award, and the same was

accepted by 1

st respondent and the same is recorded as

5

part of the Contracts dated 07.11.2022. Pursuant to the

same, the work was awarded and 1

st petitioner started

undertaking the works after incurring huge costs.

3. It is stated in the writ affidavit that after 298

days of accepting the PBGs for the entire value from 1

st

petitioner, 1

st respondent issued a letter dated 11.08.2023

to 1

st petitioner company seeking additional PBGs directly

to be provided by the supporting company . Though 1

st

petitioner company made endeavours to obtain PBG from

the supporting company, due to sanctions in place against

the State of Iran, it could not obtain the same. The same

was duly explained by 1

st petitioner company in its letter

dated 18.10.2023 addressed to 1

st respondent, to which

letters issued by the Banks regarding their inability to issue

PBGs in the name of the supporting company were

enclosed, and offered to provide Demand Draft for the said

entire guarantee amounts which the supporting company

was to provide, to secure the interest of 1

st respondent,

which is in line with the guidelines issued by the Ministry

of Finance. 1

st petitioner company also explained that it

6

had already issued Purchase Orders for majority of items

and construction was also under progress, and thus,

requested not to take any adverse action, as, anyway, PBGs

for the entire requisite amounts were already provided to

secure interest of 1

st respondent. Pursuant to the

explanation and undertakings, 1

st petitioner company was

given to understand that only upon acceptance of the said

explanation, pending payments receivable to 1

st petitioner

company were released.

It is stated that in terms of Clause 6.3.1.1 of the

Agreements, the scheduled completion date of the works is

5.5.2024 i.e. 22 months from the date of issue of

Notification of Award. In view of various reasons beyond

the control of 1

st petitioner company, including the delay

caused by 1

st respondent in providing access of the site to

the petitioners and delay in approval of equipment designs

and drawing by 1

st respondent, the works could not be

completed by the said date, and so, vide letter dated

12.04.2024, 1

st petitioner company sought extension till

31.3.2025. Considering the same and without seeking any

7

further explanation, 1

st respondent extended the contract

period up to 04.08.2024 and sought to extend the validity

of the Bank Guarantees, without even any mention of

requirement of additional PBGs directly to be provided by

the supporting company. Thus, till April, 2024, there was

no whisper of any alleged violation by 1

st petitioner

company and the works undertaken were in full swing.

It is further stated that after 22 months of issuance of

the Notification of Award, 1

st petitioner company received a

letter dated 23.05.2024 from 1

st respondent whereunder

the following 3 clarifications were sought viz. (i) in relation

to the regulatory filings being completed for the invested

amount by 1

st petitioner‟s supporting company at the time

of incorporation of the petitioner; (ii)regarding the prior

disqualifications of Mr. Siva Kumar Golla, who is one of the

Directors of 1

st petitioner company, and (iii) copy of the

power of attorney/authorization granted to Mr. Siva Kumar

Golla by the Iranian supporting company , and it was

requested to provide the information by 27.5.2024. 1

st

petitioner company, vide letter dated 27.05.2024, sought

8

extension of time till 10.06.2024, for providing the

information. 1

st respondent gave reply dated 28.5.2024,

extending time therefor till 29.05.2024. 1

st petitioner

company sent clarifications vide e-mail dated 29.05.2024

and sought 10 days‟ time till 10.06.2024, to provide further

information with respect to filing of Form FC-GPR. The

petitioner applied for the same and was awaiting issuance

of the same from the RBI. 1

st respondent sent an e-mail

dated 01.06.2024, rejecting the request for the additional

time, without indicating whether the information provided

was insufficient or irrelevant. 1

st Petitioner company

received e-mail dated 03.06.2024 from Bank of

Maharashtra regarding invocation of the PGBs, attaching

letter dated 03.06.2024 issued by the respondents to the

Bank seeking to invoke and encash the subject PGBs. On

05.06.2024, it came to the knowledge of 1

st petitioner

company that a Letter of Termination dated 03.06.2024,

was e-mailed to 1

st petitioner company at late hours on

03.06.2024, whereby the respondents sought to terminate

the Contract both in terms of Clause 8.3.4 of the General

9

Conditions of Contract and Paragraph (1) of Section 3 of the

Integrity Pact. Challenging the same, 1

st petitioner company

filed Writ Petition No.12243 of 2024 before this Court, and

vide Order dated 09.07.2024, this Court disposed of the

said Writ Petition, directing to treat the Letter of

Termination dated 03.06.2024 as show -cause notice, to

which 1

st petitioner company was asked to submit reply

within a period of two weeks. Accordingly, 1

st petitioner

company submitted reply dated 23.07.2024. But, without

considering the explanation that there is no illegality

committed with respect to the manner of incorporation of

1

st petitioner company, the respondents, as a part of their

premeditated scheme, passed the impugned Letter of

Termination dated 03.08.2024, terminating the contract, in

terms of Clause 8.3.4 of the General Conditions of Contract

and Paragraph (1) of Section 3 of the Integrity Pact, on the

following grounds.

(i) Mr. Siva Kumar Golla, while being appointed as

Director of M/s. JSC Golla Engineering Private

Limited, was a defaulting Director under Section

10

164 (2) (a) of the Companies Act, 2013 and was

disqualified from 01.11.2016 to 31.10.2021;

(ii) Non-compliance of statutory provisions related

to NDI Rules and FC GPR putting the reliability

and credibility of Contractor in question;

(iii) Non-submission of PBG by supporting

company M/s. Jondishapour Company, Tehran,

Iran;

(iv)Very minimal progress of 31.64% as on date.

Challenging the same, the present Writ Petition is

filed.

4. (a) Respondents filed counter affidavit denying

the material averments in the writ affidavit and contending

inter alia that the parties to the subject contract agreed that

all disputes or differences arising out of the subject

contract, are amenable to the Courts in Delhi, and in view

of the same, this Court has no jurisdiction to entertain the

Writ Petition; that a Writ Petition under Article 226 of the

Constitution of India is not maintainable in a private

contractual matter like the present one, wherein the

11

respondents acted solely in accordance with the terms of a

private contract entered into, between the parties.

(b) It is further stated that M/s. Jondishapour

Company, an Iranian Com pany, is majority shareholder,

holding 51% share in 1

st petitioner company, and 1

st

petitioner company relied on technical and financial

credentials of the said company for fulfilment of the bidding

criteria set out in the present tender process, but the

statutory auditors of ONGC made certain observations that

the 51% shareholding of 1

st petitioner company subscribed

by the Iranian Company was not subscribed through

remittance of funds from foreign sources, rather the

remittance was made from Indian source s i.e. by Ms.

Jasmi, as is evident from e-form 20A and the bank

statement available in public domain. ONGC referred the

issue to internal committee, Fraud & Risk Management

Committee (FRMC) under „Audit Committee‟ of the Board of

Directors of ONGC, for further examination. The FRMC

requested 1

st petitioner company to provide documents to

support its case that the Iranian Company made relevant

12

inward remittance of foreign funds for acquisition of the

shareholding of the petitioner company, and that Mr. Siva

Kumar Golla, Director of the company was not disqualified

under Section 164 of the Companies Act, 2013 at the time

of his appointment as Director of 1

st petitioner company.

Upon reviewing the information provided by 1

st petitioner

company, it was concluded that there are no supporting

documents to support version of 1

st petitioner company and

therefore it was recommended for termination of the

contract. Accordingly, termination order dated 03.06.2024

was issued terminating the contract inter alia on the

ground of element of fraud arising in subscription of the

shareholding of 1

st petitioner company by the Iranian

Company. Challenging the same, the petitioners filed W.P.

No. 12243 of 2024 before this Court, and pursuant to the

Order dated 09.07.2024 pa ssed by this Court in

W.P.No.12243 of 2024, ONGC, on receipt of reply dated

23.07.2024, passed the impugned termination order. The

impugned termination order was issued after considering

13

all the contentions of 1

st petitioner company in detail in

accordance with the settled principles of law.

(c) As regards the 2

nd ground of termination, it is

further stated that 1

st petitioner company admitted that as

per the Foreign Exchange Management (Non -debt

Instruments) Rules, 2019, it was required to file FC-GPR

within 30 days of subscription of the Iranian Company

shares as the Iranian Company qualifies as a non-resident

shareholder as per the NDI Rules, but it had inadvertently

missed filing of Form-FC-GPR post subscription of the

Iranian Company shares. After receipt of letter dated

23.05.2024 from ONGC, 1

st petitioner company filed an

application for submission of Form FC -GPR with its

authorized dealer bank along with late fee submission

payable under the Guidelines issued by the RBI and it is

awaiting the acknowledgement of submission of the said

Form, from the RBI.

As per Rule 3 of the NDI Rules, except as provided in

the Foreign Exchange Management Act, 1999 (FEMA) or the

Rules and Regulations made thereunder, no person

14

residing outside India will make any investment in India,

and as per Paragraph 1 (d) (iii) of Schedule I read with Rule

6 of the NDI Rules, a non-resident is permitted to subscribe

to the equity shares of an Indian company incorporated by

it against the pre-incorporation expenses incurred by the

non-resident for incorporation of the Indian company

subject to the Rules and Guidelines issued by the

Government of India and with the approval of the RBI.

The directions issued by the RBI do not prescribe

guidelines for issuance of equity shares by a company

incorporated in India to a non-resident entity, and such

issuance of equity shares is governed solely by the

provisions of the NDI Rules and the FDI Policy read with

FEMA. If the shares were allotted to the Iranian Company

against its alleged pre-incorporation expenses, petitioner

should have provided proof of such subscription at the time

of filing INC 20A. Therefore, issuance of equity shares by

1

st petitioner company to the Iranian Company will not be

considered as „remittance to a non-resident‟ under the

aforementioned directions. Issuance of shares to the

15

Iranian Company will be required to comply with the

provisions of the NDI Rules and the FDI Policy, and in view

of the above, the issuance of the shares by the JSC Golla to

the Iranian Company is in contravention of the NDI Rules

and the FEMA.

Initially, when petitioner No.1 was asked to produce

FC-GPR, on one hand, it requested time till 10.06.2024 to

furnish a copy of FG-GPR, but even after so many days

thereafter the petitioners did not provide the said

document, and on the other hand, it furnished a copy of

the opinion issued by a Company Secretary along with the

Writ Petition, wherein it was stated that the investment

from the foreign entity did not occur in the foreign money.

This shows that the petitioners do not have FC-GPR and

they approached this Court with unclean hands. These

factors put credibility and reliability of 1

st petitioner

company in question, and continuance of the contract with

such a company is undoubtedly harmful to the execution of

the contract and requires immediate termination.

16

(d) As regards 1

st ground of termination, it is stated

that the list of disqualified Directors for the financial years

2013-14, 2014-15 and 2015-16 issued by the Registrar of

Companies, Hyderabad shows the period of disqualification

of the Director from 1.11.2016 till 31.10.2021, and the date

of incorporation of 1

st petitioner company is on 17.08.2021,

by which date Mr. Siva Kumar Golla was disqualified under

Section 164 (2) (a) of the Companies Act, 2013. As per the

publicly available records, the Ministry of Corporate Affairs

(MCA) has not issued any Notification on its web portal

removing the Director from the list of disqualified Directors

under Section 164 (2) (a) of the Companies Act, 2013.

Therefore, the documents submitted by the petitioners

along with the reply, are not sufficient to prove that the

Director was not disqualified under Section 164 (2) (a) of

the Companies Act, 2013.

(e) As regards the 3

rd ground of termination, it is sated

that although the PBGs furnished by 1

st petitioner company

was momentarily recorded in the agreement, ONGC never

waived requirement of furnishing the PBGs by the Iranian

17

foreign entity. In fact, ONGC asked the petitioner No.1

company on multiple occasions after the agreement, to

furnish such bank guarantee, but the petitioner failed to do

so. It is a justifiable reason for terminating the contract.

(f) As regards 4

th ground of termination, it is stated

that the petitioners completed only 31.64% of the work

under the contract for Group A, but not 60%, as contended

by the petitioners. The extension of time given to 1

st

petitioner company was only until 04.08.2024, by reserving

the right of the ONGC to levy liquidated damages. Though

ONGC requested the petitioner No.1 company to expedite

completion of the works and complete the project within the

stipulated date of completion, it failed to do so within the

scheduled date of completion of the project.

(g) It is further stated that Clause 8.3.7 of the Tender

as well as the Contract contemplates initiation of the

inquiry proceedings consequent upon termination of a

contract, and pending such inquiry proceedings, the

defaulting party would be subject to temporary holiday

proceedings. The petitioners did not raise any objection to

18

such clauses at the time of entering into the contract or

during the tender process. Now, the petitioners cannot

challenge the validity of the clauses, after they have been

duly invoked by the ONGC. When the inquiry proceedings

are ongoing, the defaulting party will not be allowed to

participate in tender proceedings. The petitioners have a

suitable alternative remedy in terms of the contract to claim

suitable damages in the event they are able to establish

that the termination is illegal. Instead of participating in

the process of inquiry, the petitioners chose to approach

this Court. The Writ Petition is premature. Hence, it is

prayed to dismiss the Writ Petition.

5. Petitioners filed reply affidavit to the counter

affidavit filed by the respondents, denying the material

averments in the counter affidavit and stating inter alia as

follows:

(a) The Writ Petition is filed challenging the arbitrary

and unjust action of the respondents, which ar e public

entities, and the same is maintainable even in the

contractual field. The main subject contract of which the

19

Integrity Pact is also to be read as part and parcel, is in

relation to the works being undertaken at places of

Tatipaka and Mandapet of Dr. B.R. Ambedkar Konaseema

District, which is also being supervised and performed in

the State of AP. The petitioners are challenging the

arbitrary manner in which the termination was carried out

by the respondents, being an instrumentality of State, and

notwithstanding the claim for damages and availability of

alternative remedies, the Writ Petition is maintainable.

(b) As regards non-filing or delay in filing of FC-GPR, it

is stated that as per the extant law, non-filing of FC-GPR

(Foreign Currency-Gross Provisional Return) is a curable

defect and the violation is compoundable even when there

is delay, and non-filing thereof does not make the actual

investment illegal or the shareholding illegal. The said

reporting infraction does not amount to contravention of

the provisions of the Integrity Pac t. There is no

misrepresentation or suppression by the petitioners, as the

same is by oversight. The delay in its issuance is that

because sanctions are in place against the State of Iran, the

20

Authorized Dealer Bank, which has to process the said FC-

GPR on behalf of the RBI, is taking more time, and the

petitioners escalated the issues with FDI Cell (Foreign

Investment Facilitation Portal), and after processing the

same, the Ministry of Petroleum and Oil & Na tural Gas

conveyed through OEM that the investment is in line with

the FDI Policy and indicated that since the FC -GPR is

compliance issues, advised the petitioners to approach the

RBI directly. Accordingly, the petitioners approached the

RBI and the same is under active consideration. The

respondents raised the issue of FC-GPR after nearly 2 years

of the Award of the Contract, and even without

understanding the nitty-grittys that are associated with the

filing of the FC-GPR, the contract was terminated b y

attributing the violation of Integrity Pact. The respondents

appear to pre-determined to terminate the contract.

Further, INC-20A form is filed to signify the

commencement of business but it does not mean that the

transactions mentioned therein are reflective of the

subscription amount.

21

(c) As regards disqualification of Mr. Siva Kumar

Golla, it is stated that there was no disqualification

attached to Mr. Siva Kumar Golla at the time of

incorporation of the company and to the said effect, the

Registrar of Companies issued a letter of good standing.

DIR No.3, INC-9 or DIR-8, DIR-9 or DIR-10 forms need not

even be provided to the ONGC as the query regarding

Sivakumar Golla‟s disqualification at the time of

incorporation of the petitioner company, was already

answered. When ROC, after ensuring all compliances, duly

incorporated the petitioner company, the respondents are

raising frivolous objections when no such objections or

compliance related issues were ever raised by the

ROC/Ministry of Corporate Affairs, which is the competent

authority.

(d) As regards furnishing of PBGs, it is stated that the

PBGs were accepted by the respondents and the same were

recorded in the agreement and thus not they cannot

contend that the same were not provided in the manner as

required under the NOA. After having accepted the PBGs,

22

recording the same in the agreement and also after legally

invoking the same and receiving the amounts, the

respondents cannot allege the same to be a justifiable

reason for termination of the contract.

The respondents are unable to conclusively state if the

present dispute is a breach of contractual terms or a

violation of Integrity Pact, which has nothing to do with the

performance of the contract, and having admitted that the

termination was primarily based on the alleged breach of

Integrity Pact, they cannot now seek to rely on the alleged

breach of the terms of the contract.

(e) As regards delay, it is stated that multiple delays

were caused at the instance of the respondents and it was

due to such delay that the execution of the contract got

delayed. The conduct of the respondents is mala fide,

arbitrary and against the principles of natural justice. The

petitioners undertook the work at the site by employing its

men and machinery by incurring huge amounts, and there

is no loss or injury whatsoever caused to the respondents.

The petitioners placed huge orders for purchase of

23

exclusive/customised machinery and necessary equipment,

and they are in an advanced stage of manufacturing and

some are ready to be delivered at the site as they were

imported and lying at Mumbai Port, and some are ready for

despatch from vendor works and some are ready for final

inspection, and at that stage, ONGC stopped responding.

Hence, it is prayed to allow the Writ Petition.

6. The 1

st petitioner filed an additional affidavit

stating inter alia that the respondents filed Transfer Petition

(Civil) No.3360 of 2024, seeking transfer of the present Writ

Petition to the High Court of Delhi, primarily in view of

jurisdiction clause as specified under the Integrity Pact

annexed to the Agreement dated 07.11.2022, and also filed

another Transfer Petition seeking transfer of a Writ Petition

pending before the Madurai Bench of Madras High Court,

and the Hon‟ble Supreme Court vide Order dated 27.3.2025

dismissed the Transfer Petitions.

It is further stated that during pendency of the Writ

Petition, the petitioner, vide letter dated 08.12.2024,

requested resolution of the matter through mediation by

24

the Outside Expert Committee, but the same was rejected

by the respondents on 02.01.2025. It is further stated

that even thereafter, the petitioner, without prejudice to the

contentions raised in the present Writ Petition, filed a claim

vide letter dated 21.01.2025, for amicable settlement of the

dispute, pursuant to which, several meetings took place,

but as on date, there is no concrete resolution. It is

further stated that as of now, the works have come to a

complete stand still, and had the petitioners allowed to

continue the works, the works would have been completed

by now and the same would have become functional as of

date. It is stated that the entire termination process and

the manner in which the same was issued is fraught with

arbitrariness and mala fides, and the same is unjust and

illegal. As a result of the same and in view of the illegal

encashment of the bank guarantees, the petitioners had

fallen in huge debt trap and is in severe financial and legal

distress, as it had already placed purchase orders towards

fulfilment and performance of the contract, and the

25

requisite equipment is now made ready to be used.

Hence, it is prayed to allow the Writ Petition.

7. Heard the learned counsel for the petitioners

and the learned Advocate Gene ral appearing for the

respondents. Perused the record.

8. Learned counsel for the petitioners contended

that the grounds on which the impugned termination order

dated 03.08.2024 was passed by the respondents are

fraught with arbitrariness and mala fides. He submits that

the first ground that Mr.Siva Kumar Golla was a defaulting

Director by the date of incorporation of 1

st petitioner

company does not stand, in view of the intimation dated

04.09.2024, issuing „Certificate of Good Standing‟ by the

Registrar of Companies, Telangana, Hyderabad; that the

second ground with regard to non-filing of FC-GPR form

with the Reserve Bank of India for subscription of the

supporting Iranian copany, is permitted to be compounded

by the Reserve Bank of India and the petit ioners paid

penalty therefor, as such, the same is not a ground to

26

terminate the contract; that 51% shareholding to the

supporting Iranian company was issued as against the pre-

incorporation expenses incurred by the said company, and

the amount involved therein is far less than the expenses

incurred by the supporting Iranian company towards pre-

incorporation expenses.

It is his submission that reason for non-submission of

the PBGs by the supporting Iranian company was explained

by the petitioners, and the petitioners furnished PBGs for

the entire requisite amount, including the amounts of PBGs

to be provided by the supporting Iranian company, and the

same was incorporated in the contract agreement dated

07.11.2022, pursuant to which 1

st petitioner company

commenced the work. He submits that in fact, the time for

execution of the works was extended by the respondents,

without there being any such condition, but only

instructing to extend the validity of the existing PBGs, and

in fact, the respondents invoked and encashed the PBGs

pursuant to the earlier letter of termination dated

03.06.2024, and therefore, at this stage, the respondents

27

are estopped from raising the said ground as a reason for

termination of the contract. He submits that the other

ground with regard to very minimal progress, is not

tenable, as the petitioners completed more than 60% work,

but not 31.64% as contended by the respondents, and had

it been allowed to continue the work, the same would have

been completed by now. He submits that the entire action

of respondents is tainted with arbitrariness and mala fides

and hence, he prayed to set aside the impugned order.

9. On the other hand, the learned Advocate General

appearing for the respondents contended that existence of

arbitration clause is a bar to entertain the Writ Petition,

and in view of Clause 1.3.2 of the General Conditions of

Contract annexed to the contract agreement dated

7.11.2022, the parties agreed to resolve the disputes

through arbitration. He submits that the petitioners failed

to complete the subject work within the scheduled

completion date and they only completed 31.64% of work,

and ONGC is not fault for the delay in execution of the

work by the petitioners. He submits that 51%

28

shareholding subscribed by the su pporting Iranian

company was not funded through foreign remittance, it was

funded through Indian sources, through intermediary

agency Ms.Jasmi, and the same is non-compliance with the

said statutory requirement, and hence, issuance of equity

shares by 1

st petitioner company to the supporting Iranian

company will not be considered as remittance to a non -

resident, and the same is violation of Integrity Pact. It is

his further submission that the respondents never waived

the requirement of furnishing of Additional PBG by the

supporting Iranian company, and mere recording the PBGs

furnished by 1

st petitioner company in the contract

agreement dated 07.11.2022 does not amount of waiver of

the said requirement, which is incorporated not merely to

secure monetary obligations, but to ensure the genuine

participation and commitment of the supporting Iranian

company in execution of the contract. Considering these

aspects, the contract of 1

st petitioner company was rightly

terminated by the respondents vide the impugn ed

29

termination order dated 03.08.2024, and there are no

grounds to interfere with the same. `

10. Now, the point that arises for consideration in

this Writ Petition is whether the grounds on which the

impugned termination order dated 03.08.2024 was passed

by the respondents are sustainable in the eye of law and

whether the same requires interference in exercise of

judicial review by this Court under Article 226 of the

Constitution of India ?

11. The factual matrix is not in dispute. Pursuant

to the Tender Notice issued by 1

st respondent for the Group

A and Group B contracts, the offer submitted by 1

st

petitioner company was accepted and 1

st respondent issued

two Letters of Intent, both dated 05.07.2022, and two

agreements, both dated 07.11.2022, were en tered into

between 1

st petitioner company and 1

st respondent in

respect of the Group A and Group B contracts. Majority

shareholder in 1

st petitioner company is one Jondishapour

Company, which is a company registered under the Laws of

30

Iran, holding 51% of the shareholding. 1

st petitioner issued

the PBGs for the entire requisite amount as required under

the Notification of Award, and the same was accepted by 1

st

respondent and the same is recorded as part of the contract

agreement dated 07.11.2022, pursuant to which 1

st

petitioner started undertaking the works. Thereafter, 1

st

respondent issued a letter dated 11.08.2023 to 1

st

petitioner company seeking additional PBGs directly to be

provided by the supporting company. 1

st petitioner

informed 1

st respondent through letter dated 18.10.2023

that though 1

st petitioner company made endeavours to

obtain PBG from the supporting company, due to sanctions

in place against the State of Iran, it could not obtain the

same. In terms of Clause 6.3.1.1 of the Agreements, the

scheduled completion date of the works is 5.5.2024 i.e. 22

months from the date of issue of Notification of Award. It

is stated by the petitioners that in view of various reasons

beyond the control of 1

st petitioner company, including the

delay caused by 1

st respondent in providing access of the

site to the petitioners and delay in approval of equipment

31

designs and drawing by 1

st respondent, the works could not

be completed by the said date, and so, vide letter dated

12.04.2024, 1

st petitioner company sought extension till

31.3.2025. Pursuant to the said request, 1

st respondent

extended the contract period up to 04.08.2024 and sought

to extend the validity of the Bank Guarantees. 1

st

petitioner company received a letter dated 23.05.2024 from

1

st respondent whereunder the following 3 clarifications

were sought viz. (i) in relation to the regulatory filings being

completed for the invested amount by 1

st petitioner‟s

supporting company at the time of incorporation of the

petitioner; (ii)regarding the prior disqualifications of Mr.

Siva Kumar Golla, who is one of the Directors of 1

st

petitioner company, and (iii) copy of the power of

attorney/authorization granted to Mr. Siva Kumar Golla by

the Iranian supporting company. 1

st Petitioner company

received e-mail dated 03.06.2024 from Bank of

Maharashtra regarding invocation of the PGBs, attaching

letter dated 03.06.2024 issued by the respondents to the

Bank seeking to invoke and encash the subject PGBs. 1

st

32

respondent issued Letter of Termination dated 03.06.2024,

to 1

st petitioner company. Challenging the same, 1

st

petitioner company filed Writ Petition No.12243 of 2024

before this Court, and vide Order dated 09.07.2024, this

Court disposed of the said Writ Petition, directing to treat

the Letter of Termination dated 03.06.2024 as show-cause

notice, to which 1

st petitioner company was asked to

submit reply within a period of two weeks. Accordingly, 1

st

petitioner company submitted reply dated 23.07.2024.

Thereafter, the respondents passed the impugne d

termination Order dated 03.08.2024. Hence, the present

Writ Petition.

12. The first ground on which the impugned

termination order dated 03.08.2024 was passed by the

respondents is that Mr. Siva Kumar Golla, while being

appointed as Director of the 1

st petitioner company, was a

defaulting Director under Section 164 (2) (a) of the

Companies Act, 2013, and was disqualified from

01.01.2016 to 31.10.2021. According to the respondents,

the list of disqualified Directors for the Financial Years

33

2013-14, 2014-15 and 2015-16, issued by the Registrar of

Companies, Hyderabad, shows that the period of

disqualification of the said Director was from 01.11.2016 to

31.10.2021, and the Ministry of Corporate Affairs has not

issued any Notification on its web portal removing the said

Director from the disqualified Directors, and as such, by

the date of incorporation of the 1

st petitioner company on

17.08.2021, he was disqualified under Section 164 (2) (a) of

the Companies Act, 2013. On the other hand, it is the

contention of learned counsel for petitioners that there was

no disqualification attached to the said Mr. Siva Kumar

Golla, at the time of incorporation of the 1

st petitioner

company and that when the Registrar of Companies duly

incorporated 1

st petitioner company, after ensuring all

compliances, it is not open to the respondents to raise such

a query. A perusal of the material on record discloses that

the Registrar of Companies, after observing all necessary

statutory compliances, issued the Certificate of

Incorporation in respect of the 1

st petitioner company.

Further, on a perusal of the intimation vide File No.

34

MISC/ROCH/00520922/1317, dated 04.09.2024, issued

by the office of the Registrar of Companies, Telangana,

Hyderabad, whereby „Certificate of Good Stand ing‟ was

issued to the said Mr. Siva Kumar Golla, it is clear that as

per the records maintained by the said office, Mr. Siva

Kumar Golla, who digitally signed Form INC 35 and INC 9

for the process of incorporation of the 1

st petitioner

company, which was incorporated on 17.08.2021, had valid

DIN (00520922) which was approved. It is further clear

from the said Intimation that as per the MCA Portal, the

present status of the DIN: 00520922 of Mr. Siva Kumar

Golla, is approved. In view of the intimation given by the

Registrar of Companies that Mr. Siva Kumar Golla had

valid DIN which was approved, by the date of the 1

st

petitioner company, the said ground is unfounded and not

tenable.

13. The second ground on which the impugned

termination order dated 03.08.2024 was issued is with

regard to non-filing of FC-GPR form with RBI for

35

subscription of shares by Jondishapour Company (Iranian

Company) in 1

st petitioner Company.

It is the case of the petitioners that non-compliance of

filing of FC-GPR is a curable defect and cannot be deemed

to be a statutory violation leading to termination of the

contract. He further submits that pursuant to the

application made by the petitioners, the Reserve Bank of

India passed order dated 25.02.2026, compounding the

said contravention, and in view of the same, the second

ground for termination does not stand to the legal scrutiny.

14. FC-GPR (Foreign Currency -Gross Provisional

Return) is a form which has to be filled with the Reserve

Bank of India to report receipt of Foreign Direct Investment

into a company when the said company issues shares to a

foreign entity. As per the Foreign Exchange Management

(Non-debt Instruments) Rules, 2019, 1

st petitioner company

was required to file FC-GPR within 30 days of subscription

by the Iranian Company shares, as the Iranian Company

(supporting company) is a non-resident shareholder as per

the NDI Rules. In the event of non-reporting within the

36

time, it can be done with delay and the contravention is

compoundable.

15. Regulation 4 (1) of the Notification No. FEMA

395/2019-RB dated 17.10.2019 , an Indian company

issuing equity instruments to a person resident outside

India in accordance with the said Regulations, shall submit

to the Reserve Bank of India, a report in Form FC-GPR,

along with documents prescribed therein, within a period of

30 days from the date of issue of the equity instruments.

In the case on hand, there is a contravention of the said

Regulation by the petitioners whereby 1

st petitioner

company failed to submit the report in Form FC-GPR in

respect of issue/allotment of 5,100 equity shares, worth

Rs.51,000/- in favour of the supporting Iranian Company

viz. Jondishapour Company, Iran on 22.11.2021. The

same was reported on 19.12.2025 with a delay of 3 years

11 months and 27 days. In terms of Section 15 of the

Foreign Exchange Management Act, 1999, a person

committing any contravention under Section 13 of the said

Act, shall be eligible to be compounded upon submission of

37

an application and as prescribed under the Compounding

Proceedings Rules, 2024. Pursuant to the application

dated 20.12.2025 submitted by 1

st petitioner company, the

Reserve Bank of India passed Order dated 25.02.2026, in

exercise of the powers conferred under section 15 (1) of the

Foreign Exchange Management Act, 1999 (FEMA) and the

Rules/ Regulations/ Notifications made thereunder, stating

that the contravention i.e. delay in submission of FC-GPR

after issue of shares to a person resident outside India,

shall be compounded by payment of penalty amount of

Rs. 6,375/-. A copy of the said Order dated 25.02.2026

passed by the Reserve Bank of India, along with online

payment receipt of the penalty amount, has been filed by

the petitioners before this Court, along with a Memo (vide

WP SR 25321 of 2026), on 26.02.2026. The same is placed

on record. Admittedly, the same is a curable defect and

the same is permitted to be compounded by virtue of the

Order passed by the Reserve Bank of India. Therefore, it

cannot, under any stretch of imagination, be a ground to

terminate the contract.

38

16. According to the respondents, 51% shareholding

subscribed by the supporting company was not funded

through foreign remittances, but it was done through

Indian sources i.e. payments made by one Ms. Jasmi

through IMPS from IDFC Bank as reflected in Form INC

20A and bank statements available in the public domain.

Even in respect of allotment of the shares to a non-resident

against pre-incorporation expenses, it is the contention of

the respondents that as per the FDI Policy, only a wholly

owned subsidiary is permitted to issue shares against the

pre-incorporation expenses to non -resident parent

company, and further, the value of the equity shares issued

by the Indian company to the non -resident against pre-

incorporation expenses cannot exceed 5% of the paid up

share capital of the Indian Company or USD 5,00,000,

whichever is lower.

17. Whereas it is the contention of the petitioners

that the receipt of share subscription amount in foreign

currency is not mandatory for issuance of shares by an

Indian Company, but shares can be issued against pre -

39

incorporation expenses undertaken by the said non -

resident/foreign company; that in the case on hand, in

respect of the pre-incorporation expenses incurred by the

supporting company, the shares were allotted to the

supporting company and that the amount involved is

nominal i.e. Rs. 51,000/- which is far less than the

expenses incurred by the supporting company.

18. The learned counsel places reliance on

Paragraph 6 (ii) of the Consolidated FDI Policy Circular of

2020 issued by the Department of Promotion of Industry

and Internal Trade (FDI Division), Ministry of Commerce

and Industry, Government of India. Paragraph 6 of the

Circular deals with „Conversion of ECB/Lump sum

Fee/Royalty, etc. into Equity‟. Paragraph 6 (ii) reads that

general permission is also available for issue of

shares/preference shares against lumpsum technical

know-how fee, royalty due for payment, subject to entry

route, sectoral cap and pricing guidelines (as per the

provision of para 2 above) and compliance with applicable

tax laws. It also makes it clear that issue of equity shares

40

against any other funds payable by the investee company,

remittance of which does not require prior permission of

the Government of India or Reserve Bank of India under

FEMA, 1999 or any Rules/Regulations framed or directions

issued thereunder, or has been permitted by the Reserve

Bank under the Act or the Rules and Regulations framed or

directions issued thereunder is permitted. Further, a

perusal of clause (iii) of the General Conditions mentioned

under the said Paragraph makes it clear that for sectors

under automatic route, issue of equity shares against

import of capital goods/machinery/ equipment (excluding

second-hand machinery) and pre -operative/pre-

incorporation expenses (including payments of rent, etc.) is

permitted under automatic route subject to compliance

with respective conditions mentioned above, and reporting

to RBI in Form FC-GPR as per the prescribed under the FDI

Policy. Admittedly, in the case on hand, the contravention

of non-filing of Form FC-GPR is compounded by the

competent authority viz. Reserve Bank of India, vide the

Order dated 25.02.2026, referred supra. Therefore, from

41

the recitals in Paragraph 6 (ii) read with clause (iii) of the

General Conditions mentioned thereunder, of the

Consolidated FDI Policy Circular of 2020 issued by the

Department of Promotion of Industry and Internal Trade

(FDI Division), Ministry of Commerce and Industry,

Government of India, coupled with the compounding Order

dated 25.02.2026 passed by the Reserve Bank of India,

general permission is also available for issue of

shares/preference shares against the amounts mentioned

therein, including pre-incorporation expenses. As such,

the contention of the learned Advocate General on this

aspect is untenable and not sustainable.

19. The other ground on which the impugned order

of termination dated 03.08.2024 was issued is non-

submission of PBGs by the supporting company. 1

st

petitioner company was incorporated as a Joint Venture

Company between Jondishapour Company, an Iranian

Company, with 51% stake, and Mr. Venkatachalam

Gedupudi, who was the promoting Director and promoter.

The paid-up capital of 1

st petitioner company is Rs.

42

1,00,000/-, with 51% (Rs. 51,000/-) held by the Iranian

Company and 49% held by the said promoter Director, Mr.

Venkatachalam. Admlittedly, 1

st petitioner participated in

the subject tender process and was issued Group A

Contract and Group B con tract vide separate Letters of

Intent dated 05.07.2022 and two agreement, both dated

07.11.2022, were entered into, between 1

st petitioner

company and 1

st respondent Corporation in respect of

Group A and Group B contracts. As per the Notification of

Intent, 1

st petitioner company and the supporting Iranian

company have to submit PBGs for 3% each, totalling 6% of

the total contract price, for each of the contracts, for due

performance of the contract. In view of the fact that the

supporting company was incorporated in the State of Iran

and as no bank in India came forward to issue Bank

Guarantee at its behest, 1

st petitioner company furnished

PBGs for the entire requisite amount as required under the

Notification of Award. 1

st respondent Corporation accepted

the PBGs furnished by the 1

st petitioner company for the

entire amount to a tune of Rs. 9.72 Crores and the same

43

was recorded in the said contracts. Clause 3.3 of the

General Conditions of the Contract annexed to Contract

Agreement dated 07.11.2022 , which deals with

Performance Guarantee, reads as under:

“3.3. Performance Guarantee:

3.1.1. The Contractor has furnished to the company

the following Performance Bank Guarantee (PBG) for

due performance of the contract:

a) PBG NO. 0200222IPG011396, dated

19.10.2022, for Rs. 4,86,08,548.00 issued by

Bank of Maharashtra, Miyapur Branch, Telangana

valid up to 05.07.2025.

b) PBG NO. 0200222IPG011379, dated

19.10.2022, for Rs. 4,86,08,548.00 issued by

Bank of Maharashtra, Miyapur Branch, Telangana

valid up to 05.07.2025.

On successful commissioning and at start of O & M

contract, the contractor shall be required to submit

another PBG valid for 7 years + 60 days duration and

of the value of 3% average annualised O & M contract

value within 15 days from the date of completion of 72

hrs. PGTR.”

44

20. The reason offered by the 1

st petitioner company

for not providing the PBG by the supporting company is

that the supporting company was incorporated in Iran and

in view of the sanctions, the Banks in India did not come

forward to provide PBG on behalf of the said supporting

company in spite of best efforts being made, and in view of

the same, 1

st petitioner furnished the PBGs for the entire

requisite amount by including the amount of PBG to be

furnished by the supporting company. Admittedly, no

objection was raised for the same by the 1

st respondent

Corporation and the same was incorporated in the contract

entered into between the parties, pursuant to which the 1

st

petitioner company started executing the contract work.

About 10 months thereafter, 1

st respondent Corporation

issued a letter dated 11.08.2023 to the 1

st petitioner

company, seeking additional PBGs from the supporting

Iranian company. It is the case of the petitioners that they

could not obtain PBGs on behalf of the supporting Iranian

company in view of the sanctions in place against the State

of Iran, and that they explained the same to 1

st respondent

45

Corporation vide letter dated 18.10.2023, duly supported

by the letters issued by the Banks expressing their inability

to issue PBGs. It is their further case that they offered to

provide even demand drafts for the entire amount which

the supporting Iranian company, was asked to provide by

way of PBGs, to the respondent No.1 Corporation, in line

with the guidelines of the Ministry of Finance on PBGs. It

is their further case that on the issue of the PBGs, 1

st

respondent Corporation stopped allowing the petitioners to

execute the project from August, 2023 to December, 2023,

and in the month of December, 2023, the petitioners were

allowed to continue to execute the project without raising

any issue regarding PBGs.

21. It is the further case of the petitioners that as

the schedule date of completion of project in terms of

Clause 6.3.1.1. of the contract was coming to an end by

05.05.2024, the petitioners addressed letter dated

12.04.2024, to extend the time for completion of the project

till 31.03.2025, for which 1

st respondent Corporation, vide

46

letter dated 29.04.2024, extended the time for completion

of the works till 04.08.2024. The said letter reads thus:

“You failed to complete the entire work within the

contract completion period. In your letter under

reference, you have asked for extension of time for

completion. In view of the circumstances stated in

your above referred letter, the time for completion

is extended from 05.05.2024 to 04.08.2024,

reserving ONGC‟s right to levy liquidated damages

from you for delay in the completion of work after

the expiry of the contract completion period as

mentioned in clause 6.3.2 for the extended period,

notwithstanding the grant of this extension.

The above extension of completion date shall also

be subject to the right of ONGC to claim a

reduction in prices on account of reduction in

statutory duties/taxes, etc. which may take place

during the extended period of completion.

However, increase in prices during extended

completion period on account of increase in

statutory duties/taxes, etc. admissible under

Change in Law clause of this work order/contract

shall be granted, only if extension is due to delay

on the part of ONGC.

47

In view of above, validity date of all the Bank

Guarantees submitted under contract be extended

accordingly and submitted at the earliest.”

A perusal of the recitals of the aforesaid letter goes to

show that 2

nd respondent extended the time for completion

of project, from 05.05.2024 to 04.08.2024, reserving

ONGC‟s right to levy liquidated damages for the delay in

completion of work as mentioned under Clause 6.3.2 of the

contract, and making it clear that the same is subject to

right of ONGC to claim reduction in prices on account of

reduction in statutory duties, taxes, etc., which may take

place during the extended period of completion. It is also

stated in the said letter that validity date of all the Bank

Guarantees submitted under the contract shall be extended

accordingly by the petitioners. A perusal of the said letter

goes to show that even at the time of extending the period

of contract after completion of the original scheduled

completion date, nowhere in the said letter it is mentioned

about the additional PBGs directly to be furnished by the

supporting Iranian company. Therefore, without there

being any objection raised with regard to replacement of the

48

PBGs already furnished or with regard to furnishing of

additional PBGs directly by the supporting company, the

respondents extended the time for completion of the

contract from 05.05.2024 to 04.08.2024, but the only

condition laid with regard to Bank Guarantee is that the

petitioners shall extend validity date of all the Bank

Guarantees submitted under the contract.

22. A perusal of the material on record further goes

to show that 1

st respondent Corporation addressed letter

dated 23.05.2024 to the 1

st petitioner company seeking

clarification on three aspects viz. (i) in relation to the

regulatory filings being completed for the invested amount

by 1

st petitioner‟s supporting company at the time of

incorporation of the petitioner; (ii) regarding the prior

disqualifications of Mr. Siva Kumar Golla, who is one of the

Directors of 1

st petitioner company, and (iii) copy of the

power of attorney/authorization granted to Mr. Siva Kumar

Golla by the Iranian supporting company. The said

information was sought to be furnished by 27.05.2024, and

on the request of the petitioners, the time of extended till

49

29.05.2024. the petitioners sent reply dated 29.05.2024,

furnishing certain information and sought time till

10.06.2024 to provide further information with respect to

filing of Form FC-GPR. Vide Email dated 01.06.2024, 1

st

respondent rejected the request for granting of further time

and thereafter issued a letter dated 03.06.2024,

terminating the contract and also invoked the PBGs

furnished by the petitioners and encashed the same. So,

from the material on record, it is clear that the respondents

have already encashed the PBGs furnished by the

petitioners for the entire requisite amounts, including the

share of the supporting Iranian company. Thereafter, as

stated supra, the petitioners filed W.P. No. 12243 of 2024

before this Court challenging the termination letter dated

03.06.2024 and this court, vide order dated 09.07.2024,

disposed of the said Writ Petition, directing to treat the

Letter of Termination dated 03.06.2024 as show -cause

notice and directing the petitioners to furnish explanation

therefor within two weeks. Pursuant to the explanation

submitted by the petitioners, the impugned termination

50

letter dated 03.08.2024 came to be passed by the

respondents leading to filing of the present Writ Petition.

23. There cannot be any dispute that Clause 6.0 of

the Notification of Award (NOA) dated 05.07.2022 issued by

the 2

nd respondent stipulates that 1st petitioner company

has to furnish unconditional and irrevocable PBG for due

performance of the contract as per the provisions and

proforma as mentioned in Clause 3.3 of GCC, for a sum of

Rs. 4,86,08,548/- which is equivalent to 3% of the total

contract price. Clause 6.1 of the said NOA stipulates that

since 1

st petitioner company took financial support from the

supporting Iranian company for meeting the financial

parameters of the tender, the supporting company was

required to furnish additional PBG for Rs. 2,43,04,274/-,

which is equivalent to 50% of the PBG to be furnished by

the 1

st petitioner company. Clause 6.2 of the said NOA

stipulates that since 1

st petitioner company took technical

support from the supporting Iranian company for meeting

the technical experience criteria of the tender, the

supporting company was required to furnish add itional

51

PBG for Rs. 2,43,04,274/-, which is equivalent to 50% of

the PBG to be furnished by the 1

st petitioner company.

However, the material on record makes it clear that 1

st

petitioner company furnished the PBGs for the entire

amount viz. Rs. 9,72,17,096/-, as stipulated supra, and the

same was incorporated in the Clause 3.3 of the General

Conditions of the Contract annexed to Contract Agreement

dated 07.11.2022. The reason offered by the petitioners for

not providing PBG by the supporting company is that the

said company is incorporated in Iran and no Bank in India

came forward to provide PBG for the said company. The

respondents did not object at the initial stage, for providing

PBGs by the 1

st petitioner company for the entire requisite

amount, and allowed the petitioners to execute the work

without raising any issue regarding providing PBGs by the

supporting company. If really submission of the PBGs by

the supporting Iranian company is so essential, the

respondents ought not to have entered into the contract

agreement with 1

st petitioner company at the earliest point

of time. Further, when the petitioners requested for

52

extension of time for completion of works till 31.03.2025,

vide their letter dated 12.04.2023, respondents, vide letter

dated 29.04.2024, extended time for completion of works

till 04.08.2024. In the said letter dated 29.04.2024,

extending the time for completion of the work, there is no

mention or condition or stipulation, with regard to

providing PBGs by the supporting Iranian Comp any. As

observed supra, without there being any reference or

insistence with regard to replacement of the PBGs already

furnished or with regard to furnishing of additional PBGs

directly by the Iranian company, time for completion of

work was extended by the respondents by way of letter

dated 29.04.2024, i.e. nearly one and half year after

execution of the contract agreement dated 07.11.2022.

24. On this aspect, it is the contention of the learned

counsel for the petitioners that as per Clauses „b‟ and „c‟ of

the contract agreement dated 07.11.2022, the terms of the

contract supersede the terms of the Notification of Award as

the terms of the contract have the priority over the NoA.

53

He relied on a decision in JSIW Infrastructure Pvt. Ltd. v

ONGC Ltd.,

1 wherein it is held thus: (paragraphs 29 to 33)

“29. Annexure A, containing the General Conditions

of Contract (GCC), explicitly supersedes and prevails

over Annexure B, in case of any discrepancy,

conflict, dispute between the two. Consequently,

clause 3.4.1.5 of the GCC, a provision within the

Annexure A, should have taken precedence over any

potentially conflicting language contained within the

letter dated 27.08.2008, a document within

Annexure B. The priority accorded in the Contract

itself, as reproduced aforesaid, has not even been

noticed in the impugned award.

30. Moreover, reliance on pre -contractual

communications by the learned arbitrator to

interpret clause 3.4.1.5 results in contravention of

clause 1.2.5 of the GCC, which states:

“1.2.5 Entire Agreement

The Contract constitutes the entire agreement between

the Company and the Contractor with respect to the

subject matter of the Contract and supersedes all

communication, negotiations and agreement (whether

written or oral) of the parties with respect thereto

made prior to the date of this Agreement.”

31. This provision of the GCC, explicitly declaring

the contract as an entire agreement, has not even

been noticed in the impugned award. By prioritizing

pre-contractual communications, the arbitrator

disregards the fundamental principle that all prior

discussions and agreements would stand

superseded, as expressly agreed to by the parties in

clause 1.2.5 of the GCC.

1

2023 SCC Online Delhi 8172

54

32. The judgments cited by the respondent are of no

avail and do not detract from the above position.

While there is no quarrel with the proposition that an

interpretation considering both the express terms of

the contract and the surrounding circumstances can

sometimes be necessitated, the same does not apply

when no ambiguity exists in the first place. Resorting

to external factors/correspondence in the absence of

ambiguity would be unwarranted and undermine the

sanctity of contract. Additionally, as already stated

above, in the present case, clause 1.2.5 of the GCC

specifically states that the contract supersedes all

communication, negotiations and agreement made

prior to the date of the contract. Therefore, the

unambiguous contractual provision/s would prevail

over any contrary understanding as may be

discernible during the contract formation stage.

Further as noticed hereinabove, as per stipulation (b)

of the contract, clause 3.4.1.5 of the GCC and the

direct implication flowing therefrom, has precedence

over the letter dated 27.08.2008. As such the

judgments cited by the respondent are cl early

distinguishable.

33. In the circumstances, the impugned arbitral

awards are set aside. Accordingly, the present

petitions stand allowed. All pending applications also

stand disposed of.”

He also relied on a judgment of the Hon‟ble Supreme

Court of India in State of Madhya Pradesh v. M/s. Sew

Construction Limited & others

2, wherein it is held thus:

(paragraph 24)

2

judgment dated 18.11.2022 in Civil Appeal No.8571 of 2022

55

“In the context of discretion, we may reiterate this

principle. The rights and duties of the parties to the

contract subsist or perish in terms of the contract

itself. Even if a party to the contract is a government

authority, there is no place for discretion vested in the

officers administering the contract. Discretion, a

principle within the province of administrative law, has

no place in contractual matters unless, of course, the

parties have expressly incorporated it as a part of the

contract. It is the bounden duty of the court while

interpreting the terms of the contracts, to reject the

exercise of any such discretion that is entirely outside

the realm of the contract.”

25. A perusal of the averments in the contract

agreement dated 07.11.2022 entered into between the

parties goes to show that clause b) thereof reads as follows:

“b) The following documents annexed herewith

shall be taken as mutually explanatory of one

another and shall be deemed to form and be read

and construed as integral parts of this Contract

and in case of any discrepancy, conflict, dispute,

they shall be referred to in the order of priority as

cited below.

1.Agreement;

56

2.Annexure „IIA‟ General Conditions of Contract &

Annexure „IIB‟ General Conditions of Contract @

SCC (applicable for O&M portion).

....”

Clause c) of the contract agreement dated 07.11.2022

reads as under:

“The contract constitutes that entire Agreement

between the Company and the Contractor, with

respect to the subject matter of the Contract and

supersedes all communication, negotiations and

Agreement (whether written or oral) of the parties

with respect thereto made prior to the date of

Agreement”

26. A perusal of clause b) of the contract agreement

goes to show that the documents annexed therewith shall

be taken as mutually explanatory of one another and

deemed to form and be read and construed as integral

parts of the contract. It makes further clear that in case of

any discrepancy, conflict, dispute, they shall be referred to

in the order of priority given in the said clause. According

to the priority of the documents mentioned thereunder, the

terms of the agreement will have priority over the „Annexure

57

„II A‟ General Conditions of Contract & Annexure „II B‟

General Conditions of Contract and SCC‟. Further, Clause

c) of the contract agreement states that the contract

constitutes the entire agreement between the parties with

respect to the subject matter of the contract and it

supersedes all communication, negotiations and agreement

of the parties, with respect thereto made prior to the date of

the agreement. A reading of the aforesaid clauses makes it

clear that in case of discrepancy, conflict or dispute, the

terms of the Agreement will have priority over the General

Conditions of Contract. Further, the contract supersedes

all communications, negotiations and agreement of the

parties made prior to the date of the agreement.

27. On the other hand, it is the contention of the

learned Advocate General appearing for the respondents

that simply because Clause 3.3 of the Contract Agreement

records the factum of submission of PBGs by Indian

Company, it does not mean that the respondents waived off

the requirement of furnishing additional PBG by the

supporting foreign company, and that when 1

st respondent

58

Corporation, vide letter dated 11.08.2023, called upon the

petitioners to furnish additional PBG by the supporting

Iranian company, the petitioners vide letters dated

07.09.2023 and 08.10.2023 sought further time to resolve

the issue relating to furnishing of additional PBGs by the

supporting Iranian company and hence, the said condition

is not waived.

28. The explanation offered by the petitioners for its

inability to secure PBGs by the supporting Iranian company

that because of the sanctions, no bank in India came

forward to furnish the same as the said company is

incorporated in Iran, is plausible. In order to secure the

monetary obligations and secure the financial interest of

the respondents, the petitioners furnished the PBGs for the

entire requite amount. In fact, the said explanation

appears to have been accepted by the respondents and

thereby the petitioners were allowed to continue to execute

the work. The same was recorded in the contract

agreement entered into between the parties; pursuant to

the same, 1

st petitioner company was allowed to commence

59

execution of the works and as the petitioners could not

complete the works within the scheduled time under the

contract agreement, the respondents also extended the time

for the completion of the works without insisting or raising

any objection on the furnishing of PBGs by the supporting

Iranian company and in fact pursuant to the earlier

termination order dated 03.06.2024, the respondents

invoked the said PBGs furnished by the 1

st petitioner

company for the entire requisite amount, towards its share

and towards the share of the supporting Iranian company,

and encashed the Bank Guarantees. Further more, while

recording the PBGs, which are dated 19.10.2022, furnished

by 1

st petitioner for the entire requisite amount vide PBG

NO. 0200222IPG011396 for Rs. 4,86,08,548.00 and PBG NO.

0200222IPG011379 for Rs. 4,86,08,548.00, both issued by

Bank of Maharashtra, Miyapur Branch, Telangana valid up to

05.07.2025, in Clause 3.3 of the contract agreement, which

is dated 07.11.2022, admittedly, no condition was

stipulated in the said contract agreement with regard to

replacement of the PBGs with the ones issued by the

supporting Iranian company at a subsequent point of time.

60

As a matter of fact, in the letter dated 29.04.2024,

extending the time for execution of work, the respondents

directed the 1

st petitioner company to extend the validity

date of all the Bank Guarantees submitted under the

contract accordingly.

29. If really submission of the PBGs by the

supporting Iranian company is so essential, the

respondents ought not to have entered into the contract

agreement with 1

st petitioner company at the earliest point

of time. Having allowed the petitioner to execute the work

and after extending the time period for execution of the

works by the petitioners, and having waited for a period of

more than two years, issuance of the impugned termination

by respondents speaks volumes. According to the

petitioners, the reason for the respondents to terminate the

contract is that ONGC is interested in giving short-term

contracts to some other persons, on whom they are

interested and because of the said reason, the present

termination order was passed arbitrarily. Further, as

stipulated in the terms of the contract agreement viz.

61

Clauses „b‟ and „c‟, the contract supersedes all

communications, negotiations and agreement (whether

written or oral) of the parties with respect thereto, made

prior to the date of the agreement. It is stipulated in the

contract. Therefore, at this stage, after recording the PBGs

in the contract agreement, allowing the petitioners to

execute the works, extending the time for completion of the

works and after invoking and encashing the PBGs, the

respondents cannot now contend, and are estopped from

raising, the objection with regard to non-furnishing of PBGs

by the supporting Iranian company and this Court is of the

opinion that the same is nothing but arbitrary and is not a

ground to terminate the contract. Accordingly, this point is

answered.

30. The last ground for termination of the contract

is delay in execution of the contract. According to the

ONGC, the schedule date of completion of works by 1

st

petitioner company, in terms of Clause 6.3.1.1. of the

contract is 05.05.2024. At the request of 1

st petitioner

company seeking extension of time till 31.03.2025 for

62

completion of works, 1

st respondent Corporation, vide letter

dated 29.04.2024, extended the time for completion of the

works till 04.08.2024. According to the respondents, the

petitioners completed only 31.64% of work by the

scheduled completion date, and that despite repeated

communications, petitioners failed to accelerate the

progress of work so as to meet the contractual timelines. It

is the case of the respondents that they have fulfilled all

pre-requisites under the contract like notifying the

contractor multiple times to rectify the deficiencies and

speed up the progress to complete the contract within the

timeline and issuing 30 days‟ notice in writing to the

contractor, inasmuch as this Court directed vide order

dated 09.07.2024 in W.P. No. 12243 of 2024, that the

previous termination order dated 03.06.2024 be treated as

show-cause notice for which the petitioners were asked to

submit an explanation.

31. On the other hand, it is the contention of the

petitioners that as of date more than 60% of the works are

undertaken (both onsite and offsite) and the alleged delay is

63

attributable to the respondent at each stage of execution of

the project, like delay in handing over the site, delay caused

by the respondents in commencement of Engineering, in

review/ approval of designs, basic engineering documents,

issues that arose due to lack of and inefficient coordination

between the different disciplines/departments of

respondent No. 1 Corporation, etc. It is their further case

that delay in execution, as a ground for termination, was

first mentioned only when the first letter of termination was

issued on 03.06.2024. It is the further case of the

petitioners that if the termination was based on the reason

of delay in execution, 1

st respondent Corporation is

obligated to issue a 30 days‟ notice to that effect in terms of

Clause 8.3.4. of the General Conditions of Contract

annexed to Contract Agreement dated 07.11.2022.

32. This Court perused the pleadings and

documents filed by the parties to the Writ Petition. There

is variance in the pleadings of the parties with regard to

percentage of the work completed by the petitioners. In

that connection, what quantum of work done by the

64

petitioner precisely, cannot be adjudicated by this Court.

The issues with regard to delay in execution of the contract;

as to whether the petitioners completed only 31.64% of

works as on date, as contended by the respondents, or

more than 60% of the works are completed by the

petitioners (both onsite and offsite), as contended by the

petitioners, and whether the alleged delay in execution of

the works is attributable to the respondents or the

petitioners, are all disputed questions of fact which arose in

the course of the execution of works under agreement

entered into, between the petitioners and respondents

pursuant to the Notification of Intent dated 05.07.2022

issued by the respondents. They are disputed questions of

fact, which cannot be decided in a Writ Petition filed under

Article 226 of the Constitution of India. Ordinarily, this

Court will not decide, in exercise of its extraordinary

jurisdiction under Article 226 of the Constitution of India,

the disputed questions of fact. On this aspect, it is

pertinent to refer to a decision in M.P. Power Management

Company Limited, Jabalpur v. Sky Power Southeast Solar

65

India Private Limited & others,

3 wherein it is held thus:

(paragraphs 89.1 to 89.9).

“82. We may cull out our conclusions in regard to the

points, which we have framed:

82.1. It is, undoubtedly, true that the writ jurisdiction

is a public law remedy. A matter, which lies entirely

within a private realm of affairs of public body, may not

lend itself for being dealt with under the writ

jurisdiction of the Court.

82.2. The principle laid down in Bareilly Development

Authority [Bareilly Development Authority v. Ajai Pal

Singh, (1989) 2 SCC 116] that in the case of a non-

statutory contract the rights are governed only by the

terms of the contract and the decisions, which are

purported to be followed, including Radhakrishna

Agarwal [Radhakrishna Agarwal v. State of Bihar,

(1977) 3 SCC 457] , may not continue to hold good, in

the light of what has been laid down in ABL [ABL

International Ltd. v. Export Credit Guarantee Corpn. of

India Ltd., (2004) 3 SCC 553] and as followed in the

recent judgment in Sudhir Kumar Singh [State of U.P. v.

Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020 SCC

OnLine SC 847] .

3

(2023) 2 SCC 703

66

82.3. The mere fact that relief is sought under a

contract which is not statutory, will not entitle the

respondent State in a case by itself to ward off scrutiny

of its action or inaction under the contract, if the

complaining party is able to establish that the

action/inaction is, per se, arbitrary.

82.4. An action will lie, undoubtedly, when the State

purports to award any largesse and, undoubtedly, this

relates to the stage prior to the contract being entered

into (see Ramana Dayaram Shetty [Ramana Dayaram

Shetty v. International Airport Authority of India, (1979)

3 SCC 489] ). This scrutiny, no doubt, would be

undertaken within the nature of the judicial review,

which has been declared in the decis ion in Tata

Cellular v. Union of India [Tata Cellular v. Union of

India, (1994) 6 SCC 651] .

82.5. After the contract is entered into, there can be a

variety of circumstances, which may provide a cause of

action to a party to the contract with the State, to seek

relief by filing a writ petition.

82.6. Without intending to be exhaustive, it may

include the relief of seeking payment of amounts due to

the aggrieved party from the State. The State can,

indeed, be called upon to honour its obligations of

making payment, unless it be that there is a serious

and genuine dispute raised relating to the liability of

the State to make the payment. Such dispute,

67

ordinarily, would include the contention that the

aggrieved party has not fulfilled its obligations and the

Court finds that such a contention by the State is not a

mere ruse or a pretence.

82.8. The existence of a provision for arbitration,

which is a forum intended to quicken the pace of

dispute resolution, is viewed as a near bar to the

entertainment of a writ petition [see in this regard, the

view of this Court even in ABL [ABL International Ltd. v.

Export Credit Guarantee Corpn. of India Ltd., (2004) 3

SCC 553] explaining how it distinguished the decision

of this Court in State of U.P. v. Bridge & Roof Co. (India)

Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd.,

(1996) 6 SCC 22] , by its observations in SCC para 14

in ABL [ABL International Ltd. v. Export Credit

Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] ].

82.7. The existence of an alternate reme dy, is,

undoubtedly, a matter to be borne in mind in declining

relief in a writ petition in a contractual matter. Again,

the question as to whether the writ petitioner must be

told off the gates, would depend upon the nature of the

claim and relief sought by the petitioner, the questions,

which would have to be decided, and, most

importantly, whether there are disputed questions of

fact, resolution of which is necessary, as an

indispensable prelude to the grant of the relief sought.

Undoubtedly, while there is no prohibition, in the writ

court even deciding disputed questions of fact,

68

particularly when the dispute surrounds demystifying

of documents only, the Court may relegate the party to

the remedy by way of a civil suit.

82.9. The need to deal with disputed questions of fact,

cannot be made a smokescreen to guillotine a genuine

claim raised in a writ petition, when actually the

resolution of a disputed question of fact is unnecessary

to grant relief to a writ applicant.”

33. According to the respondents, Clause 1.3.2 of

the General Conditions of Contract annexed to the contract

agreement dated 07.11.2022, the parties agree to resolve

the disputes through Arbitration. Clause 1.3.2 of the

General Conditions of Contract annexed to the contract

agreement dated 07.11.2022, provides for „Arbitration‟. A

perusal of the said Clause goes to show that the said

Clause provides for resolution in respect of the disputes

arose between the parties in regard to monetary claims.

The same is not apt for resolution of the issues in the case

on hand.

34. A perusal of Clause 1.3.4 of the General

Conditions of Contract annexed to the contract agreement

69

dated 07.11.2022 deals with „Resolution of disputes

through conciliation by OEC (Outside Expert Committee).

In fact, as seen from the averments in the Additional

affidavit filed by the petitioners, vide letter dated

08.12.2024, the petitioners requested resolution of the

matter through mediation by OEC. In terms of Clause

1.3.4 (2) thereof, if any dispute, difference, question or

disagreement arises between the parties hereto or their

respective representatives or assignees, in connection with

construction, meaning, operation, effect, interpretation of

the contract or breach thereof which parties are unable to

settle mutually, the same may first be referred to

conciliation through Outside Expert Committee to be

constituted by CMD, ONGC, as provided thereunder.

Therefore, there is a mechanism provided for resolution of

the subject disputes arising between the parties.

Accordingly, the parties are relegated to avail the

mechanism provided in the General Conditions of Contract

annexed to the contract agreement dated 07.11.2022 , for

resolution of the said dispute viz. the percentage of work

70

completed by the petitioners, reasons for delay in execution

of the contract, etc.. The point is answered accordingly.

35. In view of the foregoing discussion, this Court is

of the opinion that the impugned termination order dated

03.08.2024, is not sustainable on the grounds mentioned

therein and the same is liable to be set aside.

36. Accordingly, the Writ Petition is allowed, setting

aside the impugned order No. DLH/OES/MM/GDU/RJY &

CAV/X11VC21007/2021/Group A, dated 03.08.2024

issued by 2

nd respondent and all other consequential

proceedings pursuant thereto. No costs.

Miscellaneous petitions pending, if any, in the Writ

Petition shall stand closed.

(JUSTICE K. SREENIVASA REDDY)

DRK

08.05.2026

71

THE HON‟BLE SRI JUSTICE K.SREENIVASA REDDY

WRIT PETITION No. 22088 of 2024

08.05.2026

DRK

72

HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

****

WRIT PETITION No.22088 of 2024

Between:

Jsc Golla Engineering Private Limited and Others ...PETITIONER(S)

AND

Oil And Natural Gas Corporation Limited and

Others

...RESPONDENT(S)

DATE OF ORDER PRONOUNCED : 08.05.2026

SUBMITTED FOR APPROVAL :

THE HONOURABLE SRI JUSTICE K. SREENIVASA REDDY

1. Whether Reporters of Local Newspapers

may be allowed to see the Order? Yes/No

2. Whether the copy of Order may be

marked to Law Reporters/Journals? Yes/No

3. Whether His Lordship wish to see the

fair copy of the Order? Yes/No

JUSTICE K.SREENIVASA REDDY

73

* HONOURABLE SRI JUSTICE K.SREENIVASA REDDY

+ WRIT PETITION No.22088 of 2024

% 08.05.2026

Between:

Jsc Golla Engineering Private Limited and Others ...PETITIONER(S)

AND

Oil And Natural Gas Corporation Limited and

Others

...RESPONDENT(S)

Counsel for the Petitioner(S):

1. M/S INDUS LAW FIRM

Counsel for the Respondent(S):

1. The Advocate General for Sri D S SIVADARSHAN

< Gist:

> Head Note:

? Cases referred:

1) 2023 SCC Online Delhi 8172

2) judgment dated 18.11.2022 in Civil Appeal No.8571 of

2022

3) (2023) 2 SCC 703