M/S. Perfect Electricals Vs Mangalore Electricity… — Company and Corporate | Karnataka HC (2025)

M/S. Perfect Electricals Vs Mangalore Electricity… — Company and Corporate | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

¶unnumbered closing para

Issue for consideration

Whether the failures of transformers repaired and returned by the petitioner within the guarantee period were attributable to defective/bad workmanship (warranting WGP classification and contractual consequences) or to external factors such as natural calamities and overload (warranting AGP classification). +2 more

Ratio / Principle

Perusal of the circular at Annexure-N indicates that on failure of repaired transformers within the guarantee period a joint inspection, in the presence of the repairer-contractor and officials of the ESCOMs, is required to find out the reason for failure; neither that circular nor any other circular or particulars of prevailing practice about the manner of testing (equipment to be used or parameters) were made available.

Key takeaways

The OM at Annexure-P2 referred to repaired transformers failing within the guarantee period being classified as AGP where all three coils were burnt, but with an observation that failure was due to overload/natural calamity and upon assessment of cause of failure by a Committee through joint inspection; hence it cannot be cited as an authority for the proposition that in all cases of transformers having all three coils burnt they were to be classified as AGP.ratio¶20
Mere recurrence in classifying transformers with all three coils burnt as AGP cannot lead to drawing a presumption.ratio¶21

Detailed headnote1 paragraphs

Karnataka High Court (Ravi V Hosmani, J.), W.P. No. 7513 of 2025 (GM-KEB), decided 10.10.2025 — dismissed. Petitioner, a small-scale industrial unit, held a MESCOM rate contract (award dated 03.01.2023) for repair and reconditioning of failed distribution transformers in Udupi O & M Circle on a buy-back basis, with Clause 8.01 of the Tender Agreement guaranteeing against failure due to defective/bad workmanship for 18 months from delivery or 12 months from commissioning (whichever earlier), failure/delay in repairing attracting deduction of repair cost from the security deposit or adjustment against running bills. Challenging notice dated 02.12.2024 (Annexure-J) classifying 120 failed transformers as 'Within Guarantee Period' (WGP), threatening recovery of repair costs from the security deposit/bill amounts and blacklisting, and seeking refund of security deposit of Rs.13,89,558/- and bank guarantee of Rs.12,15,000/- and payment of invoices of Rs.9,49,960/- and Rs.24,65,886/-, petitioner contended the failures arose from external factors (rain, wind, overload, unauthorised load connections) as per JIRs showing all three coils burnt and a Minister's press note, meriting 'After Guarantee Period' (AGP) classification. Held: the Annexure-N circular mandated joint inspection to find the reason for failure but prescribed no testing methodology; OMs treating three-coil-burnt transformers as AGP (Annexures-P, P1, P2) were case-specific (recording overload/natural calamity and committee assessment) and could not ground a blanket presumption; mere recurrence of such classification raises no presumption; ascertaining the cause of failure involves disputed questions of fact requiring technical expertise, for which Article 226 jurisdiction is unsuitable. Writ petition dismissed; no relief granted.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF OCTOBER, 2025

BEFORE THE HON'BLE MR. JUSTICE RAVI V HOSMANI WRIT PETITION NO. 7513 OF 2025 (GM-KEB)

BETWEEN:

M/S. PERFECT ELECTRICALS, A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT 1932, PLOT NO. 152, SOMPURA 1^ST STAGE, DABASPET, NELAMANGALA TALUK, BENGALURU - 562 111, KIADB INDUSTRIAL AREA, REP BY ITS MANAGING PARTNER SRI P.V. KUMARASWAMY, AGED ABOUT 65 YEARS, S/O LATE VEERABHADRAPPA.

…PETITIONER

[BY SRI SIDDHARTH SUMAN, ADVOCATE (PH)]

AND:

Digitally signed by GEETHAKUMARI PARLATTAYA S Location: High Court of Karnataka

1 . MANGALORE ELECTRICITY SUPPLY COMPANY (MESCOM) A GOVERNMENT OF KARNATAKA UNDERTAKING REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT 2^ND FLOOR, MESCOM BHAVANA KAVOOR CROSS ROAD BEJAI, MANGALURU-575004, REP BY ITS MANAGING DIRECTOR.

2 . SUPERINTENDING ENGINEER (ELE), O AND M CIRCLE, MESCOM HAVING REGISTERED OFFICE AT KUNJIBETTU, UDUPI-576102.

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3 . THE EXECUTIVE ENGINEER, (ELE)., O AND M DIVISION, MESCOM, MARUTHI VITHIKA, UDUPI - 576 101.

4 . THE EXECUTIVE ENGINEER, (ELE), O AND M DIVISIONS, MESCOM, KARKALA - 574 104.

5 . THE EXECUTIVE ENGINEER, (ELE). O AND M DIVISION, MESCOM, NANASAHEB ROAD, KUNDAPRA - 576 201.

…RESPONDENTS

[BY SMT. AMRUTHA VARSHINI M.C., ADV. FOR R1 TO R5]

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE NOTICE NO.AAEM(V)/UDUPI/KANIEM(V)SAKANIEM-2/KA78/I/118201/2024 DATED 02.12.2024 ISSUED BY THE R-1 i.e. ANNEXURE-J AS ARBITRARY, ILLEGAL AND UNJUST, DIRECT THE RESPONDENTS TO REFUND THE SECURITY DEPOSIT AMOUNTING TO RS.13,89,558/WHICH HAS BEEN UNLAWFULLY WITHHELD BY THE RESPONDENT, DIRECT THE RESPONDENT TO REFUND THE AMOUNT UNLAWFULLY OBTAINED BY INVOKING THE PETITIONERS BANK GUARANTEE AMOUNT OF RS. 12,15,000/- AND ETC.,

THIS PETITION IS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 23.09.2025, THIS DAY, THE COURT, PRONOUNCED THE FOLLOWING:

CORAM: HON'BLE MR. JUSTICE RAVI V HOSMANI

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CAV ORDER

Challenging notice no.AaEm (V)/UDUPI/KaNiEm(V) Sakaniem-2/Ka-78/1/118201/2024 dated 2.12.2024 issued by Respondent no.1 produced as Annexure – J, and seeking for a direction to respondents to refund security deposit of Rs.13,89,558/-; Bank Guarantee amount of Rs.12,15,000/- and

to pay outstanding dues under Invoices no.KL-007 dated 30.03.2024 of Rs.9,49,960/- and Invoice no.UP-005 dated 28.03.2024 for Rs.24,65,886/- etc. this writ petition is filed.

Sri Siddarath Suman, learned counsel for petitioner submitted petitioner was a partnership concern and as an Small Scale Industrial Unit manufactured and supplied transformers to various ESCOMS in State. It was submitted since 1999 it was also registered with KPTCL for repair and reconditioning of distribution transformers and undertaken said work at respective repair centers. It was submitted, petitioner had repaired more than 36,000 units and had BIS, CPRI and BEE certification for repair works also. It was submitted, in tender dated 01.10.2022 issued by respondent no.1 (MESCOM), petitioner was successful and was awarded Rate Contract on

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03.01.2023 for repair and reconditioning of failed distribution transformer on a buy-back basis in Udupi O & M Circle.

It was submitted scope of tender work was release of transformer oil, removal of high voltage and low voltage coils along with other unserviceable components, replace same with new coils, bushings etc. painting and refilling with Extra High Voltage Transformer Oil procured from approved vendor, testing of repaired transformers etc as per terms and conditions of Tender Agreement. It was submitted, Tender Notification, Rate Contract Award and Tender Agreement were produced as Annexures - A, A1 and A2. It was submitted Clause 8.01 of Tender Agreement contained a guarantee clause against failure of repaired transformers due to defective/bad workmanship for a period of 18 months from date of delivery or 12 months from date of commissioning, whichever was earlier. It was submitted, said guarantee clause stipulated that in case of failure of transformers within guarantee period, contractor would be required to repair/replace said transformer at his own cost, by collecting failed transformers within seven days from date of intimation and to return them repaired within 15 days. Said clause further provided for suspension of further allotment

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of faulty transformers. Further, if transformers were to fail again, petitioner was required to have them repaired and delivered within 10 days. Said clause further provided that in case of failure or delay in repairing them, cost of repair of such transformers was to be deducted from Security Deposit Amount or adjusted against any outstanding running bills.

It was submitted, tender was initially awarded for a period of two years with provision for extension for second year on successful and satisfactory performance during first year. It was submitted, on 05.10.2023 petitioner was offered Rate Contract Award for second year, but which was not accepted by petitioner. It was submitted, petitioner had duly repaired all faulty distribution transformers and delivered same to respective divisional stores after running checks. Receipt of transformers by respondents would indicate that test results were accepted.

It was submitted during joint inspection certain transformers that were still within guarantee period were declared failed. It was submitted, as failure of said transformers was not due to faulty workmanship, but due to external factors including natural calamities, overload due to unauthorized load

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connection, single phase power failure etc. Though, petitioner had communicated said observations to respondents in various correspondences, when petitioner submitted bills no.UP-005 dated 28.03.2024 and KL-007 dated 30.03.2024, petitioner was issued with notice dated 17.08.2024 calling upon petitioner to repair all transformers that had failed within guarantee period. It was also alleged that certain transformers that had failed within tender period had also remained without repair.

It was submitted, since failure of transformer was not due to bad or faulty workmanship, petitioner was not obliged to repair them. In reply, it was stated that failure was due to external factors which would not be covered under tender guarantee. Respondents thereafter alleged that certain transformers were subjected to joint inspection, wherein it was reported that all three coils were burnt and therefore were beyond guarantee, even though no such inspection was held.

In his reply dated 23.08.2024, petitioner stated that

all faulty transformers issued up to 20.04.2024 were repaired and duly delivered and final bills were submitted and payments from Udupi and Karkala Division only were withheld. It was further stated that such repaired transformers had worked for

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30 to 344 days after being commissioned, which established that there was no faulty workmanship and that they had failed due to external factors, such as natural calamities, overload, etc. Reliance was placed on Press note dated 31.07.2024 by Energy Minister that 3,924 transformers had failed due to rain and wind. Based on same, it was contended such failures could not be classified as Within Guarantee Period (‘WGP’, for short), but as After Guarantee Period (‘AGP’, for short).

However, petitioner was issued with another notice on 13.09.2024 reiterating earlier allegations and calling upon petitioner to undertake repair of all faulty transformers within 7 days. Thereafter, petitioner not only sent multiple E-mails but also correspondence reiterating that such failure of transformers was not due to bad/faulty workmanship and they could not be classified as WGP. Petitioner also emphasized that inspection conducted in presence of AEE (Electrical), MT, Udupi, were classified as all three coils burnt, which could be attributed only due to external factors such as overload, heavy rains, lightning, strong winds, unauthorized load connections, tampering with fuse wires, etc. Petitioner relied on Joint Inspection Reports (‘ JIRs ’, for short) dated 29.11.2023,

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26.12.2023 and 05.01.2024 were produced as Annexures-H, H1 and H2.

Despite placing facts and circumstances in proper perspective, petitioner was issued with impugned notice dated 02.12.2024 at Annexure-J alleging that petitioner had failed to repair and return 120 failed transformers by August, 2024, which were subjected to one more joint inspection on 05.11.2024 and 19.11.2024, which indicated that most of transformers had all three coils intact or with only one coil burnt indicating that failure was not due to overload, etc. and classifying failure as WGP. It was submitted, petitioner was also threatened with having transformers repaired from some other tenderer and cost recovered from security deposit and Bill amounts apart from taking action for blacklisting of petitioner. Aggrieved thereby, present writ petition was filed.

It was submitted JIRs indicated that most of transformers had 2 or 3 coils burnt. However, such conclusion could be arrived at only after testing of each coil and not by mere visual inspection. It was submitted, test reports at Annexure-C, after repair and delivery of transformers to respondents would indicate them as ‘passed’ and acceptance of

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same by respondents. It was further submitted, contract period was for two years with extension for second year contemplated only in case of satisfactory completion of work for first year. It was submitted, offer for extension for second year would amount to an admission about petitioner having completed tender work satisfactorily during first year. It was further submitted, Circular at Annexure-N providing for procedure in case of failed transformers, mandated preparation of JIR with details of failure. Learned counsel sought to draw attention of this Court to Official Memorandum (‘OMs’ for short) at Annexures-P and P1 in respect of Tumkur and Madhugiri, wherein transformers with all three coils burnt were classified as AGP. Likewise, petitioner also relied upon OM dated 01.12.2011 at Annexure-P2 by CESCOM for treating failed transformers with all three coils burnt even within guarantee period as AGP. It was submitted, procedure mandated as per Circular dated 4,6,7.09.2004, at Annexure-N issued by KPTCL, was not followed.

Referring to Clause 8.01 of Tender Notification at Annexure-A, it was submitted guarantee mandated was only against failure of transformer ‘ due to bad workmanship’ within

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guarantee period. It was submitted, pre-delivery inspection report of transformers as well as press statement by concerned Minister at Annexure-M as well as JIRs would establish that failure of transformers was not due to bad workmanship. Therefore, action by respondents for treating petitioner had failed to repair failed transformers within guarantee period and seeking to impose consequences of withholding of payment and penalizing petitioner by recovery of cost of repair from security deposit/bill amount as well as for blacklisting would be contrary to law and prayed for allowing writ petition.

On other hand, Smt.Amrutha Varshini MC., learned counsel for respondents no.1 to 5 opposed writ petition. At outset, learned counsel submitted that there was neither any rule or practice prevalent among any ESCOM for classifying transformers failing within guarantee period with all three coils burnt as AGP. It was further submitted, there was no dispute about fact that several of transformers returned by petitioner after repair, having failed. Such failure could only be attributed to faulty workmanship, as there was no provision for presuming that failure was due to external cause. Fact that Annexures-N and P2, contemplated tests to ascertain cause of failure, would

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rule out presumptions that any type of failure was to be classified as AGP.

Insofar as petitioner’s apprehension about blacklisting, it was submitted, impugned notice at Annexure-J only mentioned various steps that could be taken against petitioner in case of continued default. It was submitted, Annexure-R10 would indicate that steps were initiated, but all that was actually done was to issue notice at Annexure-J calling upon petitioner to undertake repair work and perform tender condition. Thus, no action for blacklisting had been taken till then. But, petitioner had employed such apprehension and obtained interim order on 13.02.2025. Contending that none of grounds urged were meritorious learned counsel sought for dismissal of writ petition.

Heard learned counsel and perused writ petition record.

From above, it is seen petitioner’s grievance against notice at Annexure-J is not only against allegation that 120 transformers repaired by petitioner and delivered to respondents had failed due to faulty workmanship inviting

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consequences but also threatening of petitioner with blacklisting without providing opportunity to petitioner as mandated by law.

At outset, it is seen that there is no dispute about obligation of petitioner under tender award to keep such transformers in working condition during 18 months after from date of deliver or period of one year after commissioning whichever is earlier. There is also no dispute between parties about certain transformers repaired and returned by petitioner had failed within guarantee period.

While petitioner relying on JIRs which show transformers with all three coils burnt and press note by Minister about failure of transformers due to rain, wind etc. to contend that failure cannot be imputed due to faulty workmanship, but external factors and therefore, such failure cannot be classified as WGP, respondents contend that there was no practice prevailing or presumption that transformers with all three coils burnt were to be classified as AGP and JIRs had found transformers to have failed and therefore there was sufficient justification for classifying them as WGP.

Perusal of circular at Annexure – N would indicate that in case of failure of repaired transformers within guarantee

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period, a joint inspection i.e. in presence of repairer-contractor and officials of ESCOMs to find out reason for failure. Neither said circular nor any other circular or particulars of prevailing practice about manner of testing i.e. equipment to be used or parameter for testing are made available.

Perusal of JIRs would indicate that failed transformers were inspected jointly on 29.11.2023, 26.12.2023 and 05.01.2024 as per Annexures - H, H1 and H2. Result to be entered about each coil was either as good or burnt. Indeed, in case of all transformers mentioned in Annexures-H, H1 and H2, it is noted that all three coils are burnt.

Likewise, perusal of JIR at Annexures – P & P1 in

respect of some other division that transformers with all three coils burnt were classified as AGP. Indeed in OM at Annexure – P2, there is some reference to repaired transformers failing within guarantee period being classified as AGP, in case of all three coils are burnt, it is seen that same is with an observation that failure was due to overload natural calamity. In any case, a Committee was constituted to assess cause of failure by Joint Inspection. Thus, said OM cannot be cited as an authority for

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proposition that in all cases of transformers having all three coils burnt, they were to be classified as AGP.

Mere fact that there is some recurrence in classifying of transformers with all three coils burnt as AGP, cannot lead to drawing a presumption. Reason for failure of repaired transformers within guarantee period would therefore require an inquiry into disputed question of fact and appreciation of rival contention/material would require technical expertise, for which invocation of jurisdiction of this Court under Art.226 of CoI would not be suitable.

For aforesaid reasons, Writ Petition fails and is

dismissed.

Sd/(RAVI V HOSMANI) JUDGE

Psg*

List No.: 1 Sl No.: 50

Procedural history

How this case reached the court

AI extract

Order under challenge
Notice no.AaEm (V)/UDUPI/KaNiEm(V) Sakaniem-2/Ka-78/1/118201/2024 dated 02.12.2024 (Annexure-J) issued by respondent no.1 alleging petitioner failed to repair and return 120 failed transformers, classifying the failures as Within Guarantee Period (WGP), threatening recovery of repair cost from security deposit/bill amounts and blacklisting.¶1
Respondent no.1 - Mangalore Electricity Supply Company (MESCOM) · 02.12.2024
Prior proceeding
Tender dated 01.10.2022 issued by respondent no.1 (MESCOM) for repair and reconditioning of failed distribution transformers; petitioner declared successful.¶2
Prior proceeding
Rate Contract awarded to petitioner on 03.01.2023 for repair and reconditioning of failed distribution transformers on a buy-back basis in Udupi O & M Circle.¶2
Prior proceeding
Clause 8.01 of Tender Agreement contained a guarantee against failure of repaired transformers due to defective/bad workmanship for 18 months from date of delivery or 12 months from date of commissioning, whichever was earlier; on failure within guarantee period the contractor was to repair/replace at his own cost.¶3
Prior proceeding
The same clause provided that in case of failure or delay in repairing, cost of repair of such transformers was to be deducted from the Security Deposit Amount or adjusted against any outstanding running bills.¶3
Prior proceeding
On 05.10.2023 petitioner was offered Rate Contract Award for the second year; petitioner did not accept it.¶4
Prior proceeding
Notice dated 17.08.2024 issued to petitioner calling upon it to repair all transformers that had failed within the guarantee period.¶5
Prior proceeding
By reply dated 23.08.2024 petitioner stated that all faulty transformers issued up to 20.04.2024 were repaired and duly delivered, final bills submitted, and payments from Udupi and Karkala Divisions alone were withheld.¶7
Prior proceeding
Second notice dated 13.09.2024 reiterating earlier allegations and calling upon petitioner to undertake repair of all faulty transformers within 7 days.¶8
Prior proceeding
Petitioner sent multiple e-mails and correspondence contending that the failures were not due to bad/faulty workmanship and could not be classified as WGP.¶8
Prior proceeding
Joint Inspection Reports (JIRs) dated 29.11.2023, 26.12.2023 and 05.01.2024 produced as Annexures-H, H1 and H2.¶8
Prior proceeding
Petitioner obtained an interim order on 13.02.2025 (as submitted by learned counsel for respondents).¶13
Prior proceeding
Petition heard and reserved for orders on 23.09.2025; CAV order pronounced on 10.10.2025.¶¶22