Writ Plea In Contractual Matters Lies Against State, Instrumentalities If Amount Is Admitted & Undisputed: Allahabad High Court

The Allahabad High Court recently observed that there is no absolute bar on the maintainability of a writ petition against the state and its instrumentalities in contractual matters.

The Bench of Justice Manoj Kumar Gupta and Justice Dr. Yogendra Kumar Srivastava remarked that where the amount is admitted and there is no disputed question of fact requiring adjudication of detailed evidence and interpretation of the terms of the contract, a writ would very well lie against the State and its instrumentalities.

The case in brief 

The Court was dealing with a writ filed by a company named Kanika Construction, which provided the service of community kitchens at two places during the COVID period to the State Government as a part of a Contract. 

The services of the company were taken after its offer to provide the services was accepted by the Government. A three-member Committee duly verified the quality and quantity of food packets supplied by the petitioner in pursuance of the contract. 

Further, in June 2020, the petitioner company was asked to close the community kitchen. The admitted dues payable to the petitioner stands quantified at Rs.37,32,072/-, however, only a part of the amount was paid on a pro-rata basis depending upon the funds available.

The remaining amount was withheld due to the non-availability of funds and since the amount wasn't paid to the petitioner despite repeated reminders, the instant petition had been filed seeking the remaining amount.

Court's observations 

At the outset, the Court observed that it cannot be held in absolute terms that a writ petition is not maintainable in all contractual matters seeking enforcement of obligations on part of the State or its authorities.

Further, referring to Allahabad HC's decision in M/S Bio Tech Systems vs. State of U.P. and Ors 2020 (11) ADJ 488 (DB), the Court said that the limitation in exercising powers under Article 226 in contractual matters is essentially a self-imposed restriction.

It may be noted that in M/S Bio-Tech Systems case, the Allahabad HC had observed that where the amount is admitted and there is no disputed question of fact requiring adjudication of detailed evidence and interpretation of the terms of the contract, may be an exception to the general principle that writ won't lie against the state in contractual matters.

"In such a situation where the instrumentalities of the State act unfairly, unjustifiably, unreasonably or arbitrarily in discharge of contractual obligations, the same would be held to be violative of the constitutional guarantee embedded in Article 14 and the aggrieved party cannot be precluded from invoking the writ jurisdiction under Article 226 of the Constitution of India nor the court would be denuded of its power of granting proper reliefs."

Against this backdrop, referring to the case at hand, the Court noted that in the instant case, there was no dispute relating to the amount due and payable to the petitioner and that the balance amount had not been paid because necessary funds have not been made available by the State Government so far.

Therefore, the Court opined that once the petitioner had performed its contractual obligations under the work order and the amount due is admitted, there is no justification on part of the respondents not to make the payment.

Accordingly, a writ of mandamus was issued by the Court directing the respondents to ensure that the amount due and payable to the petitioner is released in its favor within a period of four weeks.

Case title - Kanika Construction v. State Of U.P. And 3 Others
Case citation: 2022 LiveLaw (AB) 27

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