The Allahabad High Court on Monday said that if the Uttar Pradesh government accepts the dues that need to be paid to a private contractor then the petition is maintainable and directed the government to pay the contractor within 4 weeks.
The Division Bench of Justices Manoj Kumar Gupta and Yogendra Kumar Srivastava passed this order while hearing a petition filed by Kanika Construction.
The petition has been filed seeking a direction to the private respondent for payment of an amount which is stated to be due and admitted.
The Court noted that in pursuance of certain advertisements inviting tenders for running community kitchen at Baijal Bhawan, Meerut and Olivia Hotel, Meerut, the petitioner company submitted its offer. It was duly accepted and in pursuance thereof, it provided the service of community kitchen at the above two places during Covid.
By letter dated on June 4, 2020, the respondents directed the petitioner to close the community kitchen w.e.f June 6, 2020.
A 3-member Committee had duly verified the quality and quantity of food packets supplied by the petitioner in pursuance of the contract. The petitioner has been paid a certain sum under the contract, but the entire amount has not been paid on account of the paucity of funds.
In it petitioner, the petitioner has placed on record an order dated March 5, 2021 issued by ADM Finance and Revenue, Meerut in which it is recorded that on basis of recommendation of the Committee and the approval granted by the District Magistrate, Meerut on March 4, 2021, the amount of Rs 3,68,81,217 received from the Government shall be disbursed amongst various service providers on pro-rata basis.
The order itself records that the remaining amount would be paid after the release of more funds from the Government. A chart which is part of the said order reveals that in respect of the petitioner, the remaining sum is Rs 37,32,072.
Standing Counsel is in receipt of instructions from the state respondents in which the same stand has been taken i.e as soon as the funds are received from the State Government, payment shall be made.
The question, whether a petition under Article 226 of the Constitution is maintainable to enforce a contractual obligation against the state or its instrumentalities, by an aggrieved party, is no longer res Integra. The law with regard to the maintainability of a petition in contractual matters is fairly well settled. It has been consistently held that there is no absolute bar to the maintainability of a petition in such matters. The discretionary jurisdiction under Article 226 of the Constitution of India may, however, be refused in case of money claims arising out of purely contractual obligations where there are serious disputed questions of fact with regard to the claims sought to be raised, the Court said.
The Court held that the legal position with regard to entertain ability of a petition in contractual matters where monetary claims are sought to be raised has been considered in extenso in a recent decision of this court in M/S Bio-Tech Systems vs. State of U.P and Ors and it was held that in a case where the contract entered into between the State and the person aggrieved is of a non-statutory character and the relationship is governed purely in terms of a contract between the parties, in such situations the contractual obligations are matters of private law and a writ would not lie to enforce a civil liability arising purely out of a contract, and the proper remedy in such cases would be to file a civil suit for claiming damages, injunctions or specific performance or such appropriate reliefs in a civil court.
While stating the aforementioned broad proposition of law in M/S Bio Tech Systems, it was also added that it cannot be held in absolute terms that a petition is not maintainable in all contractual matters seeking enforcement of obligations on part of the State or its authorities. The limitation in exercising powers under Article 226 in contractual matters is essentially a self-imposed restriction. A case 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, maybe an exception to the aforementioned general principle.
The Court further said that, where the State or its instrumentalities are parties to a contract, they would be under an obligation in law to act fairly, justly and reasonably, which is the requirement under Article 14 of the Constitution of India.
In such a situation where the instrumentalities of the State act unfairly, unjustifiably, unreasonably or arbitrarily in the 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.
“In the case at hand, it is evident that there is no dispute relating to the amount due and payable to the petitioner. The instructions received by the Standing Counsel clearly indicate that the balance amount has not been paid for the reason that necessary funds have not been made available by the State Government so far.
Once the petitioner has performed its contractual obligations under the work order and the amount due is admitted, we find no justification on part of the respondents not to make payment,” the Court observed.
The Court opined that in the facts and circumstances noted above, there is no justification in not making payment of the amount due and payable to the petitioner.
“Accordingly, a writ of mandamus is issued directing the respondents to ensure that the amount due and payable to the petitioner is released in its favour within a period of four weeks from the date of receipt of a true attested copy of the order by the second respondent,” the order reads.
Accordingly, the Court allowed the writ petition.