M/S Vikas Medical Devices vs. The State Of Assam And 3 Ors

Held

The Court held that the respondents, being the State, cannot deny the petitioner's legitimate entitlement to the amount of Rs. 9,01,600/- on the grounds of non-allotment or unavailability of funds. The Court reasoned that such actions, after receiving and installing the equipment which has been put to use, are arbitrary and unreasonable. The Court directed the respondents to resolve the matter amongst themselves and make the necessary budgetary provisions for the payment of Rs. 9,01,600/- to the petitioner. This exercise was to be completed within three months from the date of service of the certified copy of the order upon Respondent Nos. 2 and 3. The issue of interest was not expressly decided or mentioned in the final directions.

Facts

The petitioner, M/s Vikas Medical Devices, filed a writ petition seeking a direction for the release of an admitted bill amount of Rs. 9,01,600/- with interest. The petitioner participated in a tender process initiated by the Mission Director, National Health Mission, Assam in 2013 and was awarded a contract for supplying and installing hospital equipment for the Assam Medical College and Hospital, Dibrugarh. The contract amount was Rs. 8,05,000/- excluding GST, with the total entitlement being Rs. 9,01,600/- (including Rs. 96,600/- GST). The petitioner supplied and installed the equipment on August 22, 2018, and September 15, 2018, respectively, which was acknowledged by the respondents. Despite submitting the bill, the payment was not released, leading to the filing of the writ petition. The Court had previously directed the respondents to release the payable amounts pending the petition.

Key Issues

1. Whether the respondents are legally bound to release the admitted bill amount of Rs. 9,01,600/- to the petitioner, despite alleged non-availability of funds or budgetary provisions, as per Section 7 of the Contract Act, 1872 (implied reliance on contractual obligations). Petitioner's Argument: The petitioner contended that the respondents cannot deny the legitimate entitlement to the amount of Rs. 9,01,600/- as the supply and installation of equipment are undisputed. They argued that withholding payment after receiving and utilizing the equipment is arbitrary and unreasonable. Respondents' Argument: The National Health Mission (NHM) submitted instructions indicating that the procurement was requested by the Director of Medical Education, Assam, and funds were to be transferred to NHM. NHM had communicated for the release of the amount in March 2019. However, the Health and Family Welfare Department had not released the funds to NHM's account, leading to non-payment to vendors, including the petitioner, due to a lack of budgetary provision under the State budget. The Health and Family Welfare Department also participated in the hearing.