Subham Infrastructure vs. Union Of INDIA

Held

The Court held that a writ petition is maintainable against an instrumentality of the State arising out of a contractual obligation, even if it involves disputed questions of fact or a consequential monetary claim. Citing the Supreme Court's judgment in ABL International Ltd. & Anr. V. Export Credit Guarantee Corporation of India Ltd. & Ors., the Court affirmed that state instrumentalities must act fairly and justly, as required by Article 14 of the Constitution. The Court found that the respondents' action of withholding payment, especially the admitted portion, could be arbitrary. Therefore, the Court directed the respondents to immediately process the petitioner's claim and release the admissible dues, after adjusting any payments already made or statutory deductions. The payment was ordered to be made within 90 days, failing which the petitioner would be entitled to interest at 12% per annum. The issue of the specific format of the GST Civil Worksheet was implicitly resolved by directing the processing of the claim.

Facts

The petitioner, Subham Infrastructure, filed a writ petition challenging the withholding of payment amounting to Rs. 1,56,17,445/- by the respondents (South East Central Railway). This amount includes Rs. 1,18,43,620/- as admitted dues and Rs. 37,73,825/- as GST neutralization for work completed on July 31, 2020. The petitioner had an agreement predating GST implementation. Following a Railway Board circular and a Joint Procedure Order (JPO) for GST impact neutralization on existing contracts, the petitioner submitted a supplementary agreement and GST calculation bill certified by a Chartered Accountant. However, the respondents raised observations, requiring compliance with specific items, and requested verification from the Railway's Chartered Accountant. The petitioner contended that they were not provided with a sample GST Civil Worksheet, leading to delays and financial hardship.

Key Issues

1. Whether a writ petition is maintainable against an instrumentality of the State arising out of a contractual obligation, particularly when monetary relief is sought? 2. Whether the respondents have acted arbitrarily and unfairly in withholding the admitted payment due to the petitioner? Petitioner's Arguments: The petitioner argued that the respondents have illegally withheld admissible payment. They relied on this Court's previous decisions in M/s Shreejikrupa Project Ltd. Vs. State of CG and others (WPC No.619/2020) and Natthani Infrastructure Vs. State of CG (WPC No.1231/2018), directing the respondents to consider and process admitted claims without delay. The petitioner emphasized the financial crisis caused by the prolonged delay. Respondents' Arguments: The respondents contended that a writ petition is not the appropriate remedy for settlement of dues arising from a contract. They argued that the petitioner should have approached a competent civil court or initiated arbitration proceedings for the release of money.