Daniyal Enterprises Through Its Proprietor Zafar Ullah Khan vs. The State Of Chhattisgarh

Facts

The petitioner, Daniyal Enterprises, a micro enterprise registered under Udyam and GST, filed a writ petition seeking release of payment for approved and admitted bills totaling Rs. 12,10,217/- for supply of water supply and electrical materials to the Municipal Council, Khairagarh. The petitioner participated in a tender process, was awarded the contract, supplied materials against work orders, and raised 31 bills. The Municipal Council, in a communication dated July 11, 2025, admitted the supply and liability but cited financial hardship for non-payment. The petitioner argued that the Council had received adequate budgetary allocations and that the amount was undisputed, making the non-payment arbitrary and amenable to writ jurisdiction. The State contended that the writ petition was not maintainable due to disputed questions of fact.

Held

The High Court held that it is a settled proposition of law that when disputed questions of fact are involved, the High Court should not exercise its jurisdiction under Article 226 of the Constitution of India, and the remedy under Article 226 may not be proper. The Court referred to several Supreme Court judgments, including Chairman, Grid Corporation of Orissa Ltd. (GRIDCO) & Others v. Sukamani Das (Smt.) & Another, Shubhas Jain v. Rajeshwari Shivam, Union of India vs. Puna Hinda, and M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (P) Ltd., which emphasize that writ jurisdiction is not meant for adjudicating hotly disputed questions of fact, especially in contractual matters where an alternate remedy by way of a civil suit is available. The Court found that the relief sought by the petitioner was contingent upon the resolution of disputed questions of fact, which could not be adjudicated under Article 226. Therefore, the Court declined to entertain the writ petition. Liberty was reserved for the petitioner to pursue other alternate remedies.

Key Issues

1. Whether the High Court can entertain a writ petition under Article 226 of the Constitution of India for the recovery of admitted contractual dues when the State or its instrumentalities act arbitrarily, despite the existence of disputed questions of fact? (Article 226 of the Constitution of India, principles of judicial review in contractual matters). Petitioner's Arguments: The petitioner argued that the non-payment of admitted and undisputed dues by the Municipal Council, despite acknowledging liability, constitutes arbitrary action and is amenable to writ jurisdiction, citing precedents like ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation of India Ltd. & Ors. and Surya Constructions v. State of Uttar Pradesh & Ors. They contended that the Municipal Council's plea of financial hardship was untenable given recent budgetary allocations. Revenue/State's Arguments: The respondents argued that the writ petition was not maintainable as it involved disputed questions of fact which cannot be adjudicated under Article 226 of the Constitution of India.