Dhanvantri Chemicals vs. State Of Chhattisgarh

Facts

The petitioner, Dhanvantri Chemicals, is a contractor who supplied phenyle to Respondent No. 2, the Assistant Commissioner, Tribal Welfare Department, Raigarh, based on a rate contract floated by Respondent No. 3, CSIDC. The petitioner supplied goods as per a supply order dated February 28, 2023, and submitted invoices totaling Rs. 7,05,125/- (including GST) on March 22, 2023. Despite acceptance of the goods without objection to quality or quantity, and their subsequent utilization, payment remained outstanding. The petitioner made representations to Respondents No. 2 and 3 on January 17, 2024, and March 11, 2024, respectively, but to no avail. The petitioner filed a writ petition seeking release of the dues amounting to Rs. 7,05,078/- along with interest.

Held

The Court held that the writ petition is maintainable and allowed it. The Court found that the petitioner had supplied the goods based on a valid supply order, the goods were accepted without objection to quality or quantity, and were utilized. The bill amount of Rs. 7,05,078/- was not disputed by Respondents No. 1 and 2. The Court reasoned that if there was any irregularity in placing the supply order, it was an internal matter for the State to address with its officials, and it should not be a ground to withhold payment to the petitioner for goods duly supplied and accepted. The Court relied on the Supreme Court's decision in ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd., which held that a writ court can issue directions to set right arbitrary actions of a State instrumentality, even in contractual matters, if they contravene the principles of fairness, justice, and reasonableness under Article 14 of the Constitution. Respondents No. 1 and 2 were directed to make the payment of the bill amount expeditiously within eight weeks, failing which the amount would carry interest at 6% per annum.

Key Issues

1. Whether the writ petition is maintainable for recovery of an undisputed amount for goods supplied and accepted by a State instrumentality, despite the alleged irregularity in the placement of the supply order by an official of the Tribal Welfare Department. Petitioner's Arguments: The petitioner contended that the supply order was placed by Respondent No. 2, the goods were supplied and accepted without objection, and the bill amount is undisputed. Therefore, the petitioner is entitled to payment. The petitioner argued that any irregularity in placing the order should be addressed by the State against its official, and not by withholding payment to the petitioner. They relied on the principle that a writ court can grant relief against arbitrary action by a public authority, even in contractual matters. Revenue/State's Arguments: The State counsel objected to the payment, stating that the supply order was placed by the then Assistant Commissioner without following due process and obtaining prior permission. A departmental enquiry has been initiated against the said official, and payment can only be fixed after its conclusion. However, the State counsel conceded that the petitioner supplied the goods as per the order, the bill amount is Rs. 7,05,078/-, and the goods have been utilized and consumed.