Chattisgarh High Court
Birbal Nishad vs State Of Chhattisgarh on 8 April, 2026
Author: Ramesh Sinha
Bench: Ramesh Sinha
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2026:CGHC:16074-DB
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 1385 of 2026
1 - Birbal Nishad S/o Uttam Nishad Aged About 38 Years, Occupation
Contractor R/o Gujrati Samaj Tikrapara, Bilaspur, Distt. Bilaspur,
Chhattisgarh.
... Petitioner
versus
1 - State of Chhattisgarh Through The Secretary, Public Health
Engineering, Department (PHED), Mahanadi Bhawan, Mantralaya,
Nava Raipur, Atal Nagar, Distt. Raipur, Chhattisgarh.
2 - The Mission Director Jal Jeevan Mission (JJM), Indravati Bhawan,
Nava Raipur, Atal Nagar, Distt. Raipur, Chhattisgarh.
3 - The Executive Engineer and Member Secretary District Water
Sanitation Mission, Public Health Engineering Department (PHED),
Division Mungeli, Distt. Mungeli, Chhattisgarh.
4 - The Accountant General (Audit) Office of the Accountant General
(Audit)- Vidhan Sabha, Zero Point, Baloda Bazar Road, Raipur,
Chhattisgarh.
... Respondents
Digitally signed by
(Cause title taken from Case Information System) MOHAMMED AADIL KHAN Date: 2026.04.10 19:05:33 +0530 For Petitioner : Mr. Amit Kumar, Advocate For State : Mr. S.S. Baghel, Govt. Advocte.
For Respondent No.4 : Mr. J.N. Nande, Advocate.
Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal, Judge Order on Board 2 Per Ramesh Sinha, Chief Justice 08-04-2026
1. Heard Mr. Amit Kumar, learned counsel for the petitioner. Also heard Mr. S.S. Baghel, learned Govt. Advocate, appearing for the State and Mr. J.N. Nande, learned counsel for respondent No.4.
2. By this petition under Article 226 of the Constitution of India, the petitioner seek for the following relief(s):
"10.1) This Hon'ble Court may kindly be pleased to call for the entire records pertaining to the case of the petitioner from the possession of the respondents for its kind perusal.
10.2) That, the Hon'ble Court may kindly be pleased to quash the impugned order dated 06.12.2024 as well as the objection dated 23.04.2024 (ANNEXURE P/1) (and any subsequent directives) issued by respondent No. 2, which seeks to unilaterally revise the contract rates ₹ 1,871 per FHTC based on an internal audit observation.
10.3) That, the Hon'ble Court may kindly be pleased to quash the letter dated 24.03.2025 (ΑNNEXURE P/2) as well as directing the Respondent No. 3 to immediately release all 3 outstanding payments for the 70% Physical Completion as already recorded and verified, without any illegal deductions. De-linking 30% from HGJ Certification and also directing the Respondents to release the final 30% installment upon technical completion and commissioning by the Department, declaring that the Petitioner's payment cannot be made contingent upon the "Har Ghar Jal" certification ог administrative handover to the Gram Panchayat, as these are third-party administrative acts beyond the Petitioner's control. 10.4)Any other relief or relief(s) which this Hon'ble Court may think proper in view of the facts and circumstances of the case may also kindly be granted."
3. The brief facts as mentioned in the petition are that, the Petitioner is a registered Class 'C' contractor with the Public Works Department (PWD), Chhattisgarh (Registration No. CGeR21057), carrying on business as a sole proprietor. During 2022-2023, Respondent No. 3 invited tenders for execution of Piped Water Supply Schemes under the Jal Jeevan Mission, pursuant to which the Petitioner was awarded multiple contracts after due technical and financial evaluation. Formal agreements bearing Nos. 53/DL/2022-23, 215/DL/2022-23, 168/DL/2022-23, 15/DL/2023-24, 16/DL/2023-24, and 17/DL/2023-24 4 were executed, clearly stipulating the Schedule of Rates (SOR), tender premium, and scope of work. The Petitioner duly executed the works in accordance with the agreements, and upon completion, submitted Running Account (RA) bills, which were verified through Measurement Books (MB) and partially paid, thereby acknowledging satisfactory performance. However, on 23.04.2024, an internal audit conducted by Respondent No. 4 raised an objection regarding the rate analysis of Functional Household Tap Connections (FHTC), alleging that the rates applied in the tender were incorrect and recommending recovery of Rs. 1,871 per connection. Based solely on this audit objection, Respondent No. 2 issued a circular dated 06.12.2024 directing withholding of payments and recovery from contractors. Acting upon the same, Respondent No. 3 withheld the Petitioner's final bills and retained the Security Deposit and Earnest Money Deposit (EMD), despite the Petitioner having fulfilled all contractual obligations. Notably, no show cause notice or opportunity of hearing was provided, nor any justification furnished for revising the agreed contractual rates retrospectively. Subsequently, on 24.03.2025, the Respondent authority directed release of 70% payment and consideration of the remaining 30% by de-linking it from "Har Ghar Jal" certification; however, the full payment due to the Petitioner remains unpaid. The Petitioner submitted representations in this regard, which were decided on 19.02.2026, but no effective relief was granted, compelling the Petitioner to seek appropriate legal remedy.
4. Learned counsel for the petitioner submits that the Respondents, 5 having invited tenders, finalized the rate analysis, and entered into binding agreements, are legally estopped (legally blocked) from unilaterally altering the agreed rates after execution of the work. The Petitioner acted upon the concluded contracts by investing resources and completing the works; therefore, the Respondents cannot retrospectively revise rates or impose recovery based on a subsequent audit objection. The attempt to recover amounts on the basis of a 2024 audit concerning 2022 contracts violates the settled principle of vested rights, as the Petitioner's entitlement to payment crystallized upon execution of the agreements and satisfactory completion of work. It is further contended that the impugned action is arbitrary and violative of principles of natural justice, as no show cause notice or opportunity of hearing was ever provided to the Petitioner. An internal audit objection, being merely an inter-departmental matter, cannot create a binding liability against the Petitioner, particularly in the absence of any fraud, misrepresentation, or contractual breach. The rates in question were part of the tender documents issued by the Department itself, and therefore, no recovery can be effected for alleged errors attributable to the Respondents. He also submits that the continued withholding of payments, including the final bills, Security Deposit, and EMD, coupled with the additional recovery sought, has resulted in complete financial strangulation of the Petitioner's business, infringing his fundamental right to carry on trade under Article 19(1)(g) of the Constitution of India. The Respondents' reliance on lack of certification is equally untenable, especially when they have themselves admitted that Third Party 6 Inspection (TPI) agencies are non-functional, making compliance impossible. Having fulfilled his contractual obligations, the Petitioner cannot be penalized for administrative lapses of the Respondents, and the non-payment of dues amounts to a clear breach of reciprocal obligations under law. Therefore, the petition may be allowed.
5. On the other hand, learned State counsel opposes the submissions made by the learned counsel for the petitioner and submits that, the dispute herein arises purely out of contractual obligations under a tender agreement, involving disputed questions of fact regarding completion, quality, measurement and verification of work, which cannot be adjudicated in writ jurisdiction under Article 226 of the Constitution. It is a settled principle that writ courts should not ordinarily interfere in contractual matters where efficacious alternative remedies such as arbitration or civil suit are available, further, the payment of the remaining 30% amount is subject to due verification, certification, and compliance of all contractual conditions, including defect liability and other technical parameters, and mere completion as alleged by the petitioner does not ipso facto entitle him to full payment; moreover, writ jurisdiction is discretionary and to be exercised only in exceptional circumstances involving clear arbitrariness, which is absent in the present case, as there is no arbitrary or mala fide action on part of the respondents but only a procedural and contractual compliance requirement. Hence, the present writ petition seeking monetary relief is not maintainable and is liable to be dismissed.
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6. We have learned counsel for the parties, perused the material annexed with the petition.
7. The Hon'ble Supreme Court in the case of Tata Motors Limited v The Brihan Mumbai Electric Supply & Transport Undertaking (Best) and Others passed in Civil Appeal No. 3897 of 2023 vide judgment dated 19.05.2023 held as follows :
"48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courThe Hon'ble Supreme Court in the case of Tata Motors Limited v The Brihan Mumbai Electric Supply & Transport Undertaking (Best) and Others passed in Civil 8 Appeal No. 3897 of 2023 vide judgment dated 19.05.2023 held as follows :
"48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a 9 magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489)
52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three-
Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Others, reported in (2005) 1 SCC 679.
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53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere.
54. As observed by this Court in Jagdish Mandal v. State of Orissa and Others, reported in (2007) 14 SCC 517, that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and 11 awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes."
8. Upon perusal of the judgment passed by the Hon'ble Supreme Court in Tata Motors Limited (Supra), as the Apex Court has categorically held that judicial review in contractual and tender matters must be exercised with great restraint and only in cases where clear arbitrariness, mala fides, bias or irrationality is demonstrated, in the present case, no such exceptional circumstance is made out, and the dispute raised by the petitioner pertains purely to non-release of alleged contractual dues, which involves factual determination regarding completion of work, compliance of contractual conditions, measurements and verification, and therefore falls within the domain of a civil dispute. The scope of judicial review in contractual and tender matters is limited and the Court ordinarily does not interfere unless the decision-making process is found to be arbitrary, irrational or contrary to law, which is not established in the present case. Hence, in light of the settled legal position, the present petition seeking release of payment 12 under a contract is misconceived, devoid of merit, and liable to be dismissed, leaving the petitioner to avail appropriate alternative remedies available under law.
9. Therefore, the present petition being devoid of merits deserves to be and is hereby dismissed.
Sd/- Sd/-
(Ravindra Kumar Agrawal) (Ramesh Sinha)
Judge Chief Justice
Aadil