M/S RKAZE Enterprises Th. Its Proprietor Sh. Ebinezer Sotra vs UT Of J&K & Ors.

The petitioner invokes the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, seeking a direction to the respondents to release the outstanding contractual liability of ₹34,63,787/-(Rupees Thirty four Lacs, Sixty Three Thousand, Seven Hundred and Eighty Seven), with interest @ 18% per annum from the date the liability became due, and to release the Security Deposit/retention money of ₹7.67 lakh.

The facts, in brief, are that the respondents issued e-Tender Notice No. SICOP/DEV/2024/126 dated 26.12.2024 for procurement and installment of Audio Visual Equipment in the Administrative Department Building at Bari Brahmana campus of the JKEDI. The petitioner participated in the tender process and the work was allotted to him vide allotment order dated 20.01.2025. The work was executed and respondent No. 3 issued the Completion Certificate dated 17.02.2026. Part payment has been made. The balance of ₹34,63,787/- remains unpaid. The Security Deposit/retention money of ₹7.67 lakh has also not been released.

The respondents have filed the objections. They do not dispute the allotment, the execution of work, the completion certificate or the outstanding amount. The only plea of the respondents is that certain codal formalities remain to be completed. The nature of those formalities and the deficiency, if any, attributable to the petitioner, is not disclosed. It is also not their case that the bills for pending liability have not been prepared.

Heard learned counsel for the parties.

The claim arises out of a concluded contract. Ordinarily, a dispute concerning interpretation of contractual terms or quantification of dues, is for the Civil Court, and not for a Writ Court. After the contract is concluded, the relations between the parties are mainly governed by the contract. Reference may advantageously be made to the judgments passed in, “Radhakrishna Aggarwal and ors. Vs. State of Bihar and ors., (1977) 3 SCC 457”; “State of Uttar Pradesh and ors. Vs. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22”; “Kerala State Electricity Board and Anr. Vs. Kurien E. Kalathil and ors., (2000) 6 SCC 293”.

That rule is not absolute where the contracting party is the State or its instrumentality. Article 226 of the Constitution of India is not ousted merely because the controversy has a contractual origin. If the action bears a public-law element, and is arbitrary, unfair or unreasonable, it is amenable to judicial review under Article 14, and a consequential monetary direction may follow. The law is well settled and in this regard, reference may be made to the judgments passed by the Hon’ble Supreme Court in “ABL International Ltd. and Anr. Vs. Export Credit Guarantee Corporation of India Ltd. and ors., (2004) 3 SCC 553”. Where the amount payable is admitted, no disputed question of fact arises, withholding of the dues itself is arbitrary, and the contractor is not to be driven to a suit. In this regard, reference may be made to “M/S Surya Constructions Vs. State of Uttar Pradesh, (2019) 16 SCC 794 .”

The present case falls within that exception, and not within the ordinary rule. The respondents are the State functionaries. The allotment, the execution, the completion certificate dated 17.02.2026 and the outstanding amount of ₹34,63,787/- are not in dispute. No Clause of the contract is under interpretation. No factual controversy is raised, which would require evidence. The only defence is a wholesale assertion that “certain formalities” are yet to be completed, without specifying the deficiency or the provision under which payment can be withheld. A plea so vague cannot be used to postpone an admitted liability. Once the work stands executed and certified, internal or codal formalities are for the department to process. They do not authorize the department, being an instrumentality of the State, to deny payment for the work admittedly done.

If any specific codal formality is required to be fulfilled by the petitioner, the respondents may communicate it in writing. The petitioner shall then be bound to remove it. Absence of such communication, however, is no justification for withholding the admitted amount.

The claim for interest @ 18% per annum is not a matter for a flat direction. No rate is shown on the record. Interest, if any, must follow the contract. The respondents shall consider the claim for interest in terms of the contract, and release it if admissible thereunder. A rate not provided by the contract cannot be imposed in writ jurisdiction.

The Security Deposit/retention money of ₹7.67 lakh stands on a different footing. It is not part of the running liability. It’s release is governed by the defect/liability period and retention Clause of the contract. The respondents shall consider and release it in terms of the contract and shall not withhold it on the same unspecified plea of formalities.

For the foregoing reasons, the instant petition is allowed to the following extent:-

Disposed of, alongwith connected application.