Allahabad High Court: State's 'Nil Dues' Assertion Must Be Verified Against Own Earlier Admission

Court Refuses to Accept State's 'Nil Dues' Claim at Face Value

A division bench of the Allahabad High Court, Lucknow Bench, comprising Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary, has held that when the State asserts that no dues remain outstanding after a fresh verification, a writ court is not bound to accept that claim at face value. Instead, the court must independently cross-check the amounts released against the department's own earlier admission of liability.

The judgment, delivered on August 25, 2026, arose from five connected writ petitions filed by M/s Jaiswal Foods and related firms—all run by members of a single family from Chilwarya village in Bahraich district. The firms had supplied food packets for block-level teacher training programmes conducted by the Uttar Pradesh Basic Education Department during 2021-2022 and 2022-2023.

The Dispute: Unpaid Bills and Contradictory Figures

The petitioners claimed that despite completing supplies through the Government e-Marketplace (GeM) portal and submitting invoices, payments were stalled due to technical glitches in the Public Financial Management System (PFMS) portal and lapse of funds. After a first round of litigation, the Director of Basic Education passed an order on January 15, 2025, admitting a much lower amount than claimed—Rs. 14,15,896 against a claim of Rs. 35,02,521 in the leading case.

Aggrieved, the petitioners moved the High Court again, arguing that the Director had arbitrarily ignored supporting reports from Block Education Officers. They sought a writ of mandamus for payment of the full claimed amounts plus 18% interest.

State's Defence and Subsequent Verification

The respondents countered that the bills were disputed and that a fresh block-level verification exercise conducted during the pendency of the petitions had determined the exact liability. By a letter dated May 11, 2026, the District Basic Education Officer, Bahraich, declared that the outstanding balance against all petitioner firms stood at "NIL", implying that all verified dues had been paid.

However, when the court compared the amounts released against the department's own admitted figures in the impugned order, it found significant discrepancies. In two of the five petitions—Writ-C No. 2151/2026 (M/s Jaiswal Foods) and Writ-C No. 2153/2026 (M/s Jaiswal Agencies)—the sums released fell short of what the department itself had admitted as payable, by Rs. 10,45,791 and Rs. 1,19,544 respectively.

Court's Approach: Splitting the Claim

The High Court adopted a bifurcated approach. It held that the admitted shortfall—being a figure recorded in the department's own order—required no factual adjudication and could be enforced through a writ of mandamus. The disputed excess over that admitted amount, however, involved genuinely contested questions of fact that could not be resolved on affidavits alone.

"Such a fact situation, where even the writ petitioners themselves are not ad idem as to what constitutes the admitted dues, and where the figures placed by the State authorities have oscillated at different stages of the proceedings, is a quintessential example of a dispute that cannot be resolved on the basis of affidavits and counter-affidavits, and would necessarily require a full-fledged Trial ," the court observed.

Precedents Applied

The bench relied on the Supreme Court's decisions in State of U.P. v. Bridge & Roof Co. (India) Ltd. , Kerala State Electricity Board v. Kurien E. Kalathil , and State of Bihar v. Jain Plastics and Chemicals Ltd. to conclude that writ courts are not forums for adjudicating complex factual disputes involving quantification of contractual dues. The exception carved out in ABL International Ltd. v. Export Credit Guarantee Corporation was held inapplicable because the present case did not involve a clear admission of liability.

The court also noted that the right to interest, as established in Secretary, Irrigation Department v. G.C. Roy and Dr. Poornima Advani v. State (NCT of Delhi) , arises only after the principal amount is firmly determined. Since the disputed excess remained unresolved, no interest could be awarded on that portion.

Key Observations

The court expressed strong displeasure at the State's shifting stance, noting that the conduct of the respondent authorities "has also not been above board." It observed:

"It is precisely to guard against such unilateral and self-serving assertions of 'NIL' liability that this Court has thought it necessary to independently verify the respondents' own figures against their own prior admission, rather than accepting the letter dated 11.05.2026 at face value ."

On the admitted shortfall, the court stated:

"This shortfall is not, in any sense, a disputed figure requiring evidence; it is the respondents' own departmental admission, recorded in their own order, which admittedly remains unpaid even as on date, despite the very verification exercise the respondents have relied upon."

Final Directions

The court directed the respondents to release the admitted shortfall amounts—Rs. 10,45,791 in Writ-C No. 2151/2026 and Rs. 1,19,544 in Writ-C No. 2153/2026—within two months, along with interest at 9% per annum from January 15, 2025 till actual payment.

In the remaining three petitions, where the amounts released exceeded or matched the admitted figures, no further direction was issued. However, the respondents were left free to recover any excess paid.

The petitioners' prayer to quash the impugned order and obtain the higher claimed amounts was rejected. They were relegated to the remedy of a civil suit for adjudication of the disputed excess, with the benefit of Section 14 of the Limitation Act, 1963.

The judgment underscores the limits of writ jurisdiction in contractual disputes and reinforces the principle that courts will not permit the State to avoid its own admitted liability by resorting to belated and self-serving verifications.