Cooperative Society's writ for contractual dues against State not maintainable unless amount admitted: Allahabad HC

Writ Court Cannot Adjudicate Disputed Factual Claims for Contractual Payments

The Allahabad High Court has firmly reiterated that a writ petition under Article 226 of the Constitution seeking payment of contractual dues is maintainable against the State only when the amount is admitted and no factual inquiry is required. The Division Bench of Justice J.J. Munir and Justice Indrajeet Shukla dismissed a petition filed by Kalyan Health Care Products Pharmaceuticals Co-Operative Society Limited, which sought payment for AYUSH medicines supplied to the Chief Medical Officer, Allahabad, along with 18% interest.

Background: Supply of Medicines and Payment Refusal

The petitioner, a cooperative society registered under the Cooperative Societies Act, 1965, claimed it received a supply order on December 21, 2017, from the Chief Medical Officer's office and supplied the medicines. It alleged that the medicines were certified as satisfactory by the Chief Pharmacist, yet the department refused to make payment. An earlier writ petition (Writ-C No.28503 of 2018) was disposed of with a direction to the Chief Medical Officer to decide the representation. The order dated October 8, 2018, rejecting the payment, cited multiple grounds including non-compliance with procurement guidelines, lack of committee approval, and financial irregularities. The society challenged this order, arguing it violated principles of natural justice as the inquiry report was not shared.

Divergent Arguments on Maintainability

The petitioner's counsel, Mr. Abhishek Sharma, argued that the impugned order did not allege sub-standard medicines or deficiency in supply. He relied on the certification by the Chief Pharmacist and contended that any fault in procurement procedures by the officers cannot be blamed on the supplier. He cited the Supreme Court's decision in M/s Utkal Highways Engineers and Contractors v. Chief General Manager (2025 SCC OnLine SC 1400) to argue that non-payment of admitted dues is arbitrary and a writ lies for recovery.

Conversely, the State's counsel, Mr. Girijesh Kumar Tripathi, contended that a three-member committee found serious financial irregularities in the procurement. He pointed out that the petitioner's name was not on the empanelled list of suppliers issued by the Mission Director, Rashtriya Swasthya Mission, and letters sent to return the medicines were returned undelivered, raising doubts about the firm's existence.

Court's Analysis: When Writs for Money Claims Are Permissible

The court observed that the denial of payment raised several disputed questions of fact, including compliance with procurement policy, quality of medicines, utilisation, return of goods, and limitation. The court distinguished between cases where dues are admitted and cases where they are disputed. It noted that in the absence of admission, the writ court is not equipped to conduct a roving inquiry.

The bench relied on its earlier decision in M/s Alaska Tech v. State of U.P. , where it was held that a claim for dues under a non-statutory contract for supply of goods is essentially a prayer for a money decree, and issues such as quality of goods and limitation cannot be adjudicated under Article 226. It also quoted the Supreme Court's observation in Hindustan Petroleum Corporation Limited v. Dolly Das (1999) 4 SCC 450 that "in the absence of Constitutional or statutory rights being involved a writ proceeding would not lie to enforce contractual obligations ."

The court clarified that it had entertained writs like Writ-C No.6580 of 2022 following ABL International Ltd. v. Export Credit Guarantee Corporation (2004) 3 SCC 553, but there the dues were admitted. In the present case, the State had not admitted any amount, making the petition unsuitable for writ jurisdiction.

Key Observations from the Bench

"We are conscious of the fact, that every writ petition seeking payment of contractual dues cannot be thrown out and can very well be entertained against the State and its instrumentalities if the amount of money due under contract is admitted and no inquiry is required to ascertain the facts. But, where facts are so disputed that these cannot be decided without leading evidences by rival parties, this Court must lay its hands off while exercising our writ jurisdiction ."

"The fault/deficiency/quality in supply of medicine are contractual rights and obligations for which the private law remedies are best suited."

"In the absence of Constitutional or statutory rights being involved a writ proceeding would not lie to enforce contractual obligations even if it is sought to be enforced against the State." (quoting Hindustan Petroleum )

Verdict and Implications

The court dismissed the writ petition, holding that the petitioner's claim required adjudication of multiple disputed facts that could not be resolved on affidavits alone. It clarified that the dismissal did not preclude the petitioner from seeking remedies before the civil court or through arbitration. The judgment reinforces the established principle that the extraordinary writ jurisdiction under Article 226 is not a substitute for ordinary civil suits in contractual disputes where facts are contested.