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2025 Supreme(Online)(Gau) 13310

TRIPURA HIGH COURT
Arindam Lodh, J
Namita Paul – Appellant
Versus
Food Corporation of India – Respondent
Writ Petition (Civil) No. 686 of 2023 | Writ Petition (Civil) No. 247 of 2022



Advocates:
For the Appellants/Petitioners: Mr. Raju Datta
For the Respondents: Mr. Ratan Datta

The withholding of security deposits without proven negligence is arbitrary, invalidating the corporation's set-off claims and violating natural justice principles.

Headnote:(A) Contract Law - Writ Jurisdiction under Article 226 - Security deposit claimed by the contractor post-execution of contracts via 'No Demand Certificates' - Respondents' attempt to set off security claims due to alleged poor performance under separate contracts is legally untenable and violates natural justice principles as it was not substantiated by evidence - No complaints against petitioner for contract execution - Court reaffirmed that it is the corporation’s burden to prove negligence before effecting deductions. (Paras 14, 20, 24)

(B) Natural Justice - The actions of the respondents - FCI in withholding security deposits without due process and consideration amount to arbitrary and illegal exercise of power violating the principles of natural justice and fair play in administrative actions. (Paras 20, 22)

Facts of the case:
The petitioner has been a contractor for transportation contracts with FCI and has completed all works satisfactorily evidenced by 'No Demand Certificates'. Despite this, the FCI set off her security deposit due to alleged losses from other contracts.

Findings of Court:
The Court found the FCI's actions without proper legal basis and determined that security deposits could not be withheld without evidence of negligence related to the work in question. The action to set off the deposit without a statutory forum being established was invalid. The FCI must refund the security deposit within 30 days.

Issues: The primary issue was whether the FCI could set off security deposits from one contract against claims from another without due process.

Ratio Decidendi: The Court ruled against the respondents' arbitrary actions and found that negligence requiring set off must be substantiated with evidence and cannot be presumed or inferred. Due process must be followed in cases involving public contracts. (Paras 16, 19, 23)

Result: Petition Allowed. FCI directed to refund security deposits.

Table of Content
1. successful contract completion supported by no demand certificates. (Para 2 , 10)
2. dispute over alleged losses from negligence in contract execution. (Para 6 , 7 , 11)
3. set off rights require evidence of negligence or loss establishment. (Para 20 , 21 , 22)
4. court's order to refund security deposits and ensure proper process. (Para 24 , 25)

1. Since common questions of law and facts are involved, all the writ petitions are taken up together for disposal by this common judgment on the consent of learned counsels appearing for the parties.

2. The facts, in a nut shell, as enumerated in WP(C) No. 686 of 2023, being taken as lead case, are set out separately here - in - below for convenience:
WP(C) No.686 of 2023:
The petitioner being a Government Contractor and Supplier for the last 20 years has been executing various transportation contracts successfully for carrying food grains / allied materials within and outside the State of Tripura under the Food Corporation of India, the respondents herein. In response to a Notice Inviting Tender, issued by the respondents - FCI she was awarded transport contract for two years for loading / unloading and handling contract at FSD Dharmanagar, Tripura on the basis of agreement executed by the petitioner under appointment letter No. CONT.9 / NEFR / HANDLING - DMR / 2006, dated 31.08.2006 issued by the respondent no.2. It is averred that the petitioner had successfully completed the contract with full satisfaction of the respondents and on satisfaction, the respondents - FCI had issued a 'No - Demand Certificate' dated 24.02.2009 in favour of the petitioner. The petitioner, on receipt of the said 'No - Demand Certificate' by a communication dated 25.02.2009 demanded the respondent no.4 for releasing Rs.1,10,000/- being the security deposit of the aforesaid contract dated 31.08.2006. But, the respondents did not refund the said security deposit to the petitioner till date rather, vide letter No. RO NEF - 21/13/2023 - Contract - RO NEF / 21806 dated 05.09.2023 issued by the respondent no.3 the claim of the petitioner for refund of Security Deposit amounting to Rs.1,10,000/- was illegally set off on the plea that they suffered losses due to the fault of the petitioner in connection with other contracts i.e. Contract No.CONT.9 / NEFT / TC / CBZ - CDR / 09 dated 29.04.2009 and Contract No. CONT.9 / NEFR / TC / CBZ - ADNR / 09 dated 12.11.2009. It is contended by the petitioner that the alleged Contract dated 29.04.2009 has already been decided by this High Court in a proceeding wherein it has been held that the respondents did not suffer any loss due to fault of the petitioner and in regard to the Contract dated 12.11.2009 there is an appeal filed by the respondents before this High Court which is pending.


3. Being aggrieved by non - refund of security deposit after repeated persuasions, the petitioner filed a writ petition being WP(C) No.247 of 2022 before this Court to refund the said security deposit of Rs.1,10,000/- along with interest at the rate of 12% per annum w.e.f. 25.02.2009. During the pendency of the writ petition the respondents - FCI vide communication dated 22.07.2022 informed the petitioner that the security deposit amounting to Rs.1,10,000/- was set off under Clause XII(e) of the contract agreement for the loss suffered by the respondents - FCI. Learned Co - ordinate Bench of this Court vide judgment and order dated 02.05.2023 disposed the said writ petition directing the petitioner to represent the matter before the respondents along with all relevant documents in support of her claim. It is further contended by the petitioner that on receipt of the copy of the said judgment and order, she submitted a detailed representation for consideration of her claim, but, she did not get any redress from the side of the respondents - FCI.
Hence, the petitioner by filing the instant writ petition has prayed for following reliefs:
(i) As to why a Writ in the nature of Certiora


















































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