State authorities must fairly decide contractors’ unpaid contractual claims consistently with Article 14.

The petitioner, a C-Class contractor registered with the Chhattisgarh Housing Board, was awarded a tender for construction of a Tehsil office building at Daura Kochli, District Balrampur-Ramanujganj, at an estimated cost of ₹64,70,826.

The petitioner claimed to have completed the work within the stipulated period and submitted the bill. Although ₹32,29,000 was paid, the alleged balance of ₹32,41,826 remained unpaid.

The petitioner asserted that repeated requests for payment were unsuccessful and that a representation dated 20.02.2026 submitted to the Executive Engineer was not decided.

The Housing Board respondents submitted that payment could not be released because the work was State-financed and the required funds had not been disbursed by the Collector.

The State respondents contended that, since the tender had been floated by the Housing Board authorities, the liability to pay rested upon them.

Whether the petitioner was entitled to a writ directing the respondents to release the alleged balance contract amount of ₹32,41,826 with interest at 18% per annum.

Whether the respondents should be directed to consider and decide the petitioner’s representation seeking payment of the outstanding contract amount.

The Court applied the constitutional principle that an instrumentality of the State must act fairly, reasonably, and consistently with public interest even in contractual matters.

Relying on ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553, the Court reiterated that when a State instrumentality acts unfairly, unjustly, or unreasonably in the discharge of its contractual, constitutional, or statutory obligations, such conduct may violate Article 14 of the Constitution.

The Court noted that the Housing Board respondents did not dispute that they had floated the tender or that the petitioner had completed the work within the stipulated period.

Their explanation was that payment had not been made because the State agency had not released the requisite funds.

The Court did not finally adjudicate the petitioner’s entitlement to the claimed balance or interest.

Instead, in light of the State respondents’ and Housing Board respondents’ competing positions regarding responsibility for payment, and applying the requirement of fairness under Article 14 as explained in ABL International, it considered it appropriate to require all respondents to examine the petitioner’s claim through a fresh representation.

The petitioner was permitted to submit a fresh representation before all the respondents.

Upon receipt, the authorities were directed to consider and decide it within three months, keeping in view the principles stated by the Supreme Court in ABL International Ltd.

No direct writ for immediate release of the claimed amount or award of 18% interest was granted.