Writ jurisdiction cannot enforce contractual dues disputed by an unresolved CAG audit objection.

The petitioner, M/s. Anand Enterprises, was awarded the work of “Collection Based Rural Distribution Franchisee” for the Phusro Electricity Supply Sub-Division under Work Order No. 08/RE/CE/RE/298/12-13 dated 31 January 2013, followed by an agreement dated 21 February 2013; the contract was subsequently extended from time to time.

The petitioner claimed that dues arising from the work remained unpaid and sought payment of ₹83,37,343, including interest up to September 2021.

The respondents stated that a bill of ₹38,96,119 had been sanctioned, but payment was withheld owing to a CAG audit objection concerning excess compensation and incentives; according to the respondents, ₹26.83 lakh of the questioned amount related to the petitioner.

The respondents further submitted that the withheld amount could be released upon submission of the requisite documents.

Whether the petitioner’s claimed contractual dues could be treated as admitted dues warranting a payment direction under Article 226 of the Constitution.

Whether the existence of an unresolved CAG audit objection and the petitioner’s failure to challenge the audit report or furnish relevant documents disentitled the petitioner to writ relief.

Whether the petitioner should be relegated to the remedy of instituting a civil suit for recovery of the disputed contractual dues.

The Court applied the principle that writ jurisdiction under Article 226 is generally inappropriate for adjudicating disputed contractual claims, particularly where the alleged dues are not unequivocally admitted and require examination of contractual compliance, accounts, audit findings, or supporting documents.

An audit objection affecting the quantification or entitlement to payment must first be addressed by the claimant through an objection to the audit findings or by furnishing the documents required by the concerned authority.

Where adjudication of the contractual claim involves disputed questions of fact and accounting, the claimant may pursue an ordinary civil suit before the competent court.

The petitioner also relied on several earlier decisions concerning payment of contractual dues, but the Court did not find them sufficient to warrant exercise of writ jurisdiction on the facts of the present case.

The Court found that the respondents had acknowledged only that the petitioner’s bill for ₹38,96,119 had been sanctioned, not that the entire amount claimed was unconditionally payable.

The CAG audit objection raised questions regarding the calculation of O&M compensation and the grant of incentives, with the respondents asserting that a substantial portion of the questioned amount related to the petitioner.

Since the petitioner had neither challenged the audit report nor supplied the relevant documents necessary to resolve the objection, the alleged dues could not be regarded as admitted or undisputed.

Consequently, determination of the petitioner’s entitlement required examination of contractual and accounting issues beyond the proper scope of the writ jurisdiction under Article 226.

The writ petition was dismissed.

The petitioner was granted liberty to address the audit objection by filing an objection or furnishing the necessary documents and was also left at liberty to institute a civil suit for recovery of the dues before the competent court.