The High Court of Tripura upholds the maintainability of writ petitions for recovery of contractually undisputed dues from State entities when no independent dispute redressal or arbitration clause exists, and clarifies that set-off across unrelated contracts is impermissible under standard contract terms. This decision affirms and applies settled Supreme Court precedent, and is binding authority within Tripura for contractor-State disputes in the construction/public works sector.
Summary
| Category | Data |
|---|---|
| Case Name | WP(C)/360/2023 of Sri Ratan Sarkar Vs The State of Tripura and ors |
| CNR | TRHC010008752023 |
| Date of Registration | 02-06-2023 |
| Decision Date | 30-10-2025 |
| Disposal Nature | Allowed |
| Judgment Author | HON’BLE THE CHIEF JUSTICE M.S. RAMACHANDRA RAO |
| Concurring or Dissenting Judges | HON’BLE MR. JUSTICE S. DATTA PURKAYASTHA (concurring) |
| Court | High Court of Tripura |
| Bench | Division Bench: Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha |
| Precedent Value | Binding within the High Court of Tripura; persuasive for other High Courts |
| Overrules / Affirms | Affirms Supreme Court judgments: ABL International Ltd. v. ECGC (2004) 3 SCC 553; Unitech Ltd. v. TSIIC (2021) 16 SCC 35 |
| Type of Law | Contractual law; Public law; Writ jurisdiction under Article 226 of the Constitution of India |
| Questions of Law |
|
| Ratio Decidendi | The High Court held that, in the absence of an independent adjudicatory mechanism (such as arbitration), writ jurisdiction under Article 226 is available for enforcement of undisputed contractual dues against the State or its instrumentalities. The attempt by respondent authorities to withhold payments under a completed contract (NIT-30) on the basis of alleged breaches in unrelated contracts (NIT-85, NIT-89, NIT-95) was held patently arbitrary, unreasonable, and violative of Articles 14 and 300A of the Constitution. The contractual clause (Clause 53) invoked by the State applies only in cases of termination and for the contract in question, not to other distinct contracts. The “Dispute Redressal System” clause (Clause 24) is not an alternative remedy, as it lacks independence and does not exclude writ jurisdiction. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court | Analysis of Clauses 24, 32, 43, and 53 of the Standard Bidding Document (SBD); Definitions in GCC; Articles 226, 14, and 300A of the Constitution; Supreme Court authorities cited above |
| Facts as Summarised by the Court | The petitioner-Contractor completed three separate road construction works under a contract (NIT-30) with the State, with all maintenance periods concluded. The State withheld payment of security deposit and performance guarantees, claiming the right to set off alleged breaches in other unrelated contracts. There was no arbitration clause; the State relied on a Dispute Redressal System placing adjudication in the hands of its own officers. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Tripura; authorities and instrumentalities of the State of Tripura in similar contractual disputes |
| Persuasive For | Other High Courts; Supreme Court |
| Overrules | None explicitly overruled; respondent’s reliance on contrary readings of N.G. Projects Ltd. v. Vinod Kumar Jain (2022) 6 SCC 127 was rejected as distinguishable |
| Distinguishes | N.G. Projects Ltd. v. Vinod Kumar Jain (2022) 6 SCC 127; K. Jayaram v. Bangalore Development Authority (2022) 12 SCC 815 |
| Follows | ABL International Ltd. v. ECGC (2004) 3 SCC 553; Unitech Limited v. TSIIC (2021) 16 SCC 35 |
What’s New / What Lawyers Should Note
- Reaffirms that, in the absence of a genuine, independent alternative remedy (such as arbitration), writ jurisdiction under Article 226 is not ousted in contractual claims against the State.
- Clarifies that internal “Dispute Redressal Systems” in government contracts, where adjudicators are officials of the employer, do not qualify as true alternative remedies so as to bar writs.
- Explicitly holds that government/public bodies cannot invoke set-off or retain monies from a concluded contract due to disputes or alleged breaches in unrelated contracts with that contractor, unless contractually provided.
- Provides a clear basis to challenge the withholding of payment or application of set-off across contracts in public procurement disputes.
Summary of Legal Reasoning
- Maintainability of Writ Petition: The Court examined Clause 24 (Dispute Redressal System) and found it does not amount to an independent, impartial adjudicatory mechanism like arbitration, as decisions rest with authorities within the respondent organization itself. Absence of an arbitration clause strengthens the maintainability of a writ for monetary claims.
- Scope of Set-off Clauses: Clause 53 applies only where the contract (NIT-30) itself is terminated due to fundamental breach. It does not permit retaining amounts due under one contract because of putative defaults in unrelated contracts.
- Application of Supreme Court Precedents: Relied squarely on ABL International Ltd. (2004) 3 SCC 553 and Unitech Ltd. (2021) 16 SCC 35 to hold that writs for specific performance of contractual conditions and monetary relief are maintainable against state entities, especially where the dispute procedure is non-independent or wholly internal.
- Facts Distinguishable from Cited Cases: The respondent’s reliance on N.G. Projects Ltd. and K. Jayaram was rejected as those judgments involved different factual/misconduct situations (tender process, fraud/suppression), not outstanding dues for completed works.
- Arbitrariness and Constitutional Rights: Withholding undisputed dues for works admittedly completed, on grounds extraneous to the contract in question, was held arbitrary and a violation of Article 14 and 300A.
- Relief Granted: The Court ordered refund of all withheld dues with 12% interest, and awarded costs.
Arguments by the Parties
Petitioner
- Successfully completed all works under contract NIT-30, including maintenance.
- No defects or issues raised by the respondent at handover; performance guarantee and security deposit remain unpaid without cause.
- Clause 53 allows withholding only when the contract is terminated for breach, which has not occurred for NIT-30.
- Set-off across contracts requires an adjudicated, ascertained debt and a suit; not justified here where liability is neither admitted nor adjudicated.
- Clause 24 is not a genuine alternative remedy warranting preclusion of a writ.
Respondents
- Petitioner failed to perform other contracts (NIT-85, NIT-89, NIT-95), entitling respondents to withhold dues under NIT-30 per Clause 53.
- Clause 24 of the SBD has not been exhausted, making the writ petition non-maintainable.
- Alleged suppression of material facts regarding non-performance in those other contracts.
- Petitioner is a habitual defaulter.
Factual Background
The petitioner entered into a contract (NIT-30) with the State’s Public Works Department via Hindustan Steelworks Construction Limited for three road construction and maintenance projects. All works, including five-year maintenance, were completed without objection, and related verification reports were issued. Despite this, a significant part of the security deposit and performance guarantees were withheld by the State, citing petitioner’s alleged breaches in other, unrelated contracts (NIT-85, NIT-89, NIT-95). There was no arbitration clause, but the contract included a Dispute Redressal System placing adjudication with respondent’s own officers.
Statutory Analysis
- Clause 24 (Dispute Redressal System): Provides for disputes to be settled first by senior officials of the employer, with the possibility of appeal to a standing empowered committee comprised largely of government officers. No provision for independent arbitration or third-party adjudication.
- Clause 53 (Payment upon Termination): Permits recovery/deduction only if the specific contract is terminated for a fundamental breach; does not apply to breaches under other contracts between the same parties.
- Clauses 32 and 43: Prescribe detailed procedures for releasing performance securities and security deposits, including requirements for repayment after completion and maintenance of works.
- Constitutional Provisions: Articles 14 and 300A invoked to assess arbitrariness and deprivation of property without authority of law.
Dissenting / Concurring Opinion Summary
No dissenting or separate concurring opinion is recorded; both judges joined in the judgment and reasoning.
Procedural Innovations
No new procedural precedent or innovation is set; the court followed established process regarding the maintainability of writs and the analysis of contract clauses.
Alert Indicators
- ✔ Precedent Followed – The decision follows and applies established Supreme Court precedent on writ maintainability and contract enforcement.