The High Court holds that contractual disputes between private parties and statutory corporations cannot be adjudicated under Article 226 of the Constitution unless a violation of statutory or constitutional mandate is established; upholds established precedent that writ jurisdiction is not exercisable for enforcing purely contractual rights. Ruling is binding on all subordinate courts in Chhattisgarh and has strong persuasive value elsewhere in government contract litigation.
Summary
| Category | Data |
|---|---|
| Case Name | WPC/5625/2025 of M/s BANU TENDUPATTA PROCESSOR THROUGH PROPRIETOR MOHAMMED FAIZAN KHALEEL Vs CHHATTISGARH STATE MINOR FOREST PRODUCE (T AND D), CNR CGHC010448192025 |
| Date of Registration | 27-10-2025 |
| Decision Date | 30-10-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | Hon’ble Shri Ramesh Sinha, Chief Justice |
| Concurring or Dissenting Judges | Hon’ble Shri Bibhu Datta Guru, Judge (concurring) |
| Court | High Court of Chhattisgarh |
| Bench | Division Bench: Chief Justice Ramesh Sinha, Justice Bibhu Datta Guru |
| Precedent Value | Binding authority within Chhattisgarh; persuasive elsewhere |
| Type of Law | Constitutional Law, Contract Law, Administrative Law |
| Questions of Law |
|
| Ratio Decidendi |
The High Court held that writ jurisdiction under Article 226 is not available for enforcing purely contractual rights unless violation of statutory or constitutional mandate is demonstrated. The petitioner, as a party to a commercial contract for purchase of Tendu leaves, could not invoke writ jurisdiction on the mere ground of alleged procedural violations when the contract provided for remedies and no prejudice was established. The record showed compliance with contractual terms by respondents including constitution of a committee for inspection. Mere assertion of absence from inspection, without showing resultant prejudice, is insufficient. The contract itself contained procedures for grievance redressal. Arbitrariness or illegality was not established by the petitioner. The Court reaffirmed that judicial review in such matters is limited and does not extend to rewriting contracts or adjudicating business disputes unless State action is shown to be shocking, arbitrary, or unconstitutional. |
| Facts as Summarised by the Court |
The petitioner, a proprietor firm, contracted with the State Minor Forest Produce Federation for the purchase of 3800 bags of Tendu leaves. After uplifting part of the quantity, the petitioner disputed the quality of the remaining stock and refused to take delivery, alleging procedural violations in inspection. Respondents constituted a committee, inspected the goods, and directed delivery, but petitioner failed to comply, leading to recovery action. Petitioner invoked Article 226 to challenge inclusion of disputed stock and raised claims of arbitrariness and constitutional violation. The Court found no procedural or substantive illegality by the State, noting the dispute was fundamentally contractual. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and statutory authorities within Chhattisgarh regarding the scope of writ jurisdiction in contract disputes involving statutory corporations. |
| Persuasive For | Other High Courts and the Supreme Court, especially in government tender/contract litigation. |
What’s New / What Lawyers Should Note
- Reaffirms that mere procedural irregularities in commercial contracts with statutory authorities do not justify exercise of writ jurisdiction under Article 226 unless a statutory or constitutional breach is established.
- Clarifies that parties to a government contract must exhaust contractual remedies and cannot use writ jurisdiction to avoid liabilities or rewrite commercial bargains.
- Underscores that failure to demonstrate material prejudice due to alleged procedural defect will defeat a writ petition.
- Highlights that judicial review does not extend to business or contractual discretion unless State action is proved to be arbitrary, illegal, or in violation of statutory/constitutional guarantees.
Summary of Legal Reasoning
- The Court examined the petitioner’s reliefs, which challenged the inclusion of disputed tendu leaf stock in installment calculations as arbitrary and violative of both contract and constitutional principles.
- The Court found that the petitioner’s complaint regarding leaf quality led to a duly constituted 12-member committee’s inspection, which declared the goods fit for sale.
- No material was placed on record by petitioner to rebut the committee’s findings or establish prejudice from absence at inspection.
- The contract explicitly set out remedies for refusal to take delivery (Federation may dispose and recover loss). Respondents acted in accordance with these contractual provisions.
- The Court emphasized settled law: writ jurisdiction under Article 226 cannot be invoked for enforcing pure contractual rights or for alleged procedural lapses unless backed by a clear statutory or constitutional violation.
- The Court held that commercial/contractual liabilities cannot be avoided via writ proceedings where no arbitrariness or illegality in State action is shown.
- The petitioner’s reliance on alleged procedural unfairness and lack of hearing was dismissed as insubstantial since contractual mechanisms for grievances existed but were not exhausted.
- Consequently, the writ petition was dismissed as devoid of merit.
Arguments by the Parties
Petitioner
- Argued respondents included 2282.2 bags of substandard Tendu leaves in dues calculation contrary to contract terms.
- Alleged inspection of leaves was conducted unilaterally, without notice or presence of petitioner, violating Clause 4(V) of agreement.
- Claimed any loss from uncollected goods should be recovered via sale as stipulated in agreement, not by compelling acceptance of inferior goods.
- Raised violation of Articles 14 and 19(1)(g) (right to fair procedure and to carry on business); sought judicial review for alleged abuse of authority and arbitrariness.
Respondents No.1-3
- Asserted petitioner defaulted on contractual obligation by failing to lift entire stock within stipulated period despite reminders.
- Insisted a committee was duly constituted to address quality complaint; committee found leaves fit for sale.
- Argued petitioner never deposited instalments or responded to official communication for transportation and payment.
- Emphasized all actions taken were strictly as per contract and statutory framework.
State (Respondents No.4 & 5)
- Clarified State was a formal/pro forma party only; all functional dealings and decisions fell within domain of the statutory corporation and its societies.
Factual Background
The petitioner, a proprietorship firm, entered into a contract with the Chhattisgarh State Minor Forest Produce Federation for procurement of 3800 bags of Tendu leaves under a government tender in 2025. After collecting a part of the stock, the petitioner disputed the quality of the remaining leaves, alleging non-compliance with contractually mandated procedures for inspection. Respondents addressed the grievance by constituting a 12-member committee, which declared the stock fit for sale, but the petitioner failed to take delivery or fulfil financial obligations. The respondents calculated petitioner’s dues including the disputed bags and proceeded to recover according to contract terms, prompting the petitioner to approach the High Court under Article 226.
Statutory Analysis
- The Court interpreted Clauses 4(V) and 4(VI)(b) of the Purchaser’s Agreement, which provide for inspection procedures and remedy if the purchaser fails to take delivery.
- No express statutory provisions of the Chhattisgarh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 were found to have been violated.
- Article 226 (writ jurisdiction), Article 14 (equality and procedural fairness), and Article 19(1)(g) (business rights) of the Constitution were invoked by the petitioner; Court found no infringement as contractual remedies were not shown as inadequate or violated with prejudice.
Dissenting / Concurring Opinion Summary
No dissenting opinion; both judges concurred in the result and reasoning.
Procedural Innovations
No procedural innovations were introduced or set by the Court in this judgment.
Alert Indicators
- ✔ Precedent Followed – Judgment reaffirms and follows established law regarding limits of writ jurisdiction in contractual matters.