Case Note & Summary
The case involved three appeals arising from orders of the High Court of Chhattisgarh, which dismissed writ petitions filed by a partnership firm, M/s Awadhesh Singh Gautam, challenging a recovery order issued by the Executive Engineer of the Chhattisgarh Rural Road Development Agency. The appellant was awarded contracts under the Pradhan Mantri Gram Sadak Yojana, but after executing a portion of the work, they faced allegations of overpayment based on a technical audit. The Collector directed recovery of the alleged overpayment, leading to the issuance of a recovery order that blocked payments from ongoing contracts. The appellant contested this recovery order, arguing it was made without notice and violated contractual provisions. The High Court dismissed the writ petitions, stating that the relief sought involved disputed questions of fact. The Supreme Court, however, found that the recovery order was not supported by any contractual clause and was issued without affording the appellant an opportunity to be heard, thus violating principles of natural justice. The Court quashed the recovery order and directed the release of the withheld amount along with interest, while clarifying that this judgment did not affect any ongoing criminal proceedings or the merits of the alleged overpayment. The appeals were allowed, and no costs were awarded.
Headnote
A) Contract Law - Recovery Order - Validity of Recovery Order - Chhattisgarh Land Revenue Code, 1959, Section 146 - The recovery order was quashed as it was not traceable to any contractual clause and violated principles of natural justice, as no notice or opportunity was given to the contractor before recovery. Held that the recovery order was not legally sustainable (Paras 28-30).
Issue of Consideration
Whether the recovery order dated 27.09.2025 is traceable to the contractual clauses relied upon by the respondents and whether it satisfies the conditions prescribed by those clauses.
Final Decision
The Supreme Court quashed the recovery order dated 27.09.2025 and directed the respondents to release Rs.84,17,003 along with interest at 6% per annum from 27.09.2025 until actual payment.
Law Points
- natural justice
- recovery order
- contract interpretation
- technical audit
- overpayment
- cross-contract recovery
