J&K High Court Directs FCI To Refund Almost ₹8 Lakh To Transport Contractor, Says Retrospective Recovery Based On Revised Route Is Illegal
The Excessive Court docket of Jammu and Kashmir and Ladakh on Monday directed the Meals Company of India (FCI) to refund an quantity of ₹7,93,456 to a transport contractor, M/s Durga Enterprises, after holding that recoveries made retrospectively primarily based on revised route distances have been unlawful and opposite to contractual phrases and coverage tips.
Underscoring the binding nature of contract phrases, the impermissibility of unilateral retrospective monetary impositions, and the boundaries of administrative discretion in public procurement contracts, Justice Moksha Khajuria Kazmi emphasised that after a celebration accepts the contractual phrases and derives profit, it’s estopped from later difficult them.
The petitioner, a transport contractor engaged by the FCI for ferrying meals grains throughout numerous routes in Jammu and Kashmir, had approached the Excessive Court docket difficult FCI’s motion of deducting ₹76,92,578 from its working payments and safety deposits. The deductions have been made on the idea of alleged remeasurement of distances for numerous routes, all contracts secured by the petitioner by means of aggressive bidding between 2017 and 2018.
Arguing on behalf of the petitioner, Senior Advocate P.N. Raina submitted that the FCI had no authority to remeasure distances unilaterally in the course of the foreign money of the contract, and even when it did, any deductions primarily based on such revised distances couldn’t be given retrospective impact.
FCI, however, defended the remeasurements as being in keeping with Clause XVIII(a)(v) of the Mannequin Tender Type (MTF), which allows distance verification and revision by designated officers and renders such revised distances binding on contractors. It claimed that infrastructural developments comparable to realigned highways and new flyovers necessitated periodic reassessment of distances to safeguard public funds, particularly because the contracts have been on a “per MT/KM” foundation.
Justice Kazmi, whereas accepting FCI’s proper to revise distances prospectively, drew a transparent authorized boundary on how and when such revised metrics might be utilized. She noticed,
“From a plain studying of Clause XVIII(a)(v) of the MTF, the constant choices of the GRC, and the authoritative circulars, it’s clear that the FCI is legally entitled and contractually licensed to remeasure and revise street distances in the course of the contract interval. The remeasurement isn’t dehors the contract.”
The Court docket additionally took under consideration the conduct of the petitioner, who had beforehand accepted an preliminary downward revision within the Ramban route (from 170 km to 139 km) with out protest, after which raised payments accordingly. Citing the Supreme Court docket’s observations in Rajasthan State Industrial Improvement and Funding Corp. Ltd. v. Diamond & Gem Improvement Corp. Ltd. (2013) and Union of India v. N.Okay. (P) Ltd. (1972) the Court docket held,
“A celebration who has accepted the phrases of a contract and acquired profit therefrom is estopped from turning round to problem the identical. The conduct of the petitioner in accepting earlier remeasurements operates as a waiver and authorized estoppel.”
Nonetheless, the Court docket discovered power within the petitioner’s grievance that FCI had utilized revised distances with retrospective impact i.e., from a date previous to the precise remeasurement which even the Grievance Redressal Committee (GRC) of FCI had discovered to be incorrect. The Court docket famous,
“The respondents, of their affidavit and counter submissions, have admitted that recoveries in sure circumstances have been made out of 01.04.2019, though the remeasurement was carried out at later dates. The GRC in each its choices has clearly held that revised distances needs to be utilized solely from the date of precise remeasurement, until there’s concrete proof of earlier structural modifications.”
In gentle of those admissions, the Court docket declared that the contractor was entitled to a refund for extra recoveries made previous to the precise date of remeasurement. Thus, the full quantity of ₹7,93,456 was directed to be refunded to the petitioner.
Justice Kazmi additional held,
“Since it’s established and admitted by the respondent-FCI that an extra quantity of ₹7,93,456 was recovered previous to the respective remeasurement dates, this Court docket deems it acceptable to get rid of the writ petition by directing the respondent-FCI to refund the quantity inside a interval of six weeks from the date of this judgment. In case of failure, the quantity shall carry curiosity on the fee of 6% every year from the date of this judgment till precise cost.”
Notably, the Court docket additionally addressed the scope of judicial evaluate in contractual issues, distinguishing the current case from earlier choices comparable to M/s S. Surinder Singh v. FCI (determined by the identical Court docket in 2018), the place writ jurisdiction was declined because of the availability of other cures.
Justice Kazmi emphasised that on this case, the FCI itself had conceded its mistake partly, and the problem was to not the interpretation of phrases alone, however to a transparent breach of the respondents’ personal admitted coverage.
Case Title: M/S Durga Enterprises Vs FCI & Ors
Quotation: 2025 LiveLaw (JKL)
