Writ jurisdiction over statutory supply claims permits payment, interest, and review of arbitrary withholding by a State instrumentality.

A contractual setting does not bar writ relief where supplies are made under a statutory regime and government directions, and the dispute carries a public law element. Refusal by a State instrumentality to pay verified bills without legal justification is amenable to judicial review under Article 226. Alleged earlier shortages do not justify unilateral withholding of payment for later supplies where the governing circulars contemplate payment and separate recourse for transit loss. In writ review, equitable relief including interest may be granted where justice requires, but an enhanced rate cannot be granted in the absence of an appeal by the beneficiary of the original order.

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Issues: (i) Whether a writ petition was maintainable in respect of supplies made under a statutory order and allied government directions despite the contractual setting of the transactions. (ii) Whether the appellant could withhold payment on the basis of alleged shortages and whether interest could be awarded in review proceedings.

Issue (i): Whether a writ petition was maintainable in respect of supplies made under a statutory order and allied government directions despite the contractual setting of the transactions.

Analysis: The supplies were made pursuant to a statutory regime under the Essential Commodities Act, 1955 and under directions/circulars issued by the Central Government. The bills were scrutinised and verified by the Government, and no real disputed question of fact survived in respect of the claims for payment. A contract involving a State instrumentality does not, by itself, exclude writ jurisdiction where the dispute contains a public law element and the action complained of is arbitrary. Since the appellant was a State within the meaning of Article 12 of the Constitution of India, its refusal to pay without legal justification was amenable to judicial review under Article 226 of the Constitution of India.

Conclusion: The writ petition was maintainable, and the refusal to pay could be examined in writ jurisdiction.

Issue (ii): Whether the appellant could withhold payment on the basis of alleged shortages and whether interest could be awarded in review proceedings.

Analysis: The alleged shortages related to earlier years and were not shown to justify withholding of payment for the disputed supplies, particularly when the recipient of the goods had not raised such objections. The governing circulars contemplated payment and, in case of transit shortage, recourse against the Railways, not unilateral non-payment by the appellant. As to interest, a writ court exercising review under Article 226 of the Constitution of India may grant appropriate relief where an omission requires correction, and equitable principles support such relief. However, the enhancement in the rate of interest ordered in appeal could not be sustained because the respondents had not appealed.

Conclusion: The appellant was not entitled to withhold payment on the alleged shortages, and interest as awarded by the Single Judge was upheld while the enhanced rate granted in appeal was set aside.

Final Conclusion: The dispute was amenable to writ jurisdiction, the appellant's withholding of payment was unjustified, and the respondents were entitled to payment with interest at the rate fixed by the Single Judge, with the appeal failing on the merits.

Ratio Decidendi: A contractual dispute involving a State instrumentality remains amenable to writ jurisdiction where the transaction has a public law character and the State's refusal to pay is arbitrary, and equitable relief, including interest, may be granted under writ review when justice so requires.

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