1 CGHC010150822022 2026:CGHC:34469-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 2142 of 2022 M/. Hora Transport Company Private Limited. A Registered Company Under The Relevant Provisions Of Companies Act, 1956 Having Its Head Office At Fafadih, Bilaspur Road, Raijpur, District Raipur Chhattisgarh, Through Its Director, Sarabjit Singh Hora, S/o Shri Dilip Singh Hora, Aged About 38 Years, R/o A/1 Sainagar Raipur, District Raipur, Chhattisgarh ... Petitioner versus 1 - Central Warehousing Corporation (A Government Of India Undertaking), Through Its General Manager (Commercial), Central Warehousing Corporation, Corporate Office, New Delhi 2 - Senior Assistant Manager (Business), Central Warehousing Corporation, (A Government Of India Undertaking), Regional Office 75 Arera Hills, Opposite Kendriya Vidyalaya No. 1, Bhopal, Madhya Pradesh 3 - Regional Manager, Central Warehousing Corporation, (A Government Of India Undertaking), Regional Office, Warehousing Complex, Rawanbhata, Post Office Birgaon, District Raipur (C.G.) At Present 75 Arera Hills, Opposite Kendriya Vidyalaya No. 1, Bhopal, Madhya Pradesh 4 - Food Corporation Of India, Through Its General Manager, Regional Office, Vidhan Sabha Road, Mowa, Pandari, District : Raipur, Chhattisgarh ... Respondents (Cause title taken from Case Information System) VED PRAKASH DEWANGAN Digitally signed by VED PRAKASH DEWANGAN Date: 2026.08.10 16:30:49 +0530 2 For Petitioner : Mr. Manoj Paranjpe, Senior Advocate along with Mr. Arpan Verma, Advocate For Respondents No.1 to 3 : Mr. Vinod Kumar Deshmukh, Advocate For Respondent No.4 : Mr. R.S. Patel, Advocate Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri R avindra Kumar Agrawal , Judge Order on Board Per Ramesh Sinha, Chief Justice 06/08/2026 1. Heard Mr. Manoj Paranjpe, Senior Advocate along with Mr. Arpan Verma, learned counsel appearing for the petitioner as well as Mr. Vinod Kumar Deshmukh, learned counsel appearing for the respondents No.1 to 3 and Mr. R.S. Patel, learned counsel appearing for the respondent No.4. 2. The present writ petition has been filed under Article 226 of the Constitution of India challenging the communication/order dated 31.05.2021 issued by the Regional Manager, Central Warehousing Corporation, whereby an amount of ₹47,26,634/- has been proposed to be adjusted/recovered from the security deposits furnished by the petitioner under various handling and transportation contracts. The petitioner has also sought a direction to the respondents to refund the entire security deposit amount of ₹51,47,188/- together with applicable interest. 3. The petitioner has filed the present writ petition seeking for the following reliefs: 3 “1] That, this Hon’ble Court may kindly be pleased to issue writ/writs, order/orders, direction/ directions, quashing the impugned order dated 31.05.2021, passed by Regional Manager, Central Warehousing Corporation and the respondent No. 1 to 3 may kindly be directed to refund the entire amount of security deposits as mentioned in Annex.P/4 (Rs. 5147188/-) furnished by the petitioner company through demand drafts along with the applicable interest. 2] That, this Hon’ble Court may kindly be pleased to writ/writs, order/orders, direction/directions and the respondent No. 1 to 3 may kindly be directed to refund the amount of security deposit, deposited by the petitioner company in the form of demand drafts in respect of the different contracts. 3] That, this Hon'ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case.” 4. The petitioner is a private limited company engaged in the business of handling and transportation, to whom the Central Warehousing Corporation (CWC) awarded several contracts between the years 2004 and 2015. In terms of the respective tender conditions, the petitioner furnished separate security deposits for each contract. According to the petitioner, all the contractual works stood completed and, therefore, the aggregate security deposit amounting to ₹51,47,188/- became refundable. The petitioner submitted several representations seeking release of the said amount and, pursuant to the respondents' 4 communication dated 22.12.2020, also furnished the requisite affidavits and No Demand Certificates. 5. The grievance of the petitioner is that instead of refunding the security deposits, the respondents, by communication dated 31.05.2021, proposed adjustment/recovery of a sum of ₹47,26,634/- towards alleged outstanding dues arising from different contracts, leaving only the balance amount payable. It is the petitioner's case that such recovery has been effected without any adjudication of liability and in violation of the principles of natural justice, as the alleged dues are disputed and could not have been unilaterally adjusted from the security deposits. On the other hand, the respondents contend that the proposed recovery is in terms of the contractual provisions, particularly the set-off clause contained in the agreement, and that disputed questions of fact arise which are not amenable to adjudication in exercise of writ jurisdiction. 6. Learned counsel for the petitioner submits that the impugned communication dated 31.05.2021, whereby the respondents have adjusted/recovered a sum of ₹47,26,634/- from the petitioner's security deposits, is wholly arbitrary, illegal and unsustainable in law. It is contended that the alleged dues were never adjudicated by any competent forum and, therefore, the respondents, being one of the contracting parties, could not have unilaterally determined the petitioner's liability and appropriated the security deposits. It is further submitted that the petitioner had successfully completed all the contracts and had duly complied with the requirements for release of the security deposits, yet the respondents withheld the refundable amount without 5 any lawful justification. 7. Learned counsel further submits that the impugned action has been taken in complete violation of the principles of natural justice, as no effective opportunity of hearing was afforded before fastening the alleged liability upon the petitioner. It is argued that the security deposits furnished under different contracts could not have been adjusted towards disputed claims arising out of other contracts, particularly when such claims were neither admitted by the petitioner nor adjudicated by any competent authority. Placing reliance upon the decisions of this Court in Macadum Makers v. State of Chhattisgarh, AIR 2012 Chhattisgarh 123 and M/s Keymore Engineering, 2017 SCC Online Chh 849 it is contended that a contracting party cannot act as a judge in its own cause and, therefore, the impugned recovery deserves to be quashed. 8. Per contra, learned counsel appearing for respondent Nos.1 to 3 submits that the writ petition is misconceived and not maintainable, as it involves disputed questions of fact arising out of contractual obligations between the parties. It is contended that the communication dated 31.05.2021 merely conveyed the proposed deductions from the petitioner's security deposits, to which the petitioner had submitted its reply and the same was duly considered by the competent authority. The petitioner, however, has deliberately suppressed the subsequent communication dated 08.07.2021 passed by the competent authority and has challenged only the earlier communication, thereby disentitling itself to any relief under Article 226 of the Constitution. It is further 6 submitted that the petitioner, if aggrieved, has an efficacious remedy before the competent civil forum, where the disputed factual issues can be adjudicated. 9. Learned counsel further submits that the impugned action is strictly in accordance with the terms and conditions of the contract, particularly Clauses XI(c) and XII-A, which expressly authorize the Corporation to retain and adjust the security deposit towards its lawful claims arising under the same or any other contract executed by the contractor. It is argued that the deductions were proposed pursuant to the pre-audit process and on the basis of recoverable amounts communicated by the Food Corporation of India, and, therefore, the respondents have acted within the contractual framework after affording due opportunity to the petitioner. It is thus submitted that no case for interference in exercise of the extraordinary writ jurisdiction is made out and the petition deserves to be dismissed. 10. Learned counsel appearing for respondent No.4 adopts the submissions advanced on behalf of respondent Nos.1 to 3 and further submits that no relief can be granted to the petitioner in exercise of writ jurisdiction, as the dispute arises purely out of contractual obligations and involves disputed questions of fact requiring detailed examination of evidence. It is, therefore, prayed that the writ petition, being devoid of merit, deserves to be dismissed. 11. We have heard learned counsel for the parties and perused the material annexed with the petition. 7 12. The main grievance of the petitioner relates to the adjustment/recovery of a sum of ₹47,26,634/- from the security deposits furnished by it under various handling and transportation contracts and the consequential refusal to refund the balance security deposit amount. The petitioner's claim is founded upon the contractual obligation of the respondents to release the security deposits after successful completion of the contracts, whereas the respondents justify the impugned action by invoking the contractual provisions relating to set-off and adjustment against alleged outstanding dues. Adjudication of the controversy would, therefore, necessarily require determination of disputed questions of fact, including the existence and quantification of the alleged dues, the validity of the deductions claimed by the respondents, the applicability and scope of the contractual set-off clause, compliance with the contractual terms and conditions, and the consequential entitlement of the petitioner to refund of the security deposits. 13. The Hon'ble Supreme Court in Tata Motors Limited v. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, 2023 SCC OnLine SC 671, while delineating the scope of judicial review in contractual matters, has held that though instrumentalities of the State are amenable to writ jurisdiction, the High Court must exercise great restraint while interfering in contractual and commercial disputes. The Supreme Court observed that interference is warranted only where a clear case of arbitrariness, mala fides, bias or irrationality is established and that the writ Court should not invoke its extraordinary jurisdiction to adjudicate contractual disputes merely because a legal issue is raised. The Court further reiterated that 8 contractual matters are essentially commercial in nature and judicial review should be exercised sparingly, keeping in view the larger public interest and the limitations inherent in writ jurisdiction. “48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give 9 “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489). 52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three- Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Others, reported in (2005) 1 SCC 679. 53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own 10 method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere. 54. As observed by this Court in Jagdish Mandal v. State of Orissa and Others, reported in (2007) 14 SCC 517, that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.” 11 14. The Hon'ble Supreme Court in State of Bihar and Others v. Jain Plastics and Chemicals Ltd., (2002) 1 SCC 216, has categorically held that disputes arising out of contractual obligations involving disputed questions of fact, particularly those relating to execution of the contract, determination of liability and monetary claims, are ordinarily not amenable to adjudication in proceedings under Article 226 of the Constitution of India and that the aggrieved party must avail the appropriate remedy before the competent civil forum. Paragraph 7 of the said judgment reads as under: “7. It is to be reiterated that writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent jurisdiction for appropriate relief for breach of contract.” 15. In Joshi Technologies International Inc. v. Union of India and Others, (2015) 7 SCC 728, the Hon'ble Supreme Court exhaustively considered the scope of judicial review in contractual matters and held that although the jurisdiction of the High Court under Article 226 of the Constitution is not completely barred in matters arising out of contracts, the exercise of such jurisdiction is essentially discretionary. The Court held that where adjudication of the controversy requires determination of disputed questions of fact or enforcement of purely contractual rights and obligations, the High Court would ordinarily decline to entertain the writ petition, leaving the parties to pursue the appropriate remedy available under the ordinary law. The Court further held that only in exceptional cases involving arbitrariness, unfairness, mala fides or 12 violation of statutory or constitutional obligations would the writ jurisdiction be invoked. Paragraph 69 of the said judgment reads as under:- “69. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.” 16. The Hon'ble Supreme Court further observed in Joshi Technologies International Inc. (supra), that although the jurisdiction of the High Court under Article 226 of the Constitution is not altogether excluded in contractual matters, such jurisdiction is essentially discretionary. It was held that where adjudication of the controversy involves disputed questions of fact or enforcement of purely contractual rights and obligations, the High Court should ordinarily decline to exercise its extraordinary writ jurisdiction and leave the parties to avail the appropriate remedy before the competent civil forum. 17. In the present case, this Court finds that the claim raised by the petitioner for refund of the security deposits after setting aside the impugned recovery/adjustment cannot be adjudicated merely on the basis of the pleadings and documents placed on record. The respondents have specifically disputed the petitioner's entitlement by asserting that substantial recoverable dues were outstanding against the petitioner under various handling and transportation contracts and that the impugned adjustment was effected in terms of the contractual 13 provisions, particularly the set-off clause. On the other hand, the petitioner disputes the very existence and legality of such recoverable dues and contends that the security deposits could not have been appropriated without prior adjudication. Determination of the petitioner's entitlement would, therefore, necessarily require examination of the contractual terms, audit records, correspondence between the Central Warehousing Corporation and the Food Corporation of India, the basis and quantification of the alleged recoveries, and the applicability of the contractual set-off clause, all of which involve disputed questions of fact. Such issues cannot appropriately be adjudicated in exercise of the limited jurisdiction of this Court under Article 226 of the Constitution of India. 18. In view of the foregoing discussion, this Court is of the considered opinion that the controversy involved in the present writ petition pertains to disputed questions of fact arising out of contractual obligations, which cannot be adjudicated in exercise of the extraordinary jurisdiction under Article 226 of the Constitution of India. Accordingly, without expressing any opinion on the merits of the rival claims of the parties, the present writ petition stands dismissed, leaving it open to the petitioner to avail such remedy as may be available in law before the competent forum. 19. No order as to costs. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice ved