Allahabad High Court Says State's “NIL” Dues Claim Must Be Tested Against Department's Own Earlier Admission
The Allahabad High Court has held that where the State asserts, on the strength of a fresh verification exercise, that nothing remains outstanding to a contractor, the writ court is not bound to act on that assertion and must itself check the amounts released against the figure the department had earlier admitted to be payable.
The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary held
“It is precisely to guard against such unilateral and self-serving assertions of “NIL” liability that this Court has thought it necessary to independently verify the respondents' own figures against their own prior admission, rather than accepting the letter dated 11.05.2026 at face value.”
The Court split the claim into two parts: an amount which the department has admitted in its own order needs no proof and can be enforced by a writ of mandamus under Article 226 of the Constitution of India, and the excess claimed over that figure rests on contested facts and must be pursued by way of a civil suit.
Applying that test, the Court found that in two of five connected petitions the sums released fell below the department's own admitted figure, and directed payment of the difference with interest.
Five firms run by members of one family from Chilwarya village in Bahraich supplied food packets for block-level training programmes conducted by the Block Education Officers of the district. Orders were placed through the Government e-Marketplace portal, but the bills went unpaid after the payment portal limit was not issued, the Print Payment Advice could not be generated and the Single Nodal Account remained unopened, with the result that the funds lapsed.
A first round of litigation was disposed of with liberty to represent afresh to the Director, Basic Education, who by order dated 15.01.2025 put the dues in the leading matter at Rs. 14,15,896/- as against a claim of Rs. 35,02,521/-. That order was challenged in present petitions.
Petitioners argued that the order was arbitrary and non-speaking and had brushed aside the reports of the District Basic Education Officer and the Block Education Officers, which supported the full claim. Relying on M/s Utkal Highways Engineer and Contractors v. Chief General Manager, they submitted that there is no absolute rule barring money claims against the State under Article 226 where non-payment of admitted dues is arbitrary, and sought interest at 18% per annum.
They also relied on Shraddha Printers Sons v. State of U.P., where the Court had directed the State to act on the Director's requisition for funds and payments had followed.
Respondents submitted that the bills were disputed, that a block-level verification had since been carried out, and that a communication dated 11.05.2026 from the District Basic Education Officer put the outstanding balance against the firms at “NIL”. They urged that the sums demanded had kept climbing, from Rs. 1,24,44,909/- in July 2025 to Rs. 4,25,29,576/- by March 2026.
The Court found three different figures for each petitioner: the amount claimed, the amount admitted in the impugned order, and the amount now said to have been released after verification, and held the quantum to be a genuinely disputed question of fact rather than a matter of arithmetic.
In the leading petition the sum released, Rs. 37,94,906/-, exceeded the sum claimed. Setting the admitted figures against the released ones, the Court found certain shortfalls in 2 petitions.
“This shortfall is not, in any sense, a disputed figure requiring evidence; it is the respondents' own departmental admission, recorded in their own order, which admittedly remains unpaid even as on date, despite the very verification exercise the respondents have relied upon.”
On the rest of the claim, the Court held that the case fell within the ambit of Apex Court's decisions in State of U.P. v. Bridge & Roof Co. (India) Ltd., Kerala State Electricity Board v. Kurien E. Kalathil and State of Bihar v. Jain Plastics and Chemicals Ltd.
“Such a fact situation, where even the writ petitioners themselves are not ad idem as to what constitutes the admitted dues, and where the figures placed by the State authorities have oscillated at different stages of the proceedings, is a quintessential example of a dispute that cannot be resolved on the basis of affidavits and counter-affidavits, and would necessarily require a full-fledged Trial”
Refusing interest on the higher claim, the Court held that the right of a person kept out of money owed to him arises only once the principal is fixed as due and payable, the entitlement being “parasitic upon, and cannot precede, a firm determination of the principal sum”.
The Court added that it could not refrain from noting that the conduct of the respondent authorities “has also not been above board”, their figures having differed between the impugned order and the later verification.
The respondents were directed to release the shortfall sums within two months with interest at 9% per annum from 15.01.2025 till the date of actual payment. In the other three petitions no further direction was called for, though the respondents were left free to seek recovery, adjustment or set-off of the excess paid.
The prayer to quash the order dated 15.01.2025 and for payment of the higher amounts was rejected, and the petitioners were relegated to a civil suit with liberty to lead evidence and the benefit of Section 14 of the Limitation Act, 1963.
Case Title: M/s Jaiswal Foods Thru. Proprietor Sudheer Jaiswal vs. State of U.P. Thru. Addl. Chief Secy. Deptt. Basic Education Govt. Lko. and 22 others 2026 LiveLaw (AB) 654
Case Citation: 2026 LiveLaw (AB) 654