Awadhesh Singh Gautam Vs State of Chhattisgarh & Ors. (Supreme Court of India)
Government Cannot Recover First and Establish Liability Later: ₹84.17 Lakh Refund Ordered
A Disputed Claim Is Not an Ascertained Debt
The Supreme Court has quashed the recovery of ₹84,17,003 from a road contractor’s running bills, holding that the State had deducted an alleged overpayment relating to earlier contracts from amounts payable under three separate, ongoing contracts, without satisfying the contractual requirements or providing a hearing.
The Court directed release of the amount with interest at 6% per annum from 27 September 2025 until actual payment.
The judgment distinguishes an allegation of excess payment from a liability established in accordance with law. Relying on the principle explained in Union of India v. Raman Iron Foundry, (1974) 2 SCC 231, the Court held that until the alleged overpayment is established in accordance with law, it remains a disputed and unadjudicated claim rather than a presently due debt. Possession of money otherwise payable to a contractor does not, by itself, authorise its appropriation towards a disputed claim.
Earlier Works Generated the Recovery Dispute
The appellant partnership firm had been awarded two road construction contracts in January 2023.
Following complaints about irregularities, a five-member committee examined the works. Its report stated that although the contractor had received ₹3,55,82,055, the value of work actually executed was approximately ₹1,54,75,938. It accordingly reported an excess payment of ₹2,01,06,117 and recommended recovery, blacklisting and further inquiry.
