The Single Bench of Justice Waseem Sadiq Nargal while deciding a petition under Article 226 of the Constitution observed that the jurisdiction of theHigh Court under Article 226 is not only restricted to review of administrative actions or executive decisions of the State, but to the extended applicability of the “doctrine of promissory estoppels” of which the whole object is to see that the Government strikes to its promise and abides by it.

These observations were made by the High Court in a Petition challenging an order passed by the Respondents rejecting the claim of the petitioner seeking release of the outstanding admitted liability amounting to Rs.20.74 lakhs relating to execution of a contract for upgradation of Chacknarwah link road. The Petitioner, being the lowest bidder, was initially allotted the aforesaid work for an amount of Rs.29.62 lacs, however, subsequently, the cost of the project was increased, and the Petitioner’s case was submitted for entering into supplementary agreement with him to the extent of increased quantum and, accordingly, the concerned superintending engineeraccorded approval for executing the supplementary agreement with the petitioner and the cost of the work was fixed at Rs. 69.26 lacs instead of Rs.29.62 lacs. Out of the total amount, Rs.48.92 lacs were already released and an amount of Rs.20.74 lacs, though admitted on numerous occasions even in the previous litigations between the parties, was pending due to non-availability of the funds. However, by virtue of the impugned order, Petitioner’s claim was rejected on the ground that he has executed the work beyond the admissible amount of Rs.29.62 lakhs, which is allegedly in violation of the General Financial Rules, and as such he is not entitled for the balanced amount. 

The Court, upon consideration of the matter, observed that “once, the supplementary agreement has been executed by the competent authority strictly under rule, which was in vogue at that relevant point of time, it does not lie in the mouth of the respondents to agitate now, at this belated stage that the same was violative of the General Financial Rules, more particularly, when the work has since been executed by the contractor (petitioner herein) well within time and no objection was ever raised against the petitioner for his entitlement to receive the balance amount all along”. Moreso, the Court noted that in the earlier round of litigation between the parties, the respondents have not denied the claim of the petitioner, rather, have prayed for some more time for release of the balance amount.

Further, the Court observed that since, there were a series of communications between the parties, which have not been denied by the respondents, it can safely be concluded that there was a binding contract between the parties and the respondents cannot escape from their liability of making the payment to the petitioner arising out of the said binding contract. In making this observation the Court relied upon the pronouncement of the Supreme Court in “Rickmers Verwaltung GMBH v. Indian Oil Corporation Ltd. [(1999) 1 SCC 1]”.

Moreover, with respect to the objection raised by the respondents to the maintainability on the ground of laches, the Court, while rejecting the plea, relied upon the decision in “Abdul Hafiz Wani v/s State of J & K and Others [OWP No.631/2016]”, wherein it was observed that “…the liability towards the petitioner for the works executed by him has been acknowledged and if that be the position, neither this petition would be hit by delay and laches nor the suit, if it had been brought by the petitioner, would have been barred by limitation.”

The Court, cumulatively, relying on a series of pronouncements of the Apex Court reiterated that where the Government makes a promise knowing or intending that it would be acted on by the promisee and in fact the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government, and thus, allowed the petition while directing the respondents to release a sum of Rs.20.74 lakhs in favour of the petitioner, within a period of six weeks, from the date of service of the order upon them, failing which, the respondents were directed to pay the outstanding amount, along with interest @9%, from the date of filing of the writ petition.