SC stays recovery proceedings against Rajasthan government for not refunding to a contractor

NEW DELHI: Facing the embarrassment of recovery proceedings for failing to refund a contractor — with some movable property, including furniture and vehicles, already seized — the Rajasthan government received relief from the Supreme Court on Monday. The top court stayed the proceedings against it.

A bench comprising Justices M M Sundresh and N Kotiswar Singh agreed to hear the state's plea after advocate Kartikeya Asthana submitted that the Rajasthan high court had wrongly refused to entertain the government's application on the ground of delay. He argued that a satisfactory justification for the 259-day delay had been placed before the high court, but it was incorrectly rejected.

Agreeing to examine the issues raised by the state, the bench issued notice to the contractor and sought his response.

In the legal dispute between the government and a Kota-based contractor, a trial court in September 2023 held that the state had breached the contract for road construction and directed the refund of ₹6.35 lakh to the company along with 6% annual interest. The state filed an appeal in the Rajasthan High Court in July 2024, well after the mandatory limitation period had expired in November 2023.

The high court refused to condone the delay and dismissed the appeal in August 2024 without examining the merits of the case. Challenging the high court’s order, advocate Asthana told the Supreme Court that the High Court had wrongly dismissed the state’s well-reasoned condonation of delay application. The application had clearly explained that the appeal could not be filed within the statutory period due to unforeseen reasons, including a change in the state government and the delayed process of appointing lawyers.

“The high court failed to appreciate that there were three main reasons cited for the delay in the condonation application: (1) change in lawyers following the change in state government, (2) concerned officials being deputed due to the state assembly elections and subsequently the 2024 parliamentary elections, and (3) the enforcement of the model code of conduct during the election period,” the state said in its plea.

As the court was informed that attachment warrants had been issued against government properties by the executing court — and movable property, including furniture and vehicles, had already been seized and attached — the Supreme Court decided to pass an interim order staying the attachment proceedings.

“The high court erroneously dismissed the condonation of delay application and, consequently, the petitioners’ appeal itself through a wholly arbitrary, unreasonable, and erroneous final order. It gravely erred in observing that there was falsity in either the condonation of delay application or the additional affidavit. The High Court order suffers from arbitrariness and non-application of mind and ought to be set aside,” the petition stated.
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