The Supreme Court has set aside Chhattisgarh authorities’ recovery of ₹84,17,003 from a contractor’s bills under three separate road projects, holding that an alleged overpayment under earlier contracts could not be treated as an established debt.
In M/s Awadhesh Singh Gautam v. State of Chhattisgarh & Ors. (2026 INSC 1072), decided on September 30, 2026, Justices Pamidighantam Sri Narasimha and Alok Aradhe found that the contractual clauses relied on did not authorise the deductions in the circumstances.
The technical-audit clause required an opportunity for the contractor to respond and approval from the agency’s chief executive. Those safeguards had not been followed. The Court held that a disputed, unadjudicated damages claim cannot be appropriated as though it were a debt presently payable.
Allowing the appeals, it directed release of the withheld amount with 6% annual interest from September 27, 2025 until payment. It left lawful recovery proceedings open and expressly preserved the independence of pending criminal proceedings and the alleged overpayment dispute.