Contractor Cannot Indirectly Challenge Govt Action Against Another Entity Through Writ Petition: Allahabad High Court

The Allahabad High Court has held that a contractor cannot indirectly challenge Government action taken against another entity by filing a writ petition under Article 226 of the Constitution. A bench of Justice Shekhar B Saraf and Justice Abdhesh Kumar Chaudhary added that where the grievance essentially arises out of contractual rights flowing from Letters of Intent, the appropriate remedy lies before the arbitral tribunal or the competent civil court. The Division Bench made these observations while dismissing a writ petition filed by a contractor challenging a government's decision to transfer two construction projects from the UP-State Construction and Infrastructure Development Corporation (respondent no. 3/ UPSCIDC) to the UP Projects Corporation Limited (respondent no. 7/UPPCL), after Letters of Intent (LoI) had already been issued in the petitioner's favour. Case in Brief The UPSCIDC had been entrusted by the State Government with the execution of certain projects. Pursuant thereto, it invited tenders and the petitioner was declared successful for the construction of two projects. LoI were issued in favour of the petitioner on April 21 and April 22, 2026. Thereafter, the Government, on April 29, 2026, directed that the UPPCL (respondent no. 7), not UPSCIDC (respondent no. 3), would act as the nodal agency for the execution of the two projects. Consequently, the petitioner was restrained from executing the allotted works, and UPPCL issued fresh short-term tenders for both projects. Challenging this action of the Government, the petitioner approached the High Court contending that once it had been declared successful in the tender process and an LoI had been issued in its favour, valuable rights had accrued which could not be taken away in the manner adopted by the Government. The State, on the other hand, opposed the writ petition, contending that the dispute was contractual in nature and any grievance arising out of the LoI was required to be resolved in terms of the arbitration clause. It was further submitted that the projects had been transferred to another nodal agency as the works were not being executed satisfactorily by UPSCIDC (respondent no. 3). High Court's Findings At the outset, the Court clarified that the rights claimed by the petitioner pursuant to the issuance of the LOI could not be enforced in proceedings under Article 226 of the Constitution. It further clarified that the Government's action to change the nodal agency was directed against UPSCIDC (respondent no. 3), and “the said action cannot be indirectly challenged by the petitioner by way of filing a writ petition”. "It is upto the respondent no.3 to initiate appropriate proceedings against the State. The respondent no.3 cannot be permitted to indulge in proxy litigation through the petitioner", the bench remarked, The Court, however, clarified that the petitioner was at liberty to seek compensation for loss of profit or any other consequential relief by invoking the arbitration clause or by instituting appropriate civil proceedings against the respondent no.3, in accordance with law Referring to the Apex Court's decisions in Bareilly Development Authority vs. Ajai Pal Singh 1989, Kerala State Electricity Board vs. Kurian E. Kalathil 2000, State of U.P. vs. Bridge & Roof Co. 1996, Zonal Manager, Central Bank of India vs. Devi Ispat Ltd. 2010, and Rajasthan State Industrial Development and Investment Corporation vs. Diamond and Gem Development Corporation Ltd. 2013, the bench concluded that non-statutory contractual rights cannot ordinarily be enforced under Article 226 of the Constitution, and disputes relating to interpretation of contractual terms or alleged breach of contract are to be resolved through arbitration or ordinary civil proceedings. The Bench also referred to the Supreme Court's recent decision in Rikhab Chand Jain vs. Union of India 2025, reiterating that the extraordinary jurisdiction under Article 226 is discretionary and ordinarily ought not to be exercised where an efficacious alternative remedy is available. Holding that the petitioner's grievance essentially arose out of an alleged breach of contractual obligations for which efficacious alternative remedies were available, the High Court dismissed the writ petition.Counsel for Petitioner(s) : Hemant Kumar Mishra, Abhishek Mishra, Arti Ganguly Counsel for Respondent(s) : CSC Pankaj Khare and ACSC Isha Mittal, I.M. Pandey Ist, Naresh Chandra MehrotraCase Title - M/s Anu Enterprises through Proprietor Anu Singh vs. State of U.P. through Additional Chief Principal Secretary, Secondary Education, Lucknow & 6 Others 2026 LiveLaw (AB) 531Case citation : 2026 LiveLaw (AB) 531Click Here To Read/Download Order

Contractor Cannot Indirectly Challenge Govt Action Against Another Entity Through Writ Petition: Allahabad High Court

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Contractor Cannot Indirectly Challenge Govt Action Against Another Entity Through Writ Petition: Allahabad High Court

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