Patna High Court Directs the Payment of ₹58,56,670/- for Supplied Medicines and Medical Equipment; Denial of Payment by Authorities Held Arbitrary and Unjust Enrichment

Court’s Decision:

The Patna High Court allowed the writ petition, directing the respondents to pay the amounts due to the petitioner within eight weeks from the date of the order. If the payment is not made within the stipulated period, the petitioner would be entitled to simple interest at the rate of 8% per annum from the date of submission of the bills till the date of actual payment. The court held that once an order has been placed by a competent authority, the authorities are legally bound to make the necessary payments, especially since the supplied goods were utilized by the Department.

Facts:

The petitioner, a supplier of medicines and medical equipment, participated in a tender process and was awarded a contract by the Civil Surgeon-Cum Chief Medical Officer, Arwal. The petitioner supplied various items, including blood sugar kits, syringes, and medical tools, between 2018-19, amounting to ₹58,56,670/-. Despite completing the supply, the petitioner did not receive the payment. Subsequently, the authorities communicated to the petitioner that some of the supplies were at the end of the financial year, and he was asked to take them back. The petitioner, however, could not comply as the supplies were marked as “government supply and not for sale.” An internal committee report acknowledged the receipt of the supplies, but payment remained pending due to alleged irregularities by the previous officer who had placed the order.

Issues:

1. Whether the petitioner is entitled to payment for the supplies made when the order was placed by the previous Civil Surgeon-Cum Chief Medical Officer, without following guidelines.
2. Whether the subsequent denial of payment for supplies made by the petitioner amounts to unjust enrichment by the Department.

Petitioner’s Arguments:

1. The petitioner argued that he had duly supplied the goods as per the order, and the authorities have utilized the supplied medicines and equipment.
2. He contended that any irregularities on the part of the officer who placed the order should not affect the petitioner’s entitlement to receive payment.
3. He emphasized that the rejection of his claims without proper hearing or notice was arbitrary and violated principles of natural justice.

Respondent’s Arguments:

1. The respondent-State argued that the Civil Surgeon-Cum Chief Medical Officer who placed the orders did so without proper approval and on the eve of his transfer, thus violating departmental norms.
2. The supplies were made at the end of the financial year and in excess of the actual requirement, raising questions about the validity of the orders.
3. The State asserted that the petitioner should have complied with the directive to take back the excess supplies, as the work orders were not issued following proper procedures.

Analysis of the Law:

The court analyzed the contractual obligations and the principles governing governmental contracts. It emphasized that once an order is issued by a competent authority and the goods are supplied and utilized, the payment for such supplies becomes legally binding. The court also pointed out that any lapses or irregularities in the placement of the order by the officer should not be used to penalize the petitioner.

Precedent Analysis:

The court referenced similar judgments, wherein the doctrine of unjust enrichment was applied to ensure that suppliers receive due payments when supplies are utilized by the authorities, even if procedural lapses occurred in the initial ordering process.

Court’s Reasoning:

1. The court found that the medicines and medical equipment supplied by the petitioner were marked for government use and were actually utilized by the Department.
2. The rejection of the petitioner’s claim based on procedural irregularities by the previous officer, without any fault attributed to the petitioner, was unjust.
3. The court held that the petitioner cannot be penalized for lapses in the internal administrative processes of the Department.

Conclusion:

The Patna High Court allowed the writ petition, directing the respondents to make the payment of ₹58,56,670/- for the supplies made. In case of non-compliance within the stipulated period, the petitioner would be entitled to interest at 8% per annum.

Implications:

The ruling reinforces the principle that once an order is placed by a competent authority, subsequent changes in personnel or alleged procedural lapses should not be used to deny payment for supplies received and utilized by the government. The decision aims to prevent unjust enrichment by government authorities and uphold the sanctity of governmental contracts.

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