The High Court of Jammu and Kashmir and Ladakh has directed the Food Corporation of India (FCI) to refund ₹7,93,456 to a transport contractor, M/s Durga Enterprises, ruling that deductions made retrospectively based on revised route distances were unlawful and violated the contractual agreement.
Justice Moksha Khajuria Kazmi emphasized that the unilateral imposition of financial burdens by FCI, without following due contractual procedures, was impermissible. The Court reiterated that parties cannot later challenge the very terms they initially accepted and benefited from.
The petitioner, M/s Durga Enterprises, had entered into road transport contracts with FCI for food grain movement across multiple routes in Jammu and Kashmir during 2017–2020. The contracts were based on specified per MT/KM rates. However, FCI later deducted ₹76.92 lakh from the contractor’s bills, citing revised route distances due to infrastructural changes.
Senior Advocate P.N. Raina, appearing for the contractor, argued that these deductions lacked legal basis as there was no provision in the original contract allowing remeasurement of distances during the currency of the contract. He highlighted that even if distances were reassessed, the revised figures could not be enforced retrospectively.
FCI, defending its action, relied on Clause XVIII(a)(v) of the Model Tender Form (MTF), which allows remeasurement by designated officers. They claimed the changes were necessary due to realigned highways and flyovers and aimed to prevent excess payments.
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However, the Court noted:
“From a plain reading of Clause XVIII(a)(v) of the MTF, the consistent decisions of the GRC, and the authoritative circulars, it is clear that the FCI is legally entitled and contractually authorized to remeasure and revise road distances during the contract period. The remeasurement is not dehors the contract.”
Justice Kazmi drew attention to the fact that while the remeasurement itself wasn’t invalid, applying revised distances from a date prior to actual verification breached both policy and fairness. The Grievance Redressal Committee (GRC) had also previously clarified that new distances should be effective only from the date of actual remeasurement, unless backed by concrete evidence of earlier structural changes.
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In this context, the Court observed:
“The respondents, in their affidavit and counter submissions, have admitted that recoveries in certain cases were made from 01.04.2019, even though the remeasurement was carried out at later dates. The GRC in both its decisions has clearly held that revised distances should be applied only from the date of actual remeasurement.”
Based on these findings, the Court ordered FCI to refund ₹7.93 lakh to the petitioner — the amount deducted prior to the actual remeasurement dates across three routes:
- ₹4,78,177 for FSD Jammu to PEG Ramban
- ₹2,87,477 for FSD Jammu to FSD Mir Bazar
- ₹27,802 for Railhead Udhampur to PEG Doda
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The judgment concluded:
“Since it is established and admitted by the respondent-FCI that an excess amount of ₹7,93,456 was recovered prior to the respective remeasurement dates, this Court deems it appropriate to direct the respondent-FCI to refund the amount within a period of six weeks. In case of failure, the amount shall carry interest at the rate of 6% per annum from the date of this judgment until actual payment.”
Case Title: M/S Durga Enterprises Vs FCI & Ors