1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH : NAGPUR WRIT PETITION NO. 3453 OF 2008 (Shri Ganesh Carriers vs. State of Maharashtra & Ors.) Office Notes, Office Memoranda of Coram, appearances, Court's orders Court's or Judge's orders or directions and Registrar's orders. CORAM : B.P. DHARMADHIKARI & F.M. REIS, JJ. OCTOBER 07, 2009. Heard Shri Bhangde, Senior Advocate with Shri Khajanchi, Advocate for the petitioner, Shri Mishra, learned Additional Solicitor General of India (ASGI) for respondent No.3 and Shri Nitin Sambre, learned Government Pleader for respondents No.1, 2, 4 & 5. The petitioner/ Contractor has assailed the notice of recovery dated 23.07.2008 issued by Respondent No.5 – District Supply Officer, Nagpur, in present matter. All the respondents have filed reply and considering the nature of controversy, we are disposing of the matter finally at the stage of admission. The matter was also kept on 4.2.2009, 18.02.2009, 03.03.2009, 04.03.2009, 13.03.2009 at 2.30 PM. Shri Bhangde, learned Senior Advocate states that accordingly the matter was heard at 2.30 PM and an order was passed on 15.4.2009 giving time to ASGI to make further statement in the matter. The petitioner contends that only on the basis 2 of an audit objection, recovery on account of alleged excess payment is proposed and amount receivable by him for work completed have been withheld. The notice by which the recovery is proposed is dated 23.07.2008 and it says that on account of diesel escalation, amount of Rs.56,65,826/- and 2,50,235/- has been paid in excess to present petitioner. The said excess payment and recovery is stated to be because of audit objection No. 3.4 and 4.4. After service of notice upon them, Respondents No. 1, 2, 4 & 5 have filed their reply stating that as per contract between the parties, there is no excess payment but as audit notice is binding upon these respondents, the respondents have no alternative but to proceed to recover the amount. Shri Sambre, learned Government Pleader has invited our attention to communication dated 31.05.2008 sent in response to audit objection. He states that the position was made clear in that note dated 31.05.2008 but as thereafter no communication is received from the office of Respondent No.3, the audit objection remains and hence the recovery has been proposed. Shri Mishra, learned ASGI appearing for respondent No.3 states that the audit objection has been rightly raised and notice of recovery impugned before this Court is proper and calls for no interference. However, he states that whether after receipt of compliance dated 31.05.2008 from the respondents, any 3 other steps were taken by Respondent No. 3’s office or not, has not come on record. Shri Sambre, learned GP contends that as question is whether the recovery is proper or not and amount was due to present petitioner or not, Civil Suit will be more appropriate remedy. The perusal of compliance report dated 31.5.2008 submitted by respondents particularly Respondent No.5 to Assistant Audit Officer, Government Audit Party, Camp at DSO, Nagpur, shows stand that the escalation in diesel prices has been rightly considered and paid with reference to price of diesel prevailing on the date of original agreement. He has pointed out that after the date of expiry stipulated in the original agreement, extension of further three years commencing from 10.4.2003 to 31.5.2006 was given on same rates and same terms and conditions. He has stated that thus the rate of diesel prevailing on the date of original agreement, therefore, formed base for working out escalation. Shri Bhangde, learned Senior Advocate has relied upon the judgment of the Hon’ble Apex Court in the case of State of Bihar vs. Industrial Corporation (P) Ltd., reported at (2003) 11 SCC 465, particularly paras 15 to 18 to urge that only on the basis of such audit objection, recovery cannot be effected. He further states that for effecting such recovery, adjudication by some impartial Tribunal or body is essential. He has also 4 relied upon the judgment of the learned Single Judge of Madhya Pradesh High Court in the case of Baijnath Singh vs. State of M.P., reported at 2005(3) M.P.L.J. 540, for the said purpose. At this stage, we find that the compliance report dated 31.05.2008 submitted by the office of Respondent No.5 to office of Respondent No.3 shows that audit objection raised is misconceived. However, how in the background of various documents and material on record said compliance has been viewed by the office of Respondent No.3 has not come on record. It is clear that the affidavit filed before this Court on 26.09.2008 by Respondents No. 1, 2, 4 & 5 also supports the contentions of the petitioner before us and the affidavit is consistent with the compliance report dated 31.05.2008. In view of this position on record, it is apparent that only on the basis of an audit objection dated 23.07.2008, the recovery could not have been proposed against the petitioner. The impugned notice dated 23.07.2008 issued by Respondent No.5 is only on the basis of said audit objection and by ignoring his own compliance therewith. The said notice, therefore, cannot be sustained. In view of these findings, the recovery notice dated 23.07.2008 is hereby quashed and set aside. However, considering the controversy, we direct the office of Respondent No.3 to consider the 5 compliance submitted by Respondent No.5 to its office and thereafter to communication to Respondent No.3 whether the said office is maintaining the audit objection or dropping it. The said action be taken as early as possible and in any case by 31st December 2009. If the audit objection is maintained by the office of Respondent No.3 and recovery from the petitioner is found essential by Respondents No.1, 2, 4 & 5, the said respondents shall issue appropriate advance notice thereof to the petitioner. The petitioner shall be free to challenge that notice. The contentions raised in the matter and not considered by us are left open for consideration at appropriate stage. Writ Petition is disposed of accordingly. However, there shall be no order as to costs. JUDGE JUDGE *GS.