Innova Captab Limited - Challenging illegal recovery and withholding of payments

Khaitan & Co represented Innova Captab Ltd in High Court of Gujarat under writ jurisdiction challenging illegal recovery and withholding of payments. Challenge to unilateral recovery of alleged risk purchase dues from a 2021 contract by deducting amounts from invoices raised under separate 2024–25 rate contracts without adjudication and without following principles of natural justice.

Court laid down significant principle of law- High Court held that risk purchase recovery from an earlier contract cannot be adjusted against payments due under a separate and independent contract. Even if the contract stipulates recovery of any previous dues, those dues have to be adjudicated dues & not merely alleged dues. Court held as “principle of law” that tender clauses permitting deduction of government dues cannot override principles of natural justice and tender conditions as dues have to be adjudicated dues and the liability needs to be crystallised.