Recovery from officers for negligence or malafide conduct
Directs formulation of SOP to streamline process
Mohinder Verma
JAMMU, Sept 26: In order to curb the practice of delayed contractual payments, restore confidence in public works governance and reaffirm the principles of fairness, transparency and accountability, the High Court of Jammu & Kashmir and Ladakh has directed the Government to formulate and implement a Standard Operating Procedure (SOP) to ensure that no admitted dues arising from completed contractual works are withheld beyond a period of 60 days from the date of submission of final bills, provided there is no legal impediment and all codal formalities are completed.
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Moreover, the Bench of Justice Wasim Sadiq Nargal has described the prevailing situation as a “systemic malaise” and a “recurring liability” which cannot be brushed aside on “hyper-technical pleas of limitation.” The High Court observed that recurrent withholding of admitted dues of contractors by Government departments, even after completion of contractual obligations, is leading to unnecessary litigation, clogging the docket of constitutional courts, draining public resources and eroding citizens’ confidence in the fairness of State action.
Passing the judgment of pan-India ramifications, Justice Nargal, while dealing with aspect of obligation to pay post completion, directed that once the work has been executed strictly in accordance with the terms and conditions set out in the tender and the agreement, the respondents shall be under a clear statutory and contractual obligation to release the due payment without any undue or arbitrary delay.
Regarding rejection of post-facto administrative objections, the High Court directed that after the execution of work, the respondents shall not be permitted to raise objections pertaining to administrative approvals, sanction of funds or diversion of funds as grounds to withhold or delay payment.
“In cases, where the delay in payment is not attributable to the contractors, the respondents shall be liable to pay interest on the outstanding amount at the prevailing rates in nationalized banks, calculated from the date the payment fell due until the actual date of payment”, the High Court said, adding “where delay or withholding of payment arises from negligence, omission, or malafide conduct on the part of any officer or official, the accrued interest shall be recovered from the salary or emoluments of such officer, thereby fixing personal accountability and deterring arbitrary exercise of power”.
About constitutional and welfare considerations, the High Court said that a welfare State cannot legitimately plead “paucity of funds” when payments for works already executed and utilized are withheld. “The principle of economic justice obliges the State to ensure that contractors, having fulfilled their part of the bargain, are not subjected to financial distress on account of arbitrary or habitual withholding of dues”, the Court said.
“In cases of habitual or willful withholding, apart from interest, the court may impose exemplary costs against the erring department, to be deposited with the State Legal Services Authority for utilization towards public welfare purposes”, read the directives.
In addition, the Chief Secretary of the Union Territory has been directed to formulate and implement a Standard Operating Procedure (SOP) to ensure that no admitted dues arising from completed contractual works are withheld beyond a period of 60 days from the date of submission of final bills provided there is no legal impediment and all the codal formalities are completed.
It has been further made clear that while formulating and implementing the SOP, the directions issued and observation made by the High Court to ensure the effective enforcement of contractual payments expeditiously with a view to uphold the principle of fairness and accountability, are adhered to in its letter and spirit.
The High Court underscored that constitutional governance does not permit the State to hide behind bureaucratic excuses while depriving its contractors of their rightful dues. “The dignity of governance lies not merely in rule-making, but in timely honouring of obligations, duty which the State, as a model litigant, is expected to uphold scrupulously”, the High Court said.
About the petition filed by M/s Saint Soldier Engineer and Contractor Pvt Ltd through its Director, Sham Singh Jamwal, a registered Government contractor, the High Court observed that he was initially awarded a contract valued at Rs 50,33,700 for providing and laying a 20 mm thick open-graded premix carpet on a 5 km stretch of the link road from Dera Camp to Nikowal Sai. However, due to site requirements and objections from local residents, the scope of work was revised to include laying 50 mm thick Bitumen Macadam (BM) along with 25 mm open-graded premix carpet.
This revision, duly approved by the competent authority, enhanced the contract value to Rs 2,37,39,1000. The petitioner completed the revised work in 2017 and submitted claims for payment. While part payment was released, an admitted amount of Rs 97,87,012 was withheld without justification, even after the final bills were settled.
Official communications from the Executive Engineer in 2016, 2018 and 2020 acknowledged the liability, but the respondents cited paucity of funds as the reason for non-payment. Subsequent requests in 2021 and 2022 also failed to secure release of the dues, prompting the petitioner to approach the High Court.
Earlier, the respondents did not file objections to controvert or deny the specific averments made by the petitioner, despite being given the opportunity by the High Court. Later, when pressed, they raised the objection of limitation, arguing that the contractor’s claim was time-barred.
After hearing both sides, Justice Wasim Sadiq Nargal observed: “It is a well-settled principle in law of pleadings that where specific averments have been made in a petition and the same are not controverted, denied, or specifically traversed by the respondents in their reply or counter affidavit, such non-denial amounts to an admission of the facts pleaded by the petitioner”.
On the objection of limitation, the High Court said: “it is not disputed that the respondents themselves acknowledged the liability in the year 2018, which was well within the period of limitation, and the same was again reaffirmed in 2020. Once liability is admitted and the State continues to enjoy the fruits of the work executed by the petitioner, it cannot be permitted to turn around and deny payment on the plea of limitation”.
Regarding accountability of Government and officers, the High Court categorically held: “The State, as a model litigant, expected to act fairly and reasonably. It cannot take advantage of its position and delay legitimate dues while contractors are subjected to procedural hurdles and financial strain. If limitation law is applied strictly against contractors, the State must equally be held accountable for each day of delay”.
Accordingly, the High Court directed the respondents to release the outstanding principal amount of Rs 97,87,012 to the petitioner within a period of four weeks without any further delay or excuse and pay interest at the rate of 6% from the date of completion of work and fulfillment of all codal formalities in 2017 until actual payment.
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