*Pulls up Govt for withholding contractor dues
Excelsior Correspondent
JAMMU, Feb 9: The High Court of Jammu & Kashmir and Ladakh has delivered a strong message to Government departments on delayed contractor payments, holding that once work is executed and liability admitted, they cannot deny dues on post-facto administrative or technical grounds. Further, the High Court emphasized that contractors cannot be penalized for internal procedural lapses of departments.
The order has been passed in a petition filed by M/s Krishna Engineering Works Industrial Estate Digiana seeking release of Rs 7,71,224 as pending payment for works executed for the Jal Shakti (PHE) Department.
It was the specific case of the petitioner that for the period from 2015 to 2020, the Executive Engineer, Jal Shakti (PHE) Division, Akhnoor engaged the petitioner firm for various works and issued job orders for a total amount of Rs 7,71,224, against which the petitioner, after successfully executing the works, raised bills before the respondents.
In spite of the fact that the petitioner executed the work well within time and in conformity with the terms and conditions of the job orders, the respondents did not release the payment amounting to Rs 7,71,224.
However, the respondents submitted that payment was rejected citing lack of codal formalities such as e-tendering, administrative approval and technical sanction.
After hearing counsel for both sides, Justice Wasim Sadiq Nargal observed, “the persons who execute the work on behalf of the respondents do so with a belief that all the codal formalities would be taken care of by the respondent-authority and after execution, they would be given their due payment with alacrity. The respondents, however, after getting the work done are denying the same to the petitioner on the pretext of codal formalities which has no connection with the petitioner”.
The High Court ruled that such objections, raised after completion of work, are legally untenable and contrary to the principles of fairness and accountability.
“The legal position regarding the payment of dues for contractual work executed is well settled by the Supreme Court in several authoritative pronouncements. These judgments collectively underscore the imperative that contractual payments must not be unduly delayed or withheld by the State without valid reasons”, the High Court said.
Justice Nargal further observed, “it is a well-established principle that when a contractor completes a work, the State incurs a direct obligation to fulfill its financial commitments. Ensuring administrative approvals are preliminary obligations of the department that must be finalized prior to commencement of the work. Consequently, once the work is executed, the State cannot rely on post-facto administrative excuses or internal delays to deny or withhold legitimate payments”.
“The respondents, having admitted the liability, are estopped under law from questioning the contract at this belated stage—after execution of the work—on grounds such as lack of e-tendering, accord of administrative approval and grant of technical sanction”, the High Court said, adding that Government agencies cannot enjoy a “win-win” situation by using completed works while withholding payment for years without consequences.
The High Court underscored that delays attributable to the State must be properly explained and justified. Failure to do so may attract interest and compensation for financial losses suffered by contractors. The Court added that internal administrative reasons, alleged paucity of funds or diversion of resources cannot be valid grounds for denying legitimate claims after completion of works.
Highlighting broader systemic issues, the High Court reiterated principles laid down in earlier rulings, emphasizing immediate release of payments once work is completed as per contractual terms, rejection of post-facto administrative objections after execution of works, liability of the Government to pay interest on delayed payments, the possibility of fixing personal accountability on officials responsible for mala fide or negligent delay and the duty of a welfare State to prevent financial distress to contractors by ensuring economic justice.
Accordingly, the High Court directed the respondents to release the admitted liability to the tune of Rs 7,71,224 in favour of the petitioner within a period of four weeks, failing which the petitioner shall be entitled to interest at the rate of 6% from the date the amount became due and remained unpaid by the respondents.
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