Jammu and Kashmir High Court Orders Immediate Payment of Overdue Contractor Dues
State Directed to Pay Rs. 97.87 Lakhs with Interest for Delayed Payments; Officers to Face Accountability for Negligence
In a landmark judgment, the Jammu and Kashmir High Court has directed the Union Territory of Jammu and Kashmir to release overdue payments amounting to Rs. 97,87,012 to M/s Saint Soldier Engineer and Contractor Pvt. Ltd., along with 6% interest from the date of completion of work in 2017. The decision was rendered by Justice Wasim Sadiq Nargal in response to a writ petition filed by the contractor, who sought relief from arbitrary withholding of payments due for government contract work.
The court found the state's failure to pay the admitted dues despite the completion of work as arbitrary and violative of constitutional guarantees under Articles 14 and 300A. The judgment emphasized that administrative reasons such as paucity of funds do not justify the delay, and contractors are entitled to interest on delayed payments and compensation for financial loss.
The petitioner, a registered government contractor, had executed works involving the laying of a 20 mm thick open-graded premix carpet on a 5 km stretch of road. Despite the successful completion of the project and acknowledgment of liability by the state, the payments were withheld without justification.
Justice Nargal underscored that the state cannot evade its financial obligations by citing technicalities like limitation or lack of funds. He highlighted that the period of limitation does not strictly apply to writ jurisdiction under Article 226 of the Constitution, and the acknowledgment of liability by the state extends the limitation period under Section 18 of the Limitation Act, 1963.
The court also addressed the issue of public accountability, directing that interest liability for delayed payments be recovered from the salaries of negligent officers responsible for the delay. Furthermore, the Chief Secretary of the Union Territory has been instructed to formulate a Standard Operating Procedure (SOP) to ensure timely release of payments in the future, emphasizing that contractors should not suffer due to bureaucratic inefficiencies.
This judgment sets a significant precedent in ensuring that government contractors are treated fairly and underscores the judiciary's role in upholding constitutional values against arbitrary state action.
Bottom Line:
Government contracts - Non-payment of admitted dues to contractors - Delay in payment due to administrative reasons such as paucity of funds or diversion of funds - Held, such conduct is arbitrary and violates Articles 14 and 300A of the Constitution of India - Contractors entitled to interest on delayed payments and compensation for financial loss.
Statutory provision(s): Articles 14, 21, and 300A of the Constitution of India, Section 18 of the Limitation Act, 1963, Sections 70 and 73 of the Contract Act, 1872, Article 226 of the Constitution of India
