Court mandates timely payment by state entities, citing violation of constitutional and statutory obligations.
In a significant judgment, the Jammu and Kashmir High Court has directed the Union Territory of Jammu and Kashmir to release the admitted dues of Rs. 47.47 lakhs to M/s Lumber India Corporation within four weeks. The court emphasized that the withholding of payments by state entities on grounds such as non-availability of funds or administrative delays is arbitrary and violates Article 14 of the Constitution of India. Justice Wasim Sadiq Nargal, presiding over the matter, highlighted that the state must act fairly and reasonably in its contractual dealings and cannot evade liability with hyper-technical defenses once the liability is admitted.
The case arose when M/s Lumber India Corporation, a registered Small Scale Industrial Unit, filed a writ petition seeking the release of dues for works executed for various government departments. Despite executing the work in accordance with approved specifications and satisfaction of the competent authorities, payments had been withheld for several years. The petitioner argued that this inaction violated their fundamental rights under Article 14 and the statutory provisions of the Micro, Small and Medium Enterprises Development Act, 2006, which mandates timely payment within 45 days and interest on delayed payments.
The court dismissed the respondents' defense of non-availability of funds, stating that once work is executed and accepted, the obligation to pay crystallizes. The court further noted that state entities cannot shirk their financial obligations due to internal administrative deficiencies, emphasizing the constitutional mandate of fairness and reasonableness. The judgment also called for administrative accountability, suggesting that delays attributable to negligence or inaction of officials should lead to consequences.
The court's order included a directive that failure to comply within the stipulated period would result in an interest penalty at 6% per annum on the due amount. The judgment underscores the court's commitment to ensuring timely financial obligations by the state, reflecting broader principles of equity and justice.
Bottom Line:
State and its instrumentalities cannot withhold admitted dues on the pretext of non-availability of funds, administrative delays, or lack of privity of contract. The obligation to ensure timely payment for executed works is a constitutional and legal duty under Article 14 of the Constitution of India.
Statutory provision(s): Article 14 of the Constitution of India, Micro, Small and Medium Enterprises Development Act, 2006 Sections 15, 16, 17, Article 226 of the Constitution of India
