Court mandates UT of J&K to release dues with interest for completed contractual work, setting precedent for accountability in government contracts.
In a significant judgment, the Jammu and Kashmir High Court has ruled in favor of M/s Krishna Engineering Works Industrial Estate, directing the Union Territory of Jammu and Kashmir to promptly release pending payments amounting to Rs. 7,71,224. This amount is owed for completed contractual work, which the state had unjustifiably withheld. The Court's decision underscores the principle that the state cannot delay or withhold payments for completed work on grounds such as lack of administrative approvals or technical sanctions once the work has been executed per the contractual terms.
Presiding over the case, Justice Wasim Sadiq Nargal highlighted that the state must honor its financial commitments without undue delay, emphasizing that any such delay attracts liability for interest and compensation. The Court criticized the state authorities for denying payments on the pretext of missing codal formalities, which should have been the responsibility of the state prior to the allotment of work. The judgment aligns with previous Supreme Court rulings, reinforcing that once a contract is fulfilled, the state is obligated to settle payments without raising post facto objections.
This case stemmed from the petitioner's claim that despite successfully completing work orders from 2015 to 2020, the state had not released the agreed payment. The petitioner's counsel argued that the liability had been acknowledged by the state, evidenced by verified bills. However, the state, through its compliance report, contended that payments could not be processed due to procedural formalities that were not adhered to.
The High Court's judgment calls for the state to release the outstanding payment within four weeks from receiving the court order. It further stipulates that should the state fail to comply within the given timeframe, it would be liable to pay an interest of 6% from the date the payment became due.
The decision sets a robust precedent for accountability in government contracts, emphasizing the importance of timely financial settlements and the potential personal accountability of officials who negligently delay or withhold payments. The Court has made it clear that the state cannot benefit from delaying payments without facing consequences, thereby ensuring fairness and justice in contractual dealings.
Bottom Line:
State cannot arbitrarily withhold or delay payment for completed contractual work on grounds of codal formalities or administrative approval. Contractors are entitled to timely payments, and delays without valid reasons attract liability for interest and compensation.
Statutory provision(s): Article 226 of the Constitution of India
