J&K High Court seeks time-bound mechanism for payment of admitted contractor liabilities

The High Court of J&K and Ladakh called for putting in place an effective time-bound mechanism to ensure prompt payment of admitted claims to contractors, saying such claims cannot be delayed on pendency of approvals or alleged paucity of funds.

A Bench of Justice Wasim Sadiq Nargal said this while deciding a related petition by a local contractor and directed the authorities to release Rs 47.47 lakh dues to the contractor.

In its decision, the Court re-iterated that the state is under an obligation to ensure timely release of admitted and undisputed dues and cannot compel parties to seek judicial redress for enforcement of such claims.

The Court re-iterated the position it has already enunciated in M/s Saint Soldier Engineers & Contractors Pvt. Ltd. vs. Union Territory of J&K & Ors.

While the court emphasised the necessity of putting in place an effective and time-bound mechanism for disbursement of admitted liabilities, it said: “It is, therefore, expected that the respondents shall adhere to and ensure strict compliance with the directions issued therein.”

The court held that despite the catena of judgments and a well settled position of law, the authorities continue to withhold such admitted dues on untenable grounds in law, such as administrative delays, pendency of approvals, or alleged paucity of funds.

“Such pleas, in the considered view of this Court, are nothing but attempts to shift the burden of internal inefficiencies onto the shoulders of the executing parties, which is impermissible”

The State, being a welfare entity, is expected to act fairly, reasonably and in a responsible manner in all its dealings, the court said.

The Court noted that the practice of compelling citizens to seek judicial intervention for enforcement of admitted claims cannot be approved and deserves to be deprecated. “It must be emphasized that once the State has availed the benefit of work executed, it is under a corresponding obligation both legal and constitutional to ensure timely payment,” it said.

The Court observed that any failure in this regard strikes at the core of Article 14 of the Constitution of India, which mandates fairness, reasonableness and non-arbitrariness in State action.

It said: “The consequences of delayed payments are significant, particularly for small-scale units, which operate within limited financial capacity. Unjustified withholding of dues results in financial hardship and adversely impacts business viability”

The State cannot be permitted to derive benefit from completed works while denying the corresponding financial entitlement to the executing party, the court said.

The Court noted that the authorities must ensure availability of funds prior to allotment of works, saying failure in this regard cannot be used as a defense to defeat legitimate claims.