The Jammu & Kashmir and Ladakh High Court came down heavily on the Union Territory authorities for failing to clear long-pending contractual payments, holding that the State cannot be permitted to evade its financial obligations. The case arose from a petition filed by M/s Saint Soldier Engineer and Contractor Pvt. Ltd., which claimed that outstanding bills amounting to ₹97.87 lakh had remained unpaid since 2017 despite completion of contracted works and certification of bills. The Court directed the authorities to release the amount along with six percent interest, stressing that judicial passivity in the face of admitted liabilities was unacceptable.
The dispute stemmed from contracts executed under public works, for which the petitioner had performed the agreed obligations and secured certification of bills. However, the respondents delayed disbursement of the payments on the grounds of administrative delays, financial constraints, and internal technicalities. The High Court examined these justifications and rejected them, observing that the dues were admitted and the withholding of payment was arbitrary. The Court ruled that it could not remain a silent spectator when established liabilities were being denied without any valid reason.
The Court reasoned that once contractual obligations are performed and dues are certified, the State has no authority to defer payment indefinitely. Administrative inefficiency or financial shortage cannot be pleaded as excuses to deprive contractors of their rightful dues. The judges observed that such arbitrary withholding of payment not only violates contractual principles but also undermines constitutional guarantees of fairness and equality. Contractors who execute public works for the State are entitled to timely remuneration, and failure to provide this creates hardship and inequity.
In its observations, the Court also recognized the systemic nature of the problem. It noted that delays in clearing contractors’ dues are not isolated instances but part of a recurring pattern in public contract management. The Court directed that authorities must establish mechanisms to ensure prompt clearance of payments and institute systems of accountability, transparent timelines, and governance frameworks to prevent recurrence. Such measures, the Court stated, were essential to safeguard the integrity of public procurement and prevent exploitation of contractors.
The judgment also emphasized that when an authority certifies a bill, it affirms the contractor’s compliance with the contractual terms. At that stage, there is no justification for delaying payment. The High Court declared that financial constraints of the State cannot override the binding obligation to pay contractors. It underlined that the principle of fairness demands prompt discharge of liabilities, and delay amounts to unjust enrichment by the State at the expense of private contractors.
To ensure compensation for the time lost, the Court awarded six percent interest on the pending dues. This, it held, was necessary to address the time value of money and to discourage arbitrary withholding of funds. The decision reinforced the principle that prolonged denial of admitted dues effectively forces contractors to finance the State without consent, and such defaults must carry financial repercussions.
In conclusion, the High Court made clear that contractors should not be forced to engage in prolonged litigation to enforce admitted payments. It reiterated that if no genuine dispute exists regarding liability, the Court can exercise its writ jurisdiction to enforce payment of dues. The ruling sends a strong signal that the judiciary will not condone arbitrary inaction or administrative excuses in matters involving established financial obligations of the State.
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