Facts of the Case

The petitioner was a company engaged in the business of software development, data processing and digitalization.

In 2016, respondent No. 2 requested the petitioner company to develop 11 Android software applications for monitoring various schemes implemented by the respondent department. The petitioner accordingly developed the 11 applications.

The petitioner thereafter sought settlement of payment for the work performed and submitted a representation dated 19.03.2018.

However, by Memo No. 12023/18/2018/AH1 dated 07.09.2018, respondent No. 1 disapproved permission to make payment to the petitioner company. The stated ground was that the proposal had been submitted with extreme delay for Government approval and that there was no adequate justification for such delay.

Aggrieved by the rejection memo, the petitioner approached the High Court through Writ Petition No. 1347 of 2022.

The record showed a detailed sequence of departmental actions concerning the applications:

  • The petitioner had addressed letters dated 16.03.2017 and 05.06.2017 to respondent No. 2.
  • By letter dated 28.06.2017, respondent No. 2 requested the petitioner to furnish certain information for further action.
  • The petitioner furnished the required information.
  • A committee meeting of technical officers for evaluation of the Android applications was held on 27.12.2017.
  • The developer gave a demonstration of the applications.
  • The committee opined that the applications could also be field-tested and suggested that they be sent to the State e-Governance Mission Team Section, Information Technology, Electronics and Communications Department for evaluation, vetting, and separate valuation of application-development and maintenance charges.
  • On 12.01.2018, respondent No. 2 requested the SeMT Section to vet the 11 Android applications and undertake valuation of development and maintenance charges.
  • By proceedings dated 12.01.2018, certain veterinarians were also requested to conduct field testing of the applications.
  • In February 2018, after evaluation, the Head of the SeMT Section normalized the cost at ₹47,03,000 excluding GST, covering development charges, total support and change requests, against the petitioner’s estimated cost of ₹51,85,600.
  • Respondent No. 2 subsequently sought permission from respondent No. 1 on 30.05.2018 to effect payment.
  • Almost sixteen months thereafter, the impugned rejection order was passed.

The documentary chronology and the Court’s reasoning are particularly reflected in pages 3 to 6 of the uploaded order, including the technical valuation of ₹47.03 lakh and the finding that the delay had occurred on the respondents’ side.

Issues Involved

The principal issues before the Court were:

  1. Whether the petitioner company was entitled to payment for the 11 Android applications developed for monitoring departmental schemes.
  2. Whether the Government could validly reject payment on the ground that the proposal for approval had been submitted with extreme delay.
  3. Whether the respondents’ contention that no work order had been issued could defeat the petitioner’s claim despite the subsequent departmental correspondence, technical evaluation, field-testing process, vetting request and valuation exercise.
  4. Whether the respondents’ contention that no invoice had been submitted was sustainable in light of the material available on record.
  5. Whether the petitioner could be made to suffer for delay that, on examination of the chronology, had occurred from the respondents’ side.
  6. Whether the Government’s own technical evaluation and normalization of the cost at ₹47,03,000 established the amount payable for development charges, total support and change requests.
  7. Whether Memo No. 12023/18/2018/AH1 dated 07.09.2018 rejecting permission for payment was legally sustainable.

Petitioner’s Arguments

The petitioner’s case, as emerging from the judgment, was that:

  • it was engaged in software development, data processing and digitalization;
  • respondent No. 2 had requested development of 11 Android applications to monitor departmental schemes;
  • the petitioner had actually developed the applications in 2016;
  • the applications were handed over to the department;
  • the petitioner repeatedly pursued payment and supplied information sought by the department;
  • the applications underwent departmental consideration, technical demonstration, proposed field testing, evaluation and vetting;
  • the SeMT Section of the ITE & C Department evaluated the applications and normalized their cost;
  • the petitioner had requested settlement of payment through representation dated 19.03.2018; and
  • rejection of payment on the ground of extreme delay was unjustified because the subsequent processing and delay occurred within the respondents’ administrative machinery.

The petitioner therefore challenged the memo dated 07.09.2018 and sought appropriate relief.

Respondents’ Arguments

Respondent No. 2 filed a counter-affidavit and principally contended that:

  • no work order had been issued to the petitioner company;
  • the petitioner company had completely failed to fulfil the department’s requirements, as allegedly ascertained by the departmental committee; and
  • no invoice had been submitted by the petitioner company for payment.

The learned Government Pleader also relied upon the contention that the proposal had been submitted with extreme delay for Government approval.

Court’s Findings

The Court examined the entire material on record and rejected the material objections raised by the respondents.

The Court found that respondent No. 2 itself, in response to the petitioner’s letters dated 16.03.2017 and 05.06.2017, had requested further information through its letter dated 28.06.2017.

The record further demonstrated that:

  • the petitioner furnished the requested information;
  • a technical committee evaluated the Android applications;
  • a demonstration was given;
  • field testing was proposed;
  • respondent No. 2 formally approached the SeMT Section for vetting and valuation;
  • the SeMT Section evaluated the applications; and
  • the normalized cost was determined at ₹47,03,000, against the petitioner’s higher estimate.

In view of this documentary material, the Court expressly turned down the Government Pleader’s contentions that:

  • no work order had been issued; and
  • no invoice had been submitted for payment.

The Court also found that the impugned order was silent regarding:

  • the precise period of alleged delay; and
  • the time within which the petitioner company was required to submit a proposal requesting payment.

The Court carefully examined the chronology and observed that:

  • the applications were developed and handed over in 2016;
  • respondent No. 2 sought further information on 28.06.2017;
  • the technical committee met on 27.12.2017;
  • SeMT vetting and valuation were requested on 12.01.2018;
  • the applications were evaluated in February 2018;
  • the cost was normalized at ₹47.03 lakh;
  • respondent No. 2 sought permission to make payment on 30.05.2018; and
  • the impugned rejection order was passed almost sixteen months thereafter.

The Court further noted that the letter dated 30.05.2018, addressed by respondent No. 2 to respondent No. 1 seeking permission to effect payment, had not been filed with the counter-affidavit of respondent No. 2.

On the basis of the sequence of events, the Court concluded that the delay had occurred from the respondents’ side.

Accordingly, the Court held that the contention that the proposal was submitted with extreme delay for Government approval could not be accepted and that the petitioner could not be made to suffer for delay attributable to the respondents.

Court Order / Final Directions

The High Court allowed the writ petition and ordered as follows:

  • Memo No. 12023/18/2018/AH1 dated 07.09.2018 was set aside.
  • The Court held that the petitioner was entitled to the normalized cost of the 11 Android applications amounting to ₹47,03,000.
  • The amount represented the evaluated cost towards:
    • development charges;
    • total support; and
    • change requests.
  • The respondents were directed to pay ₹47,03,000 to the petitioner company within eight weeks from the date of receipt of a copy of the order.
  • Pending miscellaneous applications, if any, were closed.
  • No order as to costs was made.

The operative payment direction appears on page 6 of the uploaded order, where the Court expressly sets aside the impugned memo and directs payment of ₹47.03 lakh within eight weeks.

Important Clarification

This judgment provides an important principle concerning Government contracts, administrative processing and payment for work actually performed:

A private party cannot be made to suffer for administrative delay attributable to Government authorities themselves, particularly where the work has been developed, departmental steps have been taken for technical evaluation and field testing, and the Government’s own technical agency has evaluated and normalized the payable cost.

The judgment also demonstrates that the mere plea of absence of a formal work order may not, in the specific factual setting of a case, conclude the matter where the record shows extensive departmental conduct acknowledging and processing the work, including:

  • requests for information;
  • technical committee evaluation;
  • demonstration of applications;
  • field-testing directions;
  • referral for vetting;
  • independent technical valuation; and
  • a departmental request for permission to effect payment.

Another significant clarification is that an administrative rejection based on “extreme delay” must be examined against the actual chronology. Where the impugned order does not identify the relevant period of delay or the prescribed time within which the payment proposal was required to be made, and the record shows delay on the respondents’ side, the contractor or developer cannot be denied payment on that basis.

Sections / Provisions Involved

Constitutional Writ Jurisdiction — invoked to challenge the administrative memo refusing permission to make payment.

Principles Governing Judicial Review of Administrative Action — relevant to examination of whether rejection of payment on the ground of delay was sustainable in light of the record.

Principles of Fairness and Non-Arbitrariness in State Action — relevant because the Court found that delay had occurred from the respondents’ side and that the petitioner could not be made to suffer for such delay.

Government Contract / Payment for Work Performed Principles — relevant to the entitlement arising from development, departmental evaluation, vetting and normalized valuation of the 11 Android applications.

GST Component: The SeMT technical evaluation normalized the cost at ₹47,03,000 excluding GST. The judgment records this valuation fact but does not adjudicate a separate GST liability dispute or identify a specific GST charging section.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783318401_1103compressed.pdf 

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