Facts of the Case

The petitioner, Marysadan Projects Pvt. Ltd., executed road construction and flood rectification works under contracts awarded by the Kerala Public Works Department (PWD). After successfully completing portions of the work, the petitioner submitted part bills during July and August 2022.

Although the measurements had been recorded and the bills prepared, the concerned PWD officers were unable to upload the bills through the PRICE Software because the software had become non-functional while being updated following changes in the GST structure.

The petitioner contended that this delay adversely affected its commercial interests and could also result in losing seniority in the queue for bill clearance despite having completed the work.

Accordingly, the petitioner approached the Kerala High Court seeking appropriate directions against the State authorities.

Issues Involved

  1. Whether the delay in uploading contractors' bills due to malfunction of PRICE Software could prejudice the contractor's rights.
  2. Whether the petitioner was entitled to protection of seniority in processing of bills despite the software-related delay.
  3. Whether the High Court should direct the authorities to upload the pending bills immediately after restoration of the software.

Petitioner's Arguments

The petitioner submitted that:

  • The contracted works had already been completed.
  • Measurements were duly recorded by the competent PWD authorities.
  • Bills had been prepared but remained pending only because PRICE Software was not functioning.
  • Delay in uploading the bills was entirely attributable to the Government system.
  • Such delay would adversely affect payment and may also deprive the petitioner of seniority in clearance of bills.
  • The contractor should not suffer due to administrative or technical failures beyond its control.

Respondents' Arguments

The State Government submitted that:

  • PRICE Software was undergoing updating owing to GST revision.
  • The software would become functional shortly.
  • Since measurements had already been recorded and bills prepared, the petitioner would not lose seniority merely because uploading was delayed.
  • The authorities intended to upload the bills immediately after restoration of the software.

Court Order / Findings

The Kerala High Court disposed of the writ petition by directing the competent PWD authorities to:

  • Upload the petitioner's part bills immediately after PRICE Software becomes functional.
  • Ensure that the delay caused due to software malfunction does not result in the petitioner losing seniority in the matter of bill clearance.
  • Process the bills subject to the petitioner being otherwise eligible for payment under law.

The Court accepted the Government's assurance that the technical issue arose only because of software updation following GST revision and protected the petitioner's rights against adverse administrative consequences.

Important Clarification

This judgment clarifies that:

  • Contractors cannot be penalized for delays arising solely from Government software failures.
  • Administrative or technical glitches should not affect seniority in bill processing.
  • Government departments must protect contractors from adverse consequences caused by system-related delays.
  • Courts may issue appropriate directions where digital governance mechanisms hinder legitimate contractual payments.
  • Technical upgrades relating to GST implementation cannot become a ground for withholding otherwise valid payment processing.

Key Takeaways

  • Software malfunction cannot prejudice contractors' legal rights.
  • GST-related software updates do not justify indefinite delay in bill processing.
  • Seniority for bill clearance must remain protected despite technical issues.
  • High Courts can intervene under Article 226 to ensure fair administrative action.
  • Government departments must process pending bills immediately after restoration of official software.

 

Sections / Legal Provisions Involved

  • Article 226 of the Constitution of India
  • GST Revision affecting PRICE Software functioning
  • Public Works Department (PWD) Billing Procedure
  • Administrative Law Principles
  • Government Contract Payment Process 

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785221229_2125compressed.pdf

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