Facts of the Case

The petitioner, a civil contractor, was awarded the work for construction of additional classrooms at the Government Junior College, Saluru Village and Mandal, Vizianagaram District under Circle Agreement No.475/2017-18/DB dated 23.02.2018 and Supplemental Agreement No.39/2019-20 dated 25.10.2019.

The estimated value of the project was ₹85,00,000, while the agreed contract value was ₹66,47,174. After completing the work, the petitioner contended that the authorities were satisfied with the execution, issued the necessary completion certificate, and prepared the final bill. Despite repeated requests, the payment for the executed work was not released, compelling the petitioner to approach the Andhra Pradesh High Court under Article 226 of the Constitution of India seeking release of the outstanding amount along with GST and interest.

Issues Involved

  1. Whether the respondents were justified in withholding payment for the completed contract work.
  2. Whether the petitioner was entitled to release of the admitted contract amount.
  3. Whether interest was payable in case of continued delay in releasing the admitted dues.
  4. Whether non-payment of admitted contractual dues violated Articles 14, 19(1)(g), and 21 of the Constitution of India.

Petitioner’s Arguments

  • The petitioner had successfully completed the contract work entrusted by the respondents.
  • The concerned authorities had accepted the work and prepared the final bill.
  • Despite completion and acceptance of the work, the respondents failed to release the payment.
  • Such inaction was arbitrary, illegal, violative of the principles of natural justice, and infringed the petitioner's constitutional rights under Articles 14, 19(1)(g), and 21.
  • The petitioner sought payment of the outstanding amount together with applicable GST and interest.

Respondents’ Arguments

  • The State did not dispute that payment was due.
  • However, it contended that the admitted payable amount was ₹45,54,984 and not ₹53,49,123 as claimed by the petitioner.
  • The petitioner expressed willingness before the Court to accept the admitted amount.

Court Order / Findings

The Andhra Pradesh High Court observed that it had consistently held in earlier decisions that withholding admitted contractual dues by the Government is arbitrary and that such payments should be released without unnecessary delay.

Considering the admitted liability and the submissions of both parties, the Court directed the respondents to:

  • Release the admitted amount of ₹45,54,984 to the petitioner.
  • Make the payment within eight weeks from the date of receipt of the Court's order.
  • In the event of failure to comply within the stipulated period, the petitioner shall be entitled to interest at 12% per annum until payment.

The writ petition was accordingly disposed of without any order as to costs.

Important Clarification

  • The High Court confined its directions only to the amount admitted by the respondents.
  • The Court reaffirmed that admitted contractual dues cannot be withheld indefinitely by Government authorities.
  • Interest at the rate of 12% per annum would become payable only if the respondents failed to release the admitted amount within the prescribed period.
  • The judgment reinforces the principle that arbitrary withholding of admitted payments can be corrected through writ jurisdiction under Article 226.

Sections  Involved

  • Article 226 – Constitution of India
  • Article 14 – Equality before Law
  • Article 19(1)(g) – Freedom to Practice Any Profession or Carry on Business
  • Article 21 – Protection of Life and Personal Liberty
  • Principles of Natural Justice

Link to Download the Order

 https://www.mytaxexpert.co.in/uploads/1785569992_2558compressed.pdf 

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