Deficiencies And Lapses In Supervision And Record-Keeping By State Department Is No Ground To Deny Contractor Payment: Patna High Court

A Single Judge Bench of Justice Smt. G. Anupama Chakravarthy was hearing a writ petition filed by a Class-II registered contractor challenging the rejection of his claim for payment of pending dues towards his final bill and refund of security deposit amounting to ₹19,81,585.

The petitioner was awarded the work of construction of a 2.70 km bypass road from Bakhari Bus Stand to Baluahi Bapu Park in Khagaria District under the Mukhya Mantri Sahari Vikas Yojana pursuant to an agreement executed on 02.02.2011. The petitioner claimed that the work was completed within the stipulated period. Thereafter, measurements were recorded in the Measurement Book and a final bill of ₹13,67,134 was prepared. The petitioner further stated that ₹6,14,451 had been retained towards security deposit, which was also not refunded.

Despite repeated requests, the final bill amount and security deposit were not released. The petitioner had earlier approached the High Court in C.W.J.C. No.14256 of 2015, wherein the Court directed the District Magistrate, Khagaria to examine the claim and release the admitted dues. In case of disagreement, the District Magistrate was directed to pass a reasoned order after granting an opportunity of hearing to the petitioner.

Pursuant to the said direction, the District Magistrate rejected the petitioner's claim, citing deficiencies in the estimate, Measurement Book, technical approval and alleged lapses on the part of departmental officials.

Before the High Court, the petitioner contended that the work had admittedly been completed, departmental authorities had recorded measurements, substantial payment had already been released and the final bill had been prepared. It was argued that the petitioner could not be deprived of payment due to alleged procedural irregularities committed by the department itself.

The State defended the rejection, submitting that the District Magistrate had examined the relevant records and found deficiencies relating to supervision, verification of measurements and technical approval.

The High Court noted that there was no dispute regarding the allotment of work, execution of the work, substantial payment already made to the petitioner, or preparation of the final bill after measurement. It observed:

“The impugned order, however, proceeds mainly on departmental lapses and deficiencies in supervision and record-keeping, without recording any specific finding of liability or default on the part of the petitioner. Such departmental omissions cannot, in the facts of the present case, by themselves constitute a valid ground for denying payment for the work executed by the petitioner under the agreement.”

The Court further held that the reasons cited by the District Magistrate did not disclose any finding that the petitioner had failed to execute the work in terms of the agreement or that the final measurement and final bill prepared by the departmental authorities were incorrect.

It noted that no material had been brought on record to establish that any amount claimed by the petitioner related to work not executed by him or that the petitioner had committed any breach of the agreement warranting withholding of the admitted dues.

Accordingly, the High Court quashed the order passed by the District Magistrate and directed the authorities to release the amount found due towards the petitioner's final bill and security deposit in accordance with departmental records and the terms of the agreement.

The Court also directed that the admitted amount would carry simple interest at the rate of 5% per annum, in terms of the earlier order passed by the Court.

Case: Navin Kumar v. State of Bihar and Ors.

Case No.: Civil Writ Jurisdiction Case No. 9839 of 2018

Appearance: For the Petitioner – M/s Yogesh Chandra Verma, Sr. Advocate; Om Prakash and Uday Shankar Pandey, Advocates. For the Respondents – Mr. Avdhesh Kumar Singh, AAG-6; Mr. Arvind Kumar, AC to AAG-6.