J&K High Court Directs Govt To Release Pending Payments To SSI For Completed Public Work, Says Arbitrary Withholding Of Pay Violates Article 14

Reinforcing the rights of small industrial units, the High Court of Jammu and Kashmir and Ladakh at Srinagar has reiterated that the arbitrary withholding of payment for completed work is violative of Article 14 of the Constitution of India. A bench of Justice Wasim Sadiq Nargal thus directed the Union Territory administration and concerned departments to release the long-pending dues to a registered Small Scale Industrial (SSI) Unit, for execution of government-assigned works.In allowing the petition of the SSI Unit, Justice Nargal also emphasised that in matters of contractual dispute with the State and its instrumentalities there is no absolute bar to exercise the writ jurisdiction. If there is no genuine dispute about liability and the dues are withheld arbitrarily, the High Court can exercise writ jurisdiction to address the grievance, he underscored. The case arose from a writ petition filed by M/S PMT Industries seeking a writ of mandamus against various departments of the J&K Government, including the Chief Secretary, SICOP (Small Scale Industries Development Corporation), and the Irrigation & Flood Control Department. The petitioner claimed that despite executing a government work order in full, the authorities arbitrarily withheld an amount of ₹6,40,960 and ₹1,14,112 without justification.In March 2014, SICOP assigned the petitioner a particular government work. While ₹24 lakh was paid, the balance was withheld on the ground that the petitioner allegedly did not complete installation and testing of the pipes.Through Advocate M.M. Khan, the petitioner contended that the entire work was executed in accordance with the specifications in the supply order. The petitioner relied on SICOP's own communications from 2021 and 2024, confirming completion of the job and certifying that the petitioner complied with all contractual obligations. It was argued that withholding the payment despite such certification was arbitrary and unjust.Represented by Government Advocates Jehangir Ahmad Dar and Waseem Gul, the respondents claimed the petitioner breached the contract by failing to complete the installation and testing, which necessitated engagement of third-party contractors. They argued that payment was rightly withheld in accordance with the contractual terms, which required fulfillment of all three components supply, installation, and testing.Court's Observations:Justice Nargal meticulously examined the documentary record and rejected the respondents' claims of contractual breach. The Court noted that the Divisional Manager of SICOP, in multiple communications, certified that the petitioner had completed the assignment strictly in accordance with the specification mentioned in the supply order.“The respondents have not placed on record any material to contradict the certification or to show that the work was left incomplete. In the absence of any such material, the petitioners claim that all contractual obligations were fully carried out stands confirmed”, remarked Justice Nargal. Quoting a Supreme Court precedent (Rajasthan State Industrial Development Corporation v. Diamond & Gem Development Corporation, (2013) 5 SCC 470), the Court held, “Where a party to a contract has acted in a manner causing prejudice to the other party and failed to fulfill its obligations without justification, it would be violative of Article 14 of the Constitution if payments lawfully due are arbitrarily withheld.”The Court also cited its own precedents in Karamat Ullah Malik v. UT of J&K and Mukhtar Ahmad Andrabi v. UT of J&K, reiterating that there is no absolute bar to exercise of writ jurisdiction in contractual disputes when the dues are arbitrarily withheld despite clear evidence of fulfillment of obligations.Concluding that the petitioner fulfilled all obligations and that the respondents acted arbitrarily, the Court held, “The respondents are under legal obligation to release the withheld payment with regard to the work executed by him.”Accordingly, the Court directed the respondents to release the amount in favour of the petitioner within six weeks. Failing compliance, the petitioner would be entitled to interest @6% from the date the amount became due, the court concluded. Case Title: M/S PMT Industries Vs UT Of J&K Citation: 2025 LiveLaw (JKL) 268Click Here To Read/Download Judgment

J&K High Court Directs Govt To Release Pending Payments To SSI For Completed Public Work, Says Arbitrary Withholding Of Pay Violates Article 14

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