Calcutta HC Raps PWD, SAI For 'Passing The Buck', Says Tender Issuing Authority Has Primary Responsibility To Clear Contractor's Dues

While dealing with a case whereby synthetic athletic track was relayed at the Sports Authority of India's Kolkata centre upon a tender issued by the Public Works Department, Justice Amrita Sinha said,

“PWD, being an instrumentality of the State, cannot get the work done for another instrumentality of the State, i.e. SAI, and later on turn around and say that payment cannot be made as the party for which the work was done has not released payment.
It is the primary responsibility of the tender issuing authority to arrange for payment and disburse the same to the contractor. The tender issuing authority ought not to accuse the requiring body for not releasing payment for onward transmission to the contractor/petitioner. Once the satisfactory completion certificate is issued in favour of the contractor, payment in respect of the work done ought not to be withheld for any reason whatsoever.”

Significant to note that a formal work order was issued to the petitioner on 31st January, 2018 and a completion cum performance certificate was issued on 16th July, 2019.

Despite successful completion of work within stipulated time period however, the petitioner had not received payment of the contractual amount. The earnest money deposit and the security deposit were also not released despite the defect liability period of five years being long over.

The dues were admitted by PWD which claimed that despite repeated demands, SAI was not releasing the balance funds.

It was SAI's case that Petitioner had not claimed Customs Duty exemption on certain materials imported from other countries for the work contract and if the exemption is claimed, the amount to be paid by SAI will be reduced to some extent.

Court said both PWD and SAI had been “passing the buck to the other” for obtaining the exemption certificate from the Customs authority and unfortunately, the petitioner had been “caught in the fray”.

It rejected the contention of SAI that the petitioner ought to have availed statutory alternative remedy instead of invoking High Court's writ jurisdiction.

“It is not for the petitioner to run around from one forum to the other chasing for payment for the work performed by it satisfactorily. There is no reason as to why a contractor has to approach Court for receiving payment when there is no dispute either with the quality of the work performed or the contractual amount to be paid. It is obligatory for the requiring body to pay for the work done by the contractor,” the Court observed at the outset.

It further remarked that at a time when getting works done by contractors in a time bound manner is becoming a challenge, it amounts to absolute breach of trust if the State authority withholds payment of a contractor who performed the work satisfactorily.

“PWD ought to appreciate that the petitioner performed the work in accordance with the work order issued by it and as the amount claimed by the petitioner is not disputed, rather admitted by the authority, there is no scope or reason to withhold payment.

PWD cannot be shown any leniency in making payment in proper time to the contractor as the contractor performed the work satisfactorily in accordance with the contract and will be legally entitled to receive the contractual amount. If the said amount is not paid within the due date, the tender issuing authority would be legally bound to pay interest for the delayed payment.

The contract signed by the petitioner and PWD do not contain any clause disclosing that payment will be made to the petitioner as and when PWD would receive payment from SAI. The payment clause did not disclose about any contingency. It could have been that the petitioner may not have been interested in the contract had the contingency factor been mentioned therein,” the Court held.

It further reminded the State that it cannot “exploit people” for getting work done, without making payments. In fact, the Court added, the State ought to be “the best pay master”.

“It was for the State to take up the matter with SAI and, if required, with the Customs authority also. The petitioner ought not to have been dragged into the infighting between the two authorities who qualify as 'State' under Article 12 of the Constitution and, consequently, not release payment to the contractor,” Court said and directed PWD to release Petitioner's dues with interest.

Appearance: For the writ petitioners :- Mr. Piyush Chaturvedi, Adv. Mr. Sayan Dev Kumar, Adv. Ms. Priyakshi Banerjee, Adv. For State :- Mr. Lalit Mohan Mahata, AGP Mr. Prasanta Behari Mahata, Adv. For SAI :- Mr. D.N. Ray, Sr. Adv. Mr. Sourav Halder, Adv.

Case title: M/s. Great Sports Tech Ltd. Vs. The State of West Bengal & Ors.

Case no.: WPA 21370 of 2024

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