Damudhar Prasad Verma vs State of Arunachal Pradesh and Others

A.H. Saikia, J.—Heard MR. T. Sen, learned counsel for the petitioner and also heard Mr. R.H. Nabm, learned Addl. Senior Govt. Advocate, A.P.

This matter relates to the non payment of contractual dues to the petitioner who completed the supply works in terms of the Work Order. The State Respondents particularly Respondents 5 and 7 and also Respondent 6 by filing their respective counters admitted a sum of Rs. 4,77,275 and Rs. 36,000 as due amount remained outstanding to be paid to the petitioner.

Mr. Sen, learned counsel for the petitioner has submitted that since the outstanding amount has already been admitted by the State-Respondents as mentioned above, this case is covered by a decision of this Court reported Swadesh Lal Roy Vs. State of Assam and Others, (Annexure-D to the writ petition) and has prayed that this writ petition may be disposed of by giving the same relief to the petitioner.

On completion of the Government contract, the Government is liable for the payment accrued against the said contract works and non payment of the said amount even after the admission of the same shall be viewed contrary to public interest. In a welfare State it is incumbent not only to protect the public interest but also to protect the interest of the individual against the arbitrary and unfair exercise of executive power. Administrative fairness must also be reflected in dealing with Government contracts. Given the recent trend of judicial activism, the petitioner has accrued enforceable legal right to invoke the jurisdiction of this Writ Court praying for a Mandamus for a direction to the respondents to make payment of the outstanding admitted contractual dues.

In Swadesh Lal Roy''s case (supra) this Court rightly observed in paragraph-4 as follows :-

"4. The liability and actionability of Governments in contract have been widely recognised in the Anglo-Saxon Jurisprudence. In India the contractual liability of the Government is to be found in Articles 293, 299 and 300 of the Constitution. Article 298 lays down that for the purpose of carrying out the functions of the State Government can enter into contracts. Article 299 contains essential formalities which a government contract must fulfil. Article 300 provides the manner in which suits and proceedings against or by the government may be instituted. The constitutional code for government contract is not complete, therefore, it is supplemented by the provisions of the Indian contract Act, 1872. The legal analysis of government contracts is a matter of growing importance. Government contracts cannot be viewed purely as being similar in all respects to private contracts between two individuals, for here both administrative and contractual powers intersect. In this area, there is need to protect public interest and also to protect the individuals against unfair exercise of administrative power. Such contracts raise problems of public law, such as, estoppel, natural justice, fundamental rights, writ jurisdiction etc. The law in this area in India is still in the process of evolution. Formerly the judicial view has been that a writ petition is not an appropriate remedy for the enforcement of contractual obligations. The remedy in case of breach of a government contract was simply a suit for damages. In recent times the judicial trend is to regard contracts between government and private individuals as not merely a matter of private law but, to some extent, of public law as well. A feeling is gathering strength that government is always a government whether it is dealing with matters of administration or contract. The government ought therefore be held subject to some public law discipline in the contractual area."

On overall consideration of the factual position of the case and also on perusal of the materials available on record including the pleadings of the parties specially the admission of the Respondents 5, 6 and 7 in their affidavits and having regard to the authority cited above and also upon hearing the learned counsel for the parties, I am Inclined to pass the similar order in the light of Swadesh Lal Roy''s case (supra) and accordingly, this writ petition is disposed of on the following terms :-

7.1 direct the State-Respondents/competent authority concerned particularly Respondents 5, 6 and 7 to release the outstanding liabilities to the tune of Rs. 4,77,275 as well as Rs 36,000 as mentioned above and make the payment of the same to the writ petitioner expeditiously but not later than three months from the date of receipt of this order. If the said amount is not paid within the stipulated period of three months, the said amount shall carry an interest at the rate of 12% per annum from the date of making of preparation of the final bills of the contractual amount till the full payment is made.

At this stage, Mr. Nabam, learned State counsel has submitted that though the outstanding amount has been admitted, the Government is not in a position to pay the amount due to financial constraints or the State. It is the settled position that paucity of fund of the State cannot be a ground for non-payment of the admitted outstanding amount to the petitioner.

For the reasons, observations and directions indicated above, this writ petition is disposed of, but no order as to costs.