Where the liability is admitted and the payments are not being made on legally untenable grounds, the action of the Government or its agencies in not making payments is per se unreasonable and calls for an interference by the Court.

1. An extraordinary feature of litigations in this State is the filing of writ petitions, under Article 226 of the Constitution, seeking direction to the State Government, and its agenc- ies, to make payment of "admitted dues". What usually happens is that a contractor or a supplier having completed the work or having made the supplies in terms of a Government contract has to wait indefinitely, sometimes for years, for payment for the work done or against the supplies made. The Government department with which the contract was made does not deny the contract nor the contractors/suppliers claim that the work was duly performed and/or the supplies were duly made in terms of the contract. Yet, the payment in terms of the contract remains withheld for many years. The usual plea in such cases is paucity of funds. Such a situation, as can be easily imagined, lands to same further undesirable consequences and in some cases allegations are made that the department/authorities were clearing bills and making payments only for extraneous considerations.

2. In a number of cases it is also seen that though a cheque for payment against the contractors bill was issued by the concerned Government department, the payee could not encash it as the Government treasury refused to make payment on account of some Government instruction imposing a ban on payments of certain kind by the treasury.

3. In such predicament Government contractors/suppliers have been approaching this Court in large numbers for direction for payment of their admitted dues. In such cases if it was found that the liability was admitted and the payments were not being made on pretexts not sustainable in law, this Court consistently issued directions for making payments within a specified time. It was considered that in cases where the liability was admitted, the action of the Government or its agencies in not making payments on legally untenable grounds was per se unreasonable and called for an interference by this Court. In such cases it was considered injudicious to relegate the claimant to a civil Court to obtain a money decree and then to realise his dues by getting the decree executed.

4. In cases, however, where the Government or its agencies disputed the liability for any reason whatsoever, this Court declined to interfere and left the claimant to seek his remedy by filing a money suit before a Civil Court of competent jurisdiction.

5. It may further be noted that as regards the question whether or not the dues were admitted, this Court did not accept the petitioners claim regarding the dues being admitted merely on the basis of the averments made in the writ petition or the documents and papers enclosed with the petition which would show that the department was either accepting the liability or atleast it was not denying the liability. In all such cases, adopting a much more cautious approach this Court invariably asked the respondent authorities to take a stand in this regard by filing a counter-affidavit and it was only in case that dues and the liability to make payments were admitted in the counter-affidavit filed on behalf of the respondent authorities that this Court proceeded on the basis that the dues were admitted. In case in the counter-affidavit the liability was disputed or denied, this Court declined to examine the petitioners claim notwithstanding the enclosures, mostly departmental documents supporting his claim as that would involve an appraisal or evidence in a case of disputed claim.

6. It is in the back ground of the aforesaid observations that this Court proposes to examine the facts and circumstances of this case.

7. The petitioner is a Government company and an undertaking of the Central Government; as its name suggests, it is engaged in the manufacture and sale of chemicals including fertilizers. Respondent N. 2 is also a company, an undertaking of the State Government; respondent No. 3 is its Managing Director.

8. According to the petitio