The judgment emphasizes the legal entitlement of contractors for timely payments and the obligation of the government to provide funds for the execution of work.

Anil K. Narendran, J.

The petitioner is a Contractor, who had undertaken various construction works for the Public Works Department and as evident from Ext.P3 non-payment certificate issued by the 4th respondent dated 20.7.2015, a total amount of 12,14,155/- is pending payment for want of letter of credit.

2. While so, the Public Works Department invited tender for execution of Pre-monsoon work, 2015 for rectification of water accumulated reaches and repairs to various roads under Roads Section, Tirur. As evident from Ext.P1 selection notice, the tender submitted by the petitioner was accepted at 27.66% below the estimate rate and the petitioner was asked to produce bank guarantee for security deposit of 34,700/- as per Ext.P6 Government order dated 5.1.2015, out of which 50% of the security deposit and performance guarantee of 2,05,100/- should be in the form of Treasury Deposit for the fulfilment of the contract for which necessary declaration in the form of bank guarantee from Nationalised/Scheduled Bank for a period of 18 months should be produced. It is relying Ext.P3 non-payment certificate, the petitioner is contending that, when a total sum of 12,14,155/- is pending payment, the 2nd respondent has absolutely no justification in insisting the petitioner to produce security deposit as well as performance guarantee, without adjusting the amount covered by Ext.P3.

3. Ext.P4 Circular issued by the Government dated 7.3.2003 deals with adjustment of amounts due to the Contractors under completed works towards security deposit for new contracts being awarded. A reading of Ext.P4 Circular would show that the said circular was issued pursuant to the judgment of this Court dated 20.1.2003 in O.P.No.1943/2003.

4. On 22.7.2015, the petitioner made Ext.P2 request before the 2nd respondent to adjust the security deposit and performance guarantee referred to in Ext.P1 from the pending payment covered by Ext.P3 non-payment certificate. But the said request was turned down by Ext.P5 communication dated 22.7.2015, relying on Ext.P6 Government Order dated 5.1.2015, which provides that 50% of the performance guarantee will be in the form of Treasury Deposit and rest in the form of Bank guarantee or any other form prescribed in the revised PWD Manual.

5. It was in such circumstances, the petitioner has approached this Court in this Writ Petition seeking a writ of mandamus commanding the respondents to pay immediately the amount mentioned in Ext.P3 non-payment certificate with 18% interest. The petitioner has also sought for a writ of mandamus commanding the respondents to permit him to enter into the agreement for execution of the work awarded under Ext.P1 by adjusting the necessary amount as mentioned in Ext.P3 towards security deposit and performance guarantee.

6. I heard arguments of the learned counsel for the petitioner and the learned Government Pleader for the respondents.

7. The fact that a sum of 12,14,155/- is pending payment to the petitioner for want of letter of credit, in respect of the works already undertaken by him, which is evident from Ext.P3 non-payment certificate issued by the 4th respondent, is not in dispute. By Ext.P1, the petitioner was asked to furnish security deposit of 34,700/- and performance guarantee of 2,05,100/- in the form of Treasury Deposit for fulfilment of the contract for which necessary declaration in the form of Bank guarantee from a Nationalised/scheduled Bank for a validity of 18 months should be produced. On receipt of Ext.P1, the petitioner submitted Ext.P2 request before the 2nd respondent to adjust the pending payment covered by Ext.P3 non-payment certificate towards performance guarantee and security deposit to be deposited in terms of Ext.P1. But the said request was turned down by the 2nd respondent vide Ext.P5 communication, relying on Ext.P6 Government order.

8. It is a fact that, going by Ext.P6 Government order, at least 50% of the security deposit will be in the form of a Treasury dep