The state or a public authority cannot withhold payment of legitimate dues to a contractor for successfully completed works due to inter-departmental funding disputes or shifting of liability.

JUDGMENT

[WP(C) Nos.29449/2025, 29456/2025, 29525/2025, 30495/2025, 32174/2025]

In all these cases, the petitioners are the contractors, who had undertaken various works under the scheme substantially funded by the NABARD. Most of the petitioners have completed the work in the year 2022 and in the case of certain petitioners work was completed in 2024. As per the scheme of the work, 85% of the total amount would be provided by the NABARD and the remaining 15% will have to be released by the State Government as its share. It was in those understanding, the administrative sanction was granted, the tenders were invited and the works were awarded to the respective petitioners in these cases. In all the cases, the petitioners have received the amounts equivalent to 85% payable by the NABARD and the grievance of the petitioners is with respect to the non-receipt of the amount of 15% from the State’s share. These writ petitions were submitted in such circumstances seeking a direction to the respondents to release the said amount.

2. A counter affidavit was submitted on behalf of the Kerala Water Authority stating that, the State share payable by the Government has not been released to them. It is also pointed out that, even though certain amounts were sanctioned in favour of the Kerala Water Authority, the same were diverted for settling another liability of the Kerala Water Authority towards the Kerala State Electricity Board Ltd.

3. In response to averments in the writ petition and also in respect of the averments made in the counter affidavit filed by the Kerala Water Authority, a detailed counter affidavit has been filed by the Government in W.P(C) No.30495/2025. In the said counter affidavit, the details of the amounts released to the Kerala Water Authority and the circumstances under which the diversion alleged by the Kerala Water Authority were made, are explained. It is specifically pointed out therein that, the diversion was only for the purpose of settling the liabilities of the Kerala Water Authority itself, towards the KSEB Ltd and therefore, in effect all those amounts were released to the benefit of Kerala Water Authority itself. As regards the contention in respect of the non-payment of State share is concerned, the specific case advanced by the State Government is that, the Government has already issued Circulars requiring the Kerala Water Authority to pay the amounts under the State share in respect of the contracts referred to above, from the own funds of the Water Authority. It is discernible from the records that, even though the Kerala Water Authority approached the Government for exempting the Kerala Water Authority from such obligation, evidently, the same has not been granted. Thus, the position which exists as of now, as revealed from the records is to the effect that, despite the fact that, amounts towards 15% of the total contract amount is due to the petitioners, the same has not been released to them. The Government as well as the Kerala Water Authority are attempting to shift their burden against each other in respect of the liability to pay the said amounts.

4. As far as the petitioners are concerned, they have entered into contracts with the Kerala Water Authority and in tune with the terms and conditions contained therein, they have completed the work to the satisfaction of the Water Authority. Admittedly, the amounts claimed by the petitioners are receivable by them, for the work they have carried out and there is not dispute with respect to the same. The fact that there are some disputes between the Kerala Water Authority and the Government with regard to the liability to pay the amounts, by itself cannot be