AI Overview...
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Lack of Funds Leading to Non-Payment - Several sources highlight that the government often cites lack of funds as the reason for not paying contractors after work completion, resulting in financial hardship and even ruin for contractors. For example, sources Anirudhan VS Government of Kerala - Kerala, State of Kerala VS G Anirudhan And Othres - Kerala, and STATE OF KERALA vs P EDWARD JOHN Advocate - RANJITH VARGHESE, ,RANJITH VARGHESE,RAHUL VARGHESE,SANTHA VARGHESE,K L VARGHESE (SR - Kerala emphasize that despite work being completed, payments are delayed or withheld due to insufficient funds, with courts sometimes intervening to enforce timely payments.
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Legal and Contractual Framework - The Kerala Financial Code and PWD Manual establish that payments should be made promptly once work is completed and verified. Courts have upheld contractors' rights to timely payment, including interest on delayed payments, as seen in STATE OF KERALA vs P EDWARD JOHN Advocate - RANJITH VARGHESE, ,RANJITH VARGHESE,RAHUL VARGHESE,SANTHA VARGHESE,K L VARGHESE (SR - Kerala and P. T. Thomas S/o Thomas VS State of Kerala - Kerala. The law also recognizes that delays caused by government delays or lack of funds do not negate the contractor’s right to compensation.
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Government’s Justifications and Contractors’ Remedies - The government often defends withholding payments citing budget constraints or procedural issues. However, courts have sometimes ruled that such reasons do not justify non-payment, especially when contractual obligations and statutory provisions mandate timely settlement. Contractors have sought remedies through writ petitions and suits, asserting their right to immediate payment and interest, as documented in Anirudhan VS Government of Kerala - Kerala, State of Kerala VS G Anirudhan And Othres - Kerala, and State of Kerala VS Edward John - Kerala.
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Interest on Delayed Payments - Courts have consistently held that contractors are entitled to interest on delayed payments, emphasizing the importance of timely disbursement for contractors’ financial stability (P. T. Thomas S/o Thomas VS State of Kerala - Kerala, STATE OF KERALA vs P EDWARD JOHN Advocate - RANJITH VARGHESE, ,RANJITH VARGHESE,RAHUL VARGHESE,SANTHA VARGHESE,K L VARGHESE (SR - Kerala).
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Procedural and Administrative Delays - Internal departmental delays and procedural lapses are also identified as factors contributing to payment delays, but these do not absolve the government of its obligation to pay contractors promptly (M/S.CRESCENT CONSTRUCTION COMPANY Vs STATE OF KERALA - Kerala).
Analysis and Conclusion:
The prevailing legal and contractual stance is that the government is obligated to pay contractors promptly upon completion of work, regardless of budget constraints, and delays are subject to judicial scrutiny. Contractors are entitled to interest on delayed payments, and courts have often directed the government to disburse dues with interest, emphasizing the importance of honoring contractual and statutory obligations to prevent financial hardship for contractors.
Search Results for "Not Paying the Contractor for Work Done by the State Due to Lack of Funds"
1999 0 Supreme(Ker) 272 • India - Kerala
A.R.LAKSHMANAN, S.SANKARASUBBAN
time from the date of completion of the work with reference to each contractor. ... the Government to allot sufficient funds to clear arrears due to contractors of the Kerala Public Works and Irrigation Departments ... with reference to each contractor. ... Several contractors are unable to undertake fresh works due to lack of funds and they were financially ruined due to the non-disbursement of #....
2000 0 Supreme(Ker) 478 • India - Kerala
S.SANKARASUBBAN, A.LEKSHMIKUTTY
approve this argument - In case where State does not contest or admit claims made by plaintiff Civil Court can immediately pass ... regarding awarding of contracts payment of amounts etc - So also Financial Code gives details of allotment of money to each contract work ... decree on basis of admission made by State and in case only portion of claim is admitted for that portion an interim decree can be ... But the Government is not paying the amount on the pretext that there is #HL_STAR....
2000 0 Supreme(Ker) 570 • India - Kerala
S.SANKARASUBBAN, A.LEKSHMIKUTTY
They completed the works but were not paid the amounts due to them as per the final bills, with the Government citing lack of funds ... Contractors - Public Works Department - Kerala Financial Code, Kerala P.W.D. ... of mandamus, and whether the contractors have an efficacious alternate remedy. ... But the Government is not paying the amount on the pretext that there is lack of funds. ... 3. ... But due#H....
2015 Supreme(Online)(KER) 46582 • India - High Court of Kerala
P.N.RAVINDRAN, ANIL K. NARENDRAN, JJ
Fact of the Case: The respondent, a PWD contractor, completed a road improvement project but faced delayed payments ... Issues: Whether the respondent is entitled to interest on delayed payments for completed work, despite the defendants' claims ... Ratio Decidendi: The court established that statutory and contractual obligations necessitate timely payments to contractors ... A Government servant who starts any such work without a written order from a higher authority and a Government servant who issues a written ord....
2017 0 Supreme(AP) 38 • India - Andhra Pradesh
SANJAY KUMAR, ANIS
Under Clause 61, if the Zonal Manager is of the opinion that the contractor neglected or failed to proceed with the work with due diligence in terms of the scheduled rate of progress or committed default in any manner, he is empowered to give notice in writing to the contractor requiring that the work ... He would point out that under Clause 60, the Zonal Manager of the APIIC is required to form an opinion that the contractor was delaying commencement or rate of progress of the #HL_STA....
2004 0 Supreme(Mad) 1322 • India - Madras
K.P.SIVASUBRAMANIAM
Government Contract-Tender-Refusal of tender schedules to the petitioner, registered as class I contractor-Direction by writ court ... Even though there is a general instruction to the effect that any contractor, if he chooses to receive the tender document by post or courier, that also should be complied with subject to the contractor making the additional payment, as required, the same state of affairs continue. ... It is now represented that the entire work has been completed and only the payment to ....
2016 Supreme(Online)(KER) 22083 • India - High Court of Kerala
ALEXANDER THOMAS, J
Fact of the Case: The petitioner, a contractor for a public works project, completed his work but faced delayed payment ... that internal departmental delays should not affect the contractor's right to timely payment. ... Whether the petitioner is entitled to immediate payment of dues and interest on delayed payments for the completed construction work ... Therefore, it is urged that the above said action of the respondents in not paying the bill amounts due to the ....
1989 0 Supreme(AP) 149 • India - Andhra Pradesh
B.P.JEEVAN REDDY, V.NEELADRI RAO
ARBITRATION ACT - Sec 20 CONTRACT ACT, Sec73 - CIVIL PROCEDURE CODE, Sec 34 - Arbitrator not required by Court or by parties to deal ... with each claim of party separately - Consolidated award passed by arbitrator - Not illegal - Arbitrator cannot pass award relating ... opinion on each claim, or issue, independently Unless the reference to arbitration specifically so requires, the arbitrator is not ... By not paying the said amount at proper time, the Government has deprived the contractor#H....
2024 0 Supreme(Ker) 436 • India - Kerala
C. PRATHEEP KUMAR
Interest - PWD Contractor Dispute - Interest Act, 1978, Section 3(1) - Anirudhan vs. ... Dead) through LRs. and Others, 2021 KHC 6407 Fact of the Case: The appellant, a PWD contractor ... , completed a work for the respondents and demanded interest for delayed payment. ... I do not find any ground for not following the above decision in the present case also and absolutely no valid explanation is offered by the respondents for the delay in paying the bill amount. ... In the decision in....
2015 0 Supreme(Ker) 1380 • India - Kerala
P.N.RAVINDRAN, ANIL K.NARENDRAN
Fact of the Case: The respondent, a PWD contractor, filed a suit for realisation of a sum due to him as per the statement ... The appellants admitted the contract work but contended that payment was made based on strict seniority and availability of funds ... Act, 1978] - The court discussed the provisions of the Kerala Financial Code, PWD Manual, and the contract for execution of the work ... A Government servant who starts any such work without a written order from a higher authori....
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