Admin Must Justify Execution Of Work Contract Without Necessary Sanction, Contractor Not Responsible For Verifying Approval: J&K High Court

A bench of Justice Rajesh Sekhri underscored that the onus lies squarely on the administration to explain how the work was executed in the absence of necessary approvals and sanctions if it so alleges.

These observations came in response to a petition filed by M/S Cube Construction Engineering against the Union Territory of Jammu & Kashmir. The petitioner, a partnership firm, was awarded a contract for constructing and maintaining a road. The petitioner completed the road project and raised a final bill of ₹13.90 lakhs for additional work executed beyond the initially sanctioned scope. Despite completing the work satisfactorily and within the prescribed timeline, the petitioner did not receive payment for the additional work, leading to the filing of the petition.

The petitioner argued that all work, including the additional tasks, was completed to the satisfaction of the respondents. The petitioner's counsel also highlighted that the respondents had admitted the completion and quality of the work but withheld the payment, citing a lack of formal administrative approval for the additional work.

On the other hand, the respondents contended that the petitioner carried out the excess work on its own initiative without receiving any formal written order or administrative approval from the competent authority. They maintained that although the work was completed, the payment could not be processed due to internal approval processes that were not completed at the time.

Justice Sekhri scrutinized the arguments from both sides and drew on the precedent set by the High Court in Abdul Rashid Malik v. Union Territory of J&K & Ors to reaffirm that it is not the contractor's duty to ensure that the necessary administrative approvals and sanctions are in place before executing any work. Instead, it is the responsibility of the administration to justify how the work was carried out without these formalities if it claims such.

The Court also referenced the Supreme Court's judgment in M/s Surya Construction v. The State of UP, emphasizing that the State, while entering into contracts with private entities, must act justly, fairly, and reasonably, and its contractual obligations are intertwined with constitutional duties.

The Court noted that the respondents had not disputed the execution of the additional work or the petitioner's entitlement to the payment but relied solely on the absence of administrative approval to withhold the funds.

“In the circumstances, respondents cannot escape the liability to make the balance payment for the work, which is admitted to have been executed by the petitioner firm in the guise of the Administrative approval”, the court remarked.

In light of these considerations, the court directed the respondents to release the outstanding payment of ₹13.90 lakhs, along with interest at the rate of 6% per annum, within six weeks.

Case Title: M/S Cube Construction Engineering Vs UT of J&K

Citation: 2024 LiveLaw (JKL) 241

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