Contractors Not Responsible for Verifying Administrative Approvals Before Commencing Work

In a recent judgement, the Hon’ble High Court of Jammu and Kashmir in the case of M/S Cube Construction Engineering v UT of J&K & Ors., (WP(C) No. 1962/2022), dated August 5, 2024, underscored that contractors are not responsible for verifying whether administrative approvals, technical sanctions, and other formalities are in place before commencing work. The Court emphasized that it is the administration’s duty to justify the execution of work if it claims that necessary approvals and sanctions were missing.

The petitioner, a partnership firm, had been awarded a tender for the construction and maintenance of roads. After successfully completing the project and additional work, amounting to Rs. 13.90 lakhs, the petitioner raised a final bill, which was approved by the respondents. Despite the issuance of a completion certificate and repeated follow-ups by the petitioner, the petitioner did not receive payment for additional work, prompting the petition.

The primary contention was whether the absence of formal administrative approval for the additional work justified the withholding of payment by the respondents.

Justice Sekhri, examining the arguments, referenced its earlier judgment in Abdul Rashid Malik v. Union Territory of J&K, (WP(C) No. 873/2021) dated May 7, 2022, reinforcing that contractors are not responsible for ensuring administrative approvals before executing work. The responsibility lies with the administration to explain how work was completed without necessary approvals, if such a claim is made. The Court stated that contractors undertake the work under the pretense that it is authorized by the respondent after obtaining the requisite approvals. Additionally, the Hon’ble Supreme Court’s decision in M/s Surya Construction v. The State of UP (Civil Appeal No. 2610/2010), dated May 2, 2010, was cited to highlight that the state must act justly and fairly in its contractual obligations, which are linked to constitutional duties.

The Court deemed that the withholding of the payment was arbitrary and unreasonable, as the petitioner had completed the work satisfactorily and within the stipulated timeline. Further, the petitioner was also issued a completion certificate from the executive engineer. The Court accordingly directed the respondents to release the outstanding amount, along with interest.