Ranchi, July 15: The Jharkhand High Court has ruled that withholding payments to contractors after the completion of work is legally untenable, directing the Jharkhand Urban Infrastructure Development Company Limited (JUIDCO) to clear all outstanding dues of M/s Eagle Infra India Limited, the contractor for the Harmu River Rejuvenation Project, within 60 days along with 10 per cent annual interest.
Hearing a petition filed by M/s Eagle Infra India Limited, Justice Anand Sen observed that once a government agency has acknowledged the completion of work and accepted the bank guarantee, it cannot create artificial disputes to delay payments.
“Withholding payment to contractors after completion of the work is not justified,” Justice Sen observed.
The court noted that the contract for the Harmu River Rejuvenation Project was awarded to the company in 2015. Construction of the project was completed on October 31, 2018, following which the contractor carried out Operation and Maintenance (O&M) work for five years until October 31, 2023.
However, despite completion of both the construction and the mandatory O&M period, the contractor’s final Running Account (RA) bill, O&M payments, dues for additional work and release of bank guarantees remained pending.
“If the government agency itself has acknowledged completion of the work and accepted the bank guarantee, creating artificial disputes to delay payment is not acceptable,” the court said.
During the proceedings, the High Court found that JUIDCO had failed to take over the project after the expiry of the five-year O&M period, compelling the contractor to continue operating and maintaining the project for an additional 16 months beyond October 31, 2023.
Recognising this delay, the court held that the contractor is entitled to payment for the extended maintenance period as well.
“The contractor is entitled to payment for the additional 16-month Operation and Maintenance period as the project was not taken over on time by the agency,” Justice Sen observed.
The court further ruled that there was no legal justification for withholding the contractor’s final bills after the work had been completed and accepted by the agency.
“Since JUIDCO itself has accepted the completion of the work and the expiry of the five-year Operation and Maintenance (O&M) period, there is no legal basis for withholding the final RA bill amount and other outstanding dues,” the court said.
In its final order, the High Court directed JUIDCO to release all pending payments to M/s Eagle Infra India Limited within 60 days and pay 10 per cent annual interest on the outstanding amount, bringing relief to the contractor in the long-pending payment dispute related to the Harmu River Rejuvenation Project.
