Public Works Contracts – Sub-contractor – Liability of State Where the State sanctioned special imprest funds, issued direct instructions to the sub-contractor, supervised execution, acknowledged completion of work, and admitted liability in official correspondence, the State cannot evade payment by contending that the sub-contractor must pursue remedies only against the principal contractor. (Paras 5–7, 20–22, 26–27)

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Constitution of India, 1950 – Article 226

Writ of Mandamus – Maintainability – Sub-contractor claiming payment from State – Absence of privity of contract

Writ petition by a sub-contractor is maintainable under Article 226 where the State, having directly instructed execution of works, supervised the work, acknowledged completion, and enjoyed the benefit thereof, cannot deny payment merely on the ground of absence of direct contractual relationship.
(Paras 19–20, 26–27)

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Public Works Contracts – Sub-contractor – Liability of State

Where the State sanctioned special imprest funds, issued direct instructions to the sub-contractor, supervised execution, acknowledged completion of work, and admitted liability in official correspondence, the State cannot evade payment by contending that the sub-contractor must pursue remedies only against the principal contractor.
(Paras 5–7, 20–22, 26–27)

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Termination of Main EPC Contract – Effect on Sub-contractor’s dues

Termination of the main Engineer, Procurement and Construction agreement does not absolve the State of its obligation to pay for works already completed by a sub-contractor prior to termination, especially when such completion is admitted and recommended for payment by departmental authorities even after termination.
(Paras 22, 26)

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Admissions by State – Binding effect

Official letters and minutes of meetings acknowledging execution of work, availability of funds, and recommending payment constitute admissions by the State, and denial of payment contrary thereto is arbitrary and unsustainable in law.
(Paras 21–23, 26–27)

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Arbitrariness – Article 14

Denial of payment after enjoying the benefit of completed works, despite admitted liability and availability of funds recovered from the main contractor, is arbitrary, unjust, and violative of Article 14 of the Constitution of India.
(Paras 26–27)

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Government Contracts – Unjust enrichment

The State, having derived benefit from specialised ground improvement works executed under its supervision, cannot unjustly enrich itself by withholding payment on technical pleas relating to contractual structure.
(Paras 26–27)

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Relief – Direction for payment

Where the amount payable is admitted and quantified by departmental authorities, the Court can direct payment of such amount within a stipulated period in exercise of writ jurisdiction.
(Paras 23–28)

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ANALYSIS (ISSUE-WISE)

1. Maintainability of Writ Petition

The Court examined the objection regarding absence of privity of contract and held that the writ petition is maintainable, as the petitioner executed works under direct instructions and supervision of the Water Resources Department, and the Department itself acknowledged and benefited from such works.
(Paras 19–20, 26–27)

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2. Role of Special Imprest and Direct Dealings

The sanction of special imprest funds, issuance of direct instructions to commence work, and continuous monitoring through review meetings established a direct nexus between the petitioner and the State, negating the plea that the petitioner was a mere stranger to the Department.
(Paras 5–6, 20)

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3. Effect of Termination of EPC Agreement

The Court rejected the contention that termination of the EPC agreement in 2019 extinguished liability towards the petitioner, noting that the works were completed in 2018 and that payment was recommended even after termination.
(Paras 22, 26)

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4. Evidentiary Value of Official Correspondence

The letter dated 29.12.2020 and the Minutes of Meetings were treated as clear admissions acknowledging the petitioner’s role, completion of work, availability of funds, and recommended payment of ₹45.90 crores.
(Paras 21–23)

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5. Arbitrariness and Constitutional Violation

The Court held that withholding payment after enjoying the benefit of completed works, despite admitted liability and recovery of substantial sums from the main contractor, amounted to arbitrariness and was unsustainable under Article 14.
(Paras 26–27)

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6. Entitlement and Relief

Given that the payable amount stood admitted and quantified, the Court exercised writ jurisdiction to direct payment of ₹45.90 crores within a specified period.
(Para 28)

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RATIO DECIDENDI

1. The State cannot deny payment to a sub-contractor on the ground of lack of privity when it directly instructed, supervised, acknowledged, and benefited from the work executed.

2. Termination of the principal contract does not extinguish the State’s liability to pay for works already completed and admitted prior to such termination.

3. Official acknowledgements and recommendations by departmental authorities constitute binding admissions, and denial of payment contrary thereto is arbitrary and violative of Article 14.

4. Enjoyment of the benefit of completed public works without payment amounts to unjust enrichment and is impermissible in law.

5. Where liability is admitted and quantified, a writ of mandamus directing payment is justified.