The Allahabad High Court has directed the Nagar Panchayat, Chandauli, to clear admitted contractual dues owed to M/s Vikas Constructions, along with simple interest at 6% per annum. A Division Bench of Justice J.J. Munir and Justice Indrajeet Shukla held that withholding admitted payments for an uncertain period amounts to arbitrary action.
Background
The contractor approached the High Court seeking payment for construction work carried out for Nagar Panchayat, Chandauli, during the financial years 2018-19 and 2021-22. According to the petition, bills amounting to ₹41,00,127 were raised, against which ₹12,56,684 had been paid, leaving ₹28,43,443 outstanding.
The contractor had sought payment through an application dated July 14, 2025, followed by reminders dated August 29, 2025, and May 25, 2026. However, the outstanding amount remained unpaid.
During the proceedings, the Court directed the Executive Officer to clarify through a personal affidavit whether the claimed dues were admitted by the Nagar Panchayat.
The affidavit disclosed that ₹7,92,580 remained unpaid against the first work order. The authorities also acknowledged a further amount of ₹6,31,890 relating to another work order, although they maintained that the contractor had not submitted a properly completed and verified bill for that amount.
The Bench observed that the completion of the work and its measurements had not been disputed. It distinguished between admitted contractual dues and claims requiring detailed examination of evidence.
Referring to the Supreme Court's decision in M/s Utkal Highways Engineer and Contractors v. Chief General Manager, the Court reiterated that monetary claims against the State can be examined under Article 226 of the Constitution in appropriate cases.
The Bench observed:
"Non-payment of even the admitted dues/contractual dues for an uncertain period amount to arbitrary in action and cannot be countenanced in law."
The Court also relied on the principle that a person deprived of money legitimately due to them may be entitled to compensation through interest for the period of deprivation.
Allowing the writ petition, the Bench directed the authorities to pay ₹7,92,580 admitted against the first work order. For the remaining ₹6,31,890, the contractor was directed to submit a fresh bill and complete the required formalities, including verification and certification.
The Court ordered the contractor to complete these formalities within two weeks. It further directed that the entire admitted dues be paid within the following four weeks.
The Bench held:
"The petitioner shall also be entitled to simple interest at the rate of 6% per annum upon the entire admitted dues from the date same fall due till the actual realization/payment is made."
The writ petition was allowed, with no order as to costs.
Case Details
Case Title: M/s Vikas Constructions v. State of U.P. and 3 Others
Case Number: Writ-C No. 37270 of 2026
Bench: Justice J.J. Munir and Justice Indrajeet Shukla
Decision Date: October 8, 2026
