Madhya Pradesh High Court Directs PWD to Decide Contractor’s Dues Representation and Pay Admitted Amounts with Interest

Madhya Pradesh High Court has issued a significant order in a writ petition concerning the release of outstanding contractual dues, refund of deductions, and application of revised GST rates for works executed by a contractor for the Government Medical College & Hospital, Shahdol. The petitioner, having completed the contractual works to the satisfaction of the authorities, sought mandamus for immediate disbursement of admitted dues, refund of amounts deducted towards EPF/ESIC, and revision of GST rates in accordance with statutory notifications and departmental orders.

The petitioner contended that despite statutory exemption from EPF/ESIC contributions—since only eight workers were engaged, below the threshold of twenty required under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952—deductions at 18.11% were made from its bills. This issue was adjudicated in the petitioner’s favour by order dated 19.10.2023. Additionally, the petitioner argued that the GST rate applicable to works contract services had been revised from 12% to 18% by Central Government Notification No. 11/2017 dated 13.07.2022, which was adopted by the Public Works Department on 31.10.2022. Internal departmental communications acknowledged the petitioner’s entitlement to both the refund of EPF/ESIC deductions and payment at the revised GST rate. Despite budgetary allotment being sanctioned and released, the admitted dues remained unpaid, prompting the present petition.

The Court noted that the petitioner had made several representations to the authorities, the latest being on 03.04.2025, but no action was taken. The respondent State, through counsel, raised no objection to the limited prayer for consideration of the representation. In light of this, the Court directed the Chief Engineer, Public Works Department, Rewa Zone, to consider the petitioner’s representation (Annexure P/34) in light of the relevant documents (Annexures P/22, P/24, and P/30) and to pass a self-contained, speaking order within 90 days from receipt of the certified copy of the order.

The Court further directed that if the petitioner is found entitled to any amount, the same shall be paid along with interest at 6% per annum, in accordance with the Supreme Court’s decision in Union of India vs Willowood Chemicals (P) Ltd., from the date of entitlement until actual payment. The Court clarified that it had not expressed any opinion on the merits of the case and disposed of the petition accordingly, with no order as to costs.

This order underscores the obligation of government authorities to process and pay admitted contractual dues promptly, and to act on representations within a reasonable timeframe, ensuring compliance with statutory and contractual provisions.