M/S Surya Construction Company vs. State Of U.P. And 4 Others

Held

The Court found substance in the Petitioner's submissions. Since the Respondent did not dispute the amount due or its liability to pay, the Petitioner was deemed entitled to reasonable interest for the delay. The Court directed the Respondent to make the payment of the balance amount within two months, as stated by their counsel. Furthermore, the Petitioner was held to be entitled to interest on the balance amount at the rate of 8% per annum from the date the amount fell due until the date of actual payment. The Court did not explicitly address the issue of penalties from tax authorities, focusing instead on the payment of the principal amount and interest.

Facts

M/s Surya Construction Company (Petitioner) filed a writ petition seeking a mandamus to compel the State of U.P. and its Corporation (Respondent) to pay outstanding amounts for maintenance work done under various work orders, along with 18% interest. The Petitioner had raised invoices which were accepted and uploaded for payment. The Respondent deducted TDS and GST but failed to provide certificates, potentially exposing the Petitioner to penalty proceedings. The Respondent admitted the invoices and amounts due, stating that partial payments had been made (Rs. 23,38,116, Rs. 2,09,209, and Rs. 18,77,463) and the balance would be paid when funds were available. The Respondent explained that the delay was due to the work falling under a second payment priority category, promising payment within two months. The Petitioner argued entitlement to interest due to the undisputed liability and delay, and the threat of penalties from tax authorities.

Key Issues

1. Whether the Petitioner is entitled to interest on the delayed payment of undisputed amounts due for maintenance work, and if so, at what rate? (Question of law) Petitioner's Arguments: - The Respondent does not dispute the amount due or the fact that it is long overdue. - The Petitioner is entitled to interest for the period of delay. - The Petitioner is facing threats of penalty and statutory interest from tax authorities due to the Respondent's failure to provide TDS and GST certificates, hindering GST return filing and other compliances. Respondent's Arguments: - The Respondent admitted the outstanding amounts and stated that payments would be made as soon as funds were available, estimating payment within two months. - The delay was attributed to the categorization of the work under a lower payment priority. - The Respondent did not dispute the Petitioner's claim for interest, but the Court imposed a specific rate.