Anirudhan v. Government of Kerala — 1999 DIGILAW 337 (KER)

Judgment :- AR. Lakshmanan, Ag. C.J. O.P. 4579/98 was filed by the All Kerala Government Contractors Association, Trivandrum through its Secretary, G. Anirudhan. The second petitioner is the President of the Kerala Government Contractors Association, Alleppey District. The relief asked for in this Original Petition is for a mandamus directing the Government to allot sufficient funds to clear the arrears due to the contractors of the Kerala Public Works and Irrigation Departments in the budget for the year 1998-99 and to pay interest at the rate of 24% on the matured liability after the completion of one month from the date of completion of the work. 2. W.A.1747/98 was filed by All Kerala Government Contractors Association, Kannur District Unit represented by its President and by one P.V. Kunhiraman Nambiar of All Kerala Government Contractors Association, Kannur District Unit. The Writ Appeal was filed against the judgment in O.P. 15313/97 dated 4.8.98 which was filed for a mandamus commanding the respondents not to invite fresh tenders without passing the pending bills of the petitioners and to declare that they are entitled for interest at the rate of 18% per annum on the amount due to them. K.A. Abdul Gafoor, J. by his judgment dated 4.8.1998 directed the Government to see that allotment of fund for each of the work tendered is made available to the respective divisions within twelve months from the date of such tender. A further direction was also issued to the State to evolve certain procedure to see that allotment of funds to different divisions, circles and districts shall be in a uniform basis and necessary norms shall be prescribed in this regard within six months from that date. 3. W.A. Nos. I486,1321,1323 and 1327/98 were filed by the State of Kerala and the contractors respectively against the judgment in O.P. Nos. 4772, 9277, 7649 and 9276/98. By the impugned judgment in O.P. 4772/98, K. Narayana Kurup, J. directed the respondents to pay the bill amount in respect of the work executed by the petitioner and outstanding as on date as expeditiously as possible and at any rate not later than three months from the date of receipt of copy of the judgment. Likewise in O.P. 9277/ 98 (W.A. 1321/98) this Court issued certain directions regarding payment of amounts due to the contractors. Likewise in O.P. 9277/ 98 (W.A. 1321/98) this Court issued certain directions regarding payment of amounts due to the contractors. In O.P. 7649/98 which is the subject matter of W.A.1323/98 the contractors were directed to make a representation pointing out Ext. P4 judgment (W.A. 2144/97 dated 23.1.98) and directed the Government to consider the representation and pass appropriate orders within a specified time. In O.P. 9276/98 (W.A. 1327/ 98) certain directions were issued directing payment of the amounts due to the contractors in accordance with the priority and the norms prescribed. 4. W.A. Nos. 2344,2510,1217,2513,2195,2630/98 and W.A. Nos. 1025,412, 470, 713,1044 and 1486/99 were all filed by different contractors. Different Original Petitions were filed by the contractors for a mandamus directing the respondents to pay the amounts covered by the bills submitted by them and for other consequential reliefs. C.S. Rajan, J. by his judgment directed the respondents to pay the bills submitted by the Contractors in accordance with the priority. In some cases the learned judges have directed the Government to pay the bills submitted by the contractors within a stipulated time. In some cases learned judges have directed the contractors to make representation and directed the authorities also to consider the same within a stipulated time. In few cases the learned judges have recorded the submissions made by the Government Pleader on instructions that the bills would be paid to the contractors strictly in accordance with priority. 5. W.A. 39/97 was filed by the petitioners in the Original Petition against the judgment in O.P. 10671/96 dated 22.11.96. The Original Petition was disposed of by K.S. Radhakrishnan, J. In that case the complaint was that the Chief Engineer has diverted the funds from one head to another head so as to defeat the rights of the petitioners/ contractors. The learned judge has observed that in the absence of any statutory violation and in the absence of any materials to show that the Chief Engineer has acted arbitrarily, this Court is not justified in granting the relief sought for and dismissed the Original Petition. During the pendency of the Writ Appeal certain directions were issued by the Division Bench on 21.1.97 and 18.3.97. In the Writ Appeal the said judgment of the learned judge is challenged on various grounds. 6. W.A.Nos.1337, 1078 & 990/1998, W.A.Nos. During the pendency of the Writ Appeal certain directions were issued by the Division Bench on 21.1.97 and 18.3.97. In the Writ Appeal the said judgment of the learned judge is challenged on various grounds. 6. W.A.Nos.1337, 1078 & 990/1998, W.A.Nos. 1369, 992, 1240, 384, 1229, 1457, 985 & 1368/99 were filed by the State of Kerala. W.A.1337/98 was filed against the judgment in O.P. 1322/98 directing the appellants to pay the contractors the amounts covered by the final bill in respect of the work executed by them and also to pay interest on the delayed payment of the bill amount. Against the said judgment the State has preferred the appeal. W.A.1078/98 was again filed against the judgment of K. Narayana Kurup, J. in O.P. 1938/98 directing the Government to pay the amount following the rules of seniority and subject to the availability of funds, at any rate not exceeding four months from the date of receipt of copy of the judgment. WA. 990/98 was filed by the State against the similar direction as in the other cases. W.A. Nos. 1369, 992, 1240, 1368, 1229, 1457, 985/99 were filed by the State of Kerala against the judgment of C.S. Rajan, J. directing payment within three months. W.A. No. 384/99 was filed by the State against certain directions issued to the Government for allotment of funds for each of the work tendered by the State and against other consequential directions. 7. Leading argument was advanced by Mr. K.M. Joseph on behalf of the All Kerala Government Contractors Association and another. Learned counsel appearing for the petitioners, after adopting the arguments of Mr. K.M. Joseph submitted that it is arbitrary and illegal on the part of the State of Kerala in constantly resiling with impunity from the promise of there being full funds and making the contractors wait for months and years together, which position was clearly admitted from the budget speech for the year 1997-98 by the Hon'ble Finance Minister in the Assembly. It is also submitted that there is no basis or excuse for non-payment of tine amount which is beyond dispute, in time and because of the observance of the Code in its breach, public interest suffers on account of non-payment of part bills because it frequently becomes impossible to avoid break down of the work. It is also submitted that there is no basis or excuse for non-payment of tine amount which is beyond dispute, in time and because of the observance of the Code in its breach, public interest suffers on account of non-payment of part bills because it frequently becomes impossible to avoid break down of the work. It is also submitted that in no other State in India there is this problem. Several contractors are unable to undertake fresh works due to lack of funds and they were financially ruined due to the non-disbursement of funds and even now Government is freely calling tenders and executing fresh agreements without allocating funds and without any security that additional funds can be found by diversion or otherwise. Inspite of a detailed representation to the Government under Ext. P3 the Government did not take any positive steps to pay the amounts. In view of this several Writ Petitions were filed by the contractors complaining about the inaction on the part of the State in not settling the amounts due to the contractors even after the final bills are submitted, approved and accepted by the State. Therefore, they pray for payment of interest from the date of approval of the bill by the respective departments. Mr. K.M. Joseph invited our attention to the conditions of the agreement and also the budget speech made by the Hon'ble Finance Minister for the year 1997-98 (Ext. P2) and the representation made by the All Kerala Government Contractors Association under Ext. P3. He also invited our attention to the various articles of the Kerala Public Works Department Manual and Art.180 of the Kerala Financial Code. 8. Advancing argument on the agreement entered into between the contractor and the Government, Mr. K.M. Joseph submitted that as per the agreement which is always one sided, the contractors have to complete the works within the stipulated time and once the work is undertaken and site is handed over the contractors are entitled to get periodical part-payments during the progress of work and that the contractors have to invest lot of money to take licence, make the security deposit, purchase machinery, raw materials, department materials like cement, steel and bitumen in the absence of the State not providing it and employment of permanent staff, supervisors etc. According to Mr. According to Mr. K.M. Joseph the bill amount is actually their working capital and if the same is blocked it will affect the entire operations and great injustice will be caused to the contractors and affect public interest in as much as the work would inevitably grind to a halt. We have perused Ext. P1 specimen agreement. Conditions 1,6,7,9 and 18 are some of the important clauses to be specially noticed in the present context. The relevant clauses are extracted hereunder: " 1. The person whose tender may be accepted shall, before the date fixed for commencing the work, if so required sign an agreement and a bond, of which forms are deposited in the Executive Engineer's office and shall pay for all stamps and legal expenses incident thereto, and he shall deposit in treasury chalan a sum amounting to (5) five percent on the cost of the work undertaken by him, as security for the due performance of his contract. All damages payable by the contractor under the terms of his contract, may be deducted by the Executive Engineer from, or paid by the sale or adjustment of a sufficient part of this Security deposit or from the interest of any such Government of India security, or from any other sums due, or which may become due to him by the Government. 6. No payment shall be made for works estimated to cost not more than rupees five hundred till after the works have been completed and approved. But in the case of works estimated to cost more than rupees five hundred the contractor shall receive a monthly payment to such extent as the works may be approved and passed under a certificate by the Executive Engineer. But all such intermediate payments shall be regarded as payments on account, to be covered by the final bill for the complete work, and not as payments for work actually done and completed. The final bill shall be submitted by the contractor within one month of the completion of the work otherwise the Executive Engineer's certificate of the measurement shall be accepted as final and binding on a parties. 7. The final bill shall be submitted by the contractor within one month of the completion of the work otherwise the Executive Engineer's certificate of the measurement shall be accepted as final and binding on a parties. 7. A bill shall be submitted by the contractor each month for all work executed in the previous month in accordance with the terms of the specification, and the Executive Engineer shall take the requisite measures for having the same tested and the claim as far as admissible, adjusted, if possible, before the expiry often days from the presentation of the bill, should the contractor be unable to prepare the bill himself. The Executive Engineer shall depute a sure ordinate to measure up the work performed in the presence of the contractor whose countersignature to the measurement list will be a sufficient warrant to the Executive Engineer to prepare the bill for him from that list. 9. The bill above alluded to shall be submitted in exact accordance with the form supplied by the Executive Engineer, and the rate sat which the value of the work if calculated shall be those entered in the attached schedule or rates. To allow of a guarantee land being formed on the part of the Government, a deduction of 10% from all payments to the contractor is to be made by the Executive Engineer at the time of payment. But the amount so held as retention plus the security deposit of 5%, as per clause (1) shall not at any time exceed ten per cent of the contract amount. This retention amount will not be released until the work is completed to the satisfaction of the and finally taken over by the Department. Till men the responsibility for the structure will rest with the contractor. 18. The contractor shall supply at his own cost all plant, tools implements ladders, cordage, tackle and scaffolding required for the proper execution of his work together with the carriage, for the same to and from the work. He shall also supply without charge the requisite agency with the necessary means to set out works, and to count, weigh, and assist in the measurement of his work or materials. He shall also supply without charge the requisite agency with the necessary means to set out works, and to count, weigh, and assist in the measurement of his work or materials. He shall also provide all necessary fencing and lights and take other precautions required to protect the public from accident and shall be bound to bear the expenses on defence on any action or law proceedings that may be brought by any person for injury sustained owing to the neglect of the above precautions to and pay any damages and cost which may be awarded in consequence." 9. It is contended that contractors are entitled to get part bills during the progress of work and final bill immediately after the completion of work as per the respective articles in the Kerala Financial Code and Kerala P. W.D. Manual and as per agreement. The contractors, according to the counsel are undertaking the contract work on the legitimate expectation and promise that payments will be made at any rate immediately after their completion of the work. But the legitimate expectation of the contractors have now turned to be otherwise and that the contractors are also constrained to complete the work within the stipulated time by investing the entire funds raised by them which is mainly on the strength of borrowings from outside by paying exorbitant rate of interest. Our attention was drawn to Art.180 of the Kerala Financial Code, which clearly provides that: "Except in accordance with the provisions of Arts.184 and 185 no government servant may enter into a contract for the execution of a work unless funds have been duly provided for it or an assurance has been received from the authority competent to provide the necessary funds that they will be allotted before the liability matures." According to Mr. Joseph legion of contracts for execution of works were entered into without properly allocating the fund and the matured liability of the Government of Kerala to the Government Contractors is more than 500 crores of rupees and no effective steps have been taken either to allocate funds or to disburse the same. In many instances work site is handed over after avoidable delay and departmental materials are not supplied as agreed and part bills are never paid in time except in the case of a few major works. In many instances work site is handed over after avoidable delay and departmental materials are not supplied as agreed and part bills are never paid in time except in the case of a few major works. Additional works and revised plans which could have been avoided had there been proper planning, are the bane of contractors. It is true that it is highly unfair. We have perused Arts.15-2.2 of the Kerala Public Works Department Manual which provided as follows: "15-2.2. Before tenders are invited for a work, there should be: a) Administrative sanction for the work b) Technical sanction for the work c) Ample provision of funds for the work in the budget. If there is only a token provision in the budget, the work shall be put to tender only if additional funds can be found by diversion or otherwise." Art.10.2.4 of the P.W.D. Manual deals with financial sanction. 10.2.4.1 provides that an estimate can become operative for execution by P.W.D. only when funds are available. Generally even when technical sanction is issued the availability of funds will be examined and the source of funds noted in the sanctions. Art.10.2.4.2 deals with usual sources of funds for execution of works. They are: "a) By specific provision for the work in the budget for the year. b) By diversion or savings in the budget allotments for other works subject to the rules regarding such diversion (see paras 82-86 of the Budget Manual) c) By obtaining a supplementary grant fertile work. d) By withdrawal of the required amount from the contingency fund with the sanction of Government to the latter regularised through supplementary grant. e) By funds being placed at the disposal of the P.W.D. for specific work from out budget allotments of another departments. f) By obtaining deposits from the parties or authorities on whose behalf the work is to be done by the P.W.D. (Applicable to deposit works)." It is submitted that because of the observances of the Code in its breach, public interest suffers on account of non-payment of part bills, because it frequently becomes impossible for the contractors to avoid break down of the work. Our attention was also drawn to the budget speech made by the Hon'ble Finance Minister on 14.3.97. Paragraph 47 of the budget speech is relevant for the present purpose, which reads thus: "47. Our attention was also drawn to the budget speech made by the Hon'ble Finance Minister on 14.3.97. Paragraph 47 of the budget speech is relevant for the present purpose, which reads thus: "47. It has been a long standing complaint that the contractors' bills for works undertaken by the Public Works Department are not settled in time. The reason is that this department has undertaken too many works in the past without sufficient budget allocation. However, since it is the responsibility of mis government to pay for work done and considering that the problem has become acute I allocated Rs. 41 crores over and above the normal budget allocation, in the year 1996-97. Recent estimates available show that bills to the tune of Rs. 189.03 crores are pending payment as on S1.12.1996. Out of this, Rs.51.53 crores relate to the period upto 31.3.96. A portion of these bills would have been paid in the first three months of 19 97. For clearing the rest of the bills, I am allocating Rs. 41 crores additionally in the Budget of 1997-98." Our attention was also drawn to Ext. P3 for which no disposal was given by the State which compelled the contractors to file the above Writ Petition through their association. 10. An affidavit was filed by the Secretary (Finance resources), Finance Department. After referring to the several other identical writ petitions filed by the individual contractors seeking directions to the State to make payments towards the final bills submitted by them it is submitted that though financial position of the State is very stringent with great difficulties the Government of Kerala are making arrangements to pay off the bills of the contractors who have filed Original Petitions and Writ Appeals as on 23.6.1999. However it is submitted that in the light of the difficulties confronting the State to augment funds which have been narrated in detail in the additional statement dated 22.6.99 filed on behalf of the State by the Secretary, Finance Resources the Government have also undertook to make such payments within the time that will be granted by this Court. Government in the said affidavit dated 12.7.1999 prayed for a minimum period of four months for making such payments. However, it is submitted that in ordering payments the claims raised collectively by the contractors in the Original Petitions filed by the association/ union of contractors be excluded. Government in the said affidavit dated 12.7.1999 prayed for a minimum period of four months for making such payments. However, it is submitted that in ordering payments the claims raised collectively by the contractors in the Original Petitions filed by the association/ union of contractors be excluded. They also prayed for a further direction that in the remaining cases of the bills presented by the contractors of the P.W.D. and Irrigation Departments including the case of bills submitted by the contractors who have filed writ petitions after 23.6.1999, payments may be permitted to be made strictly according to the seniority of bills under the particular head of account concerned as has been held and directed by a Division Bench of this Court in W. A. 1314/93 and in several other judgments of this Court and depending upon the availability of funds. 11. A reply affidavit was filed on 3.4.98 by the second petitioner in O.P. 4579/98. It is highlighted that in the land of unemployment where the State by its position control the distribution of wealth in the largess including works contract, the contractors have no meaningful choices and in substance and reality constrained to sign on the dotted line. It is said that the Government is duty bound under the agreement conditions and the Finance Code and P.W.D. Manual to honour promptly and in time the part bills. It is submitted that department has completely stopped honouring the part bills and even the final bills are not paid for months and years together. 12. A further reply affidavit was filed with annexures Exts. P4 and P5 which are the true copies of the news items in Indian Express dated 14.7.98 and copy of Government Order dated 16.4.98 along with the letter of credit. 13. The Government also filed additional statement on behalf of respondents 1 to 3 in O.P. 4579/98. After referring to the substantive plea raised by the petitioners that the Government has not provided the required funds to pay off the arrears of contractors in the budget. It is submitted that there has been no specific system of setting apart provision specifically for paying off arrears of contractors in any year in the budget. After referring to the substantive plea raised by the petitioners that the Government has not provided the required funds to pay off the arrears of contractors in the budget. It is submitted that there has been no specific system of setting apart provision specifically for paying off arrears of contractors in any year in the budget. It is stated that under each head of account payment is being made in the order of seniority of the bill and according to them this procedure was laid down in accordance with the directions of this Court in the judgment in W.A.I 314/93. It is submitted that every year the entire budget allocation for works under P.W.D. and Irrigation actually goes to meet the arrears first. Wherever there is some provision in the head of account, there will be a corresponding reduction of arrears and only if there is a balance in the head of account it will be spent for works taken up in the current year. The only case where there is no reduction in arrears whatsoever is under head of accounts where there is no provision at all. 14. The trend for allocation of work is shown in page 2 of the additional statement, which is reproduced hereunder: (Rs. in crores) 1996-67 1997-98 1998-99 Total allocation for works including, supplementary 801.50 932.85 949.50 demand the Grants It is stated that there is an increasing trend in the budgetary allocation for capital works in the past three years. This means that Government have tried to find resources, even within the difficulties experienced by it, to provide for works and in this manner pay off pending bills. Of the amounts indicated above, about 50-55 % is typically devoted for establishment costs. The rest of the amount viz., 45-50% is the provision that actually goes to pay the work bills. In the current year, viz., 1999-2000, a sum of Rs. 890.49 crores has been included in the budget of works. It is estimated that out of this, approximately Rs. 400 to Rs. 450/- crores will be the provision that will actually be used for works. In the current year, viz., 1999-2000, a sum of Rs. 890.49 crores has been included in the budget of works. It is estimated that out of this, approximately Rs. 400 to Rs. 450/- crores will be the provision that will actually be used for works. It is submitted in para 5 of the additional statement that in the meeting with of the Government and in the wake of continuing economic recession avid the financial burden imposed on account of the pay revision, it was explained that it would be extremely difficult to find additional resources for works during the current year and pay revision alone had imposed an additional burden of Rs. 1100/- crores approximately in the year 1999-2000 and after elaborate discussions, the Government had agreed to mobilise an amount of Rs. 160 crores Inspite of the fiscal strain that it was experiencing for clearing a substantial portion of the pending bills. It was also decided that approximately Rs. 60 crores would be needed for completely paying off the arrears of bills under Village Roads. It is also stated that Contractors Association had in the meetings recognised the difficulties experienced by the Government and responded positively leading to satisfactory resolution of the grievances for the present, which is denied by the Contractors Association at the time of hearing. It is also averred that the Government has, even while experiencing great financial difficulties provided substantial relief to the contractors towards the redressal of their grievances. 15. At the time of hearing, learned Advocate General filed a statement furnishing the details of case number and the details of judgment and the present outstanding, rank and head of account together with remarks. Learned Advocate General was not in a position to controvert or deny any of the legal submissions made by the counsel appearing for the contractors with reference to the provisions of the Kerala Financial Code and the articles referred to in the Kerala PWD Manual and the terms of the agreement. Learned Advocate General was not in a position to controvert or deny any of the legal submissions made by the counsel appearing for the contractors with reference to the provisions of the Kerala Financial Code and the articles referred to in the Kerala PWD Manual and the terms of the agreement. He would only submit that the Government, in view of the acute financial constraints is not in a position to pay the contractors and therefore considering the present financial position explained in the affidavit filed by the State and the particulars furnished in the additional statement dated 23.6.99 the Government must be granted four months time at least for making payments to the contractors who have filed Original Petitions and Writ Appeals on or before 23.6.99 against the final bill submitted by them excluding the Original Petitions tiled by the association/ union of contractors and permitting the respondents to make payments in the remaining cases strictly in accordance with the seniority of the bills under the respective head of accounts and subject to availability of funds. 16. We have carefully analysed the rival submissions made by both parties and in particular the fervent appeal made by the Advocate General to grant at least four months time to make payment to the contractors against the final bills submitted by them. We are of the opinion that the Government, in view of the stringent financial conditions, should be granted four months time for making payments of the contractors who have filed Original Petitions and appeals on or before 23.6.99 against the final bills submitted by them. 17. The grievances expressed by the Secretary and President of the Contractors Association are genuine in nature which would only enable us to decide the matter on merits of applying the articles referred to in the Kerala P.W.D. Manual, on the basis of Art.180 of the Kerala Financial Code and on the basis of the agreement entered into between parties. It is stated that the second petitioner in O.P. 4579/98 is the General Secretary of All Kerala Government Contractors Association and in Kerala as many as 1000 A Class, 3000 B Class and 6000 C Class contractors and the Original Petition is devoted to ventilate the grave public problem affecting not only the general public but also the contractors. We appreciate the sentiments and difficulties expressed by the contractors. We appreciate the sentiments and difficulties expressed by the contractors. Since the petition has been filed to ventilate the ,public grievance of the contractors in general we cannot give a general direction in the nature as asked for but can only decide the cases which are pending on our File as on 23.6.99. Therefore, we restrict the relief now granted to the contractors who have filed Original Petitions and Writ Appeals. In our opinion, the grievances expressed by the petitioners/ appellants are genuine in nature. It is not in dispute that contractors have completed the works and submitted final bills. As per the agreement contractors have to deposit 5 % of the total agreed amount of contract as security which will be released only after the defect liability period of the work. The contractors are bound to rectify any defect noted during the defect liability period fixed by the department. The agreement also provides for penalty ie., fine up to Rs. 15,000/- being levied on the contractor for a delay of 20 days in executing the agreement. Fine up to Rs. 15,000/- is also levied from the contractors for a period of the first three months delay in executing the work. Fine for the successive three months delay is up to Rs. 30,000/-. The Government also imposes heavy fine for the delay in payments to be made by the contractors to the Government. Though it is contended that the agreement is always one sided and contrary to the principles of fairness, equality and justice oriented. We are unable to countenance the said submission for the simple reason that the contractors are parties to the contract and have signed the contract with eyes wide open. As per the agreement the contractors have to complete the work within the stipulated time. Once the work is undertaken and site is handed over to the contractors they are entitled to get periodical part payments during the progress of work. It is also not in dispute that contractors have borrowed money and invested the same for taking licence, making the security deposit, purchasing machinery, raw materials, department materials like cement, steel etc. As rightly pointed out by Mr. It is also not in dispute that contractors have borrowed money and invested the same for taking licence, making the security deposit, purchasing machinery, raw materials, department materials like cement, steel etc. As rightly pointed out by Mr. Joseph that the bill amount is actually their working capital and if the same is blocked it will affect the entire operations and great injustice will be caused to the contractors and affect public interest in as much as the work would inevitably grind to a halt. As already noticed the contractors are entitled to get part bills during the progress of work and final bill immediately after the completion of work as per the respective articles in Kerala Financial Code and the Kerala P.W.D. Manual and as per the agreement. It cannot be denied that the contractors on the legitimate expectation and promise that payments will be made at any rate immediately after the completion of the work have undertaken various works given by the State. It cannot be denied that non-payment of part bills and final bills in time the contractors are being financially ruined resulting in deprivation of their livelihood and the lack of funds make them handicapped to take further works which has reached a stage of economic trap. 18. A reading of Art.180 of the Kerala Financial Code clearly provides that no Government may enter into a contract for the execution of a work unless funds have been duly provided for it or an assurance has been received from the authority competent to provide the necessary funds that they will be allotted before the liability matures. The fact remains that the above mandatory provision in Art.180 of the Kerala Financial Code has been given a go bye. Likewise Arts.15-2.2, 10.2.4.1 and 10.2.4.2 of the Kerala P.W.D. Manual provides various procedures to be followed before tenders are invited for a work. 19. It is held by decisions of Court that an executive agency must be vigorously held to the standards by which it professes its action to he judged. This principle has been accepted by the Apex Court in many cases. Having regard to the explicit terms of Art.180 of Kerala Financial Code and 15 of the Kerala P.W.D. Manual it is clear that Goverment arc duty bound to make payments to the work completed. This principle has been accepted by the Apex Court in many cases. Having regard to the explicit terms of Art.180 of Kerala Financial Code and 15 of the Kerala P.W.D. Manual it is clear that Goverment arc duty bound to make payments to the work completed. The aforesaid provision, in our opinion would unambiguously command that no work shall he tendered except with the availability of complete funds, has given rise to a promise or representation and it is on that basis alone the contractors come forward to undertake the work, plan their work programme and arrange for the employment of staff and engagement of machinery and incur large investments. Thus upon the strength of the promise and representation the contractors act or change their position by undertaking various steps as aforesaid and also claim 5% security deposit which, according to the contractors, is also made either by borrowings at high rate of interest or from diversion or from their own funds. Non-payment of the amounts due to the contractors will cause grave injustice to them. It is held that the contractors are engaged by the State on their expectation and therefore cannot be denied their legal dues. A citizen is entitled in jaw to insist that the State will go by the procedure which it has laid down. In all these cases the State has entered into a contract undertaking payment upon satisfactory completion of the work. The Government has also undertaken to pay the other amounts for the work done as per the agreement. Therefore, the Government, in our opinion cannot be permitted to violate the solemn contracts. Such a position would be contrary to the clear mandate under the Constitution for the State to act free from unfairness. We are also unable to accept the argument of the learned Advocate General that the principles of seniority has to be maintained. We are of the opinion that principles of seniority is totally irrational and opposed to the mandate under the Financial Code. P.W.D. Manual and provisions of the agreement. As already noticed, the Financial Code and the P.W.D. Manual provide for complete funding and tendering and only thereafter the work is to be called. The arrears, as pointed out by the contractors and also by the State, are accumulating only because of violation of the rules by not providing full funds as provided in the rules. As already noticed, the Financial Code and the P.W.D. Manual provide for complete funding and tendering and only thereafter the work is to be called. The arrears, as pointed out by the contractors and also by the State, are accumulating only because of violation of the rules by not providing full funds as provided in the rules. The Government has to make payments strictly in time. The figures furnished to us by the State would show that arrears have gone up steeply as is clear from the statement. The Government of Kerala are duty bound to provide funds by bringing in a supplementary budget or from the contingency fund. It is also stated that there are no arrears in respect of contractors dues in the C.P. W.D. or the railways or even in the Panchyats etc. It may be true that the contractors are aware that there will be some delay of payment in settling some cases. That does not mean that the contractors have to wait indefinitely. Likewise the head wise seniority list and payment is clearly in violation of the spirit of the directions of this court in its judgment in W. A. 1314/93. In the said judgment Jagannadha Rao (C.J.) and K. Sreedharan, J. have directed that the State of Kerala shall disburse the amounts allotted by the Government under various heads based on the seniority of the contractors, such seniority being based on the date of acceptance of the bills for the work coming under that head and as long as different contractors fall under the same head, the State shall follow the seniority of the date of acceptance of bills. The Bench also held that the same principle will be adopted in relation to disbursement of monies to contractors also. With this direction the Writ Appeal was disposed of by the said Bench. The Government also will not give any room for complaint that payments are made to some contractors out of turn when various other final bills submitted were pending with the Government for payment. It is alleged that a person who did the work much later is paid immediately and the person who did the work earlier is not paid at all. It is alleged that a person who did the work much later is paid immediately and the person who did the work earlier is not paid at all. Though total lack of bonafide and absence of earnestness in solving the problems of the contractors was highlighted, we are not inclined to go into the said question and the illustrations cited with reference to some cases, regarding the discrimination and arbitrariness as reported in the newspapers. We are of the view that irrespective of the various heads of the principle of "first done first paid" should be ensured. The other reason given by the State to justify non-payment of the monies on the ground of pay revision cannot also be accepted. The pay is paid to the Government Servant on the ground of pay revision. However payments made because of pay revision cannot be compared to the payments to be made to the contractors. It is also submitted that there is practice of departmental execution of works and in such works the payments are made without reference to seniority and immediate payment is made. Even though interest is asked for, for the delay in payment of the amounts due, we are not now awarding interest in view of the undertaking now given by the State that all the contractors who have filed writ petitions and appeals on or before 23.6.99 will be paid within four months. We therefore, direct the State of Kerala to effect payments either in one lump or in two installments. The entire amounts due to the contractors who have not been paid off the amounts due to them shall be paid within the above period. There shall not be any delay in effecting the said payment. The Government shall scrupulously follow this direction and pay the amounts to the contractors within four months from today, failing which the State shall pay interest at the rate of 18% per annum to all the contractors who are before us and that the interest is payable on the matured liability after the completion of one month's time from the date of completion of the work with reference to each contractor. The Writ Petition and the Writ Appeals filed by the State and the contractors are disposed of accordingly. No costs.