Unpaid sub-contractor beaten by labourers

Chain of events

The client does not pay the main contractor, because the consultant has not submitted the bill report. The contractor does not pay the sub-contractor. The sub-contractor does not pay the labourers for seven months. The labourers beat Mr. A. The consultant says the work is defective; the contractor says it was never told about this on site, and alleges that the consultant wants a bribe.

Contract law

• Each contract binds only its own parties (privity): client-contractor, contractor-sub-contractor, sub-contractor-labourers. The sub-contractor has no direct claim against the client.
• The client must pay the contractor on certified bills within the time stated in the contract. Delay by the consultant in certifying is not the contractor's fault; if the work conformed, the non-payment is a breach, and the contractor can claim interest, an extension of time and, finally, termination.
• If the work really is defective, the consultant must tell the contractor in writing (notice of defects, rejection and rectification) and certify the defect-free part. Not informing the contractor on site is a procedural failure by the consultant. The contractor has a duty to correct defects.
• The contractor remains responsible to the client for the sub-contractor's work, and under the sub-contract it must pay the sub-contractor for work done, unless a valid back-to-back clause applies or the work is defective.
• The labourers' wages are a legal right under the Labour Act and cannot be withheld; the employer (the sub-contractor, and the contractor as principal employer) is liable for them.

Tort, negligence and criminal liability

• Consultant: owes a duty of care to certify fairly and promptly. Delaying payment without a written reason, or being negligent in inspection, is professional negligence. Asking for covert money is corruption: an offence under the Prevention of Corruption Act 2059 (a complaint can go to the CIAA) and a gross breach of the Nepal Engineering Council code. This must be proved, not assumed.
• Contractor: if the work is defective, it is in breach and negligent; if it is not, it should have insisted on its rights through the dispute clause. Failure to pay the sub-contractor is a breach of contract.
• Labourers: the assault is a criminal offence (hurt/battery under the Muluki Criminal Code 2074). Their grievance is genuine, but the act is not justified. Mr. A is the victim and can file a criminal case and claim compensation.
• Sub-contractor Mr. A: is liable to pay the labourers even when he is not paid himself; he should have used his legal remedies.

Judgement and resolution

The chain shows poor communication and no timely certification. The primary fault lies with the consultant (for failing to certify or notify, and for the alleged bribe demand), then the contractor (no notice, non-payment) and the client (no action to resolve the matter). Steps:

1. Joint inspection and testing by an independent party to find out whether the work is defective.
2. Pay the undisputed portion at once; pay the labourers' wages first.
3. Use the contract's dispute clause (engineer's decision, adjudication or arbitration).
4. Report the bribe allegation to the proper authority for investigation.
5. File a police case for the assault, and report the wage default to the labour office.