Saying contractor is not interested in paying is a strange and stupid statement. He is a contractor. How can he refuse to obey the principal employer. Are you paying him enough to allow him to pay proper wages ? And providing him enough to make a margin ? Compute the net amount he is getting after service tax and TDS and see.
If he has enough money, and is still not paying, then you should change the contractor immediately and replace him with one who will obey the law.
You can also pay the arrears directly to the workers as a one off case and recover the same from his bill. But be careful of that route as it can be misused at a later date.