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For any non payment of statutory payment in time, by the contractor, can the principle employer can withhold service charges, and some times the wages to the workmen bill in total payable in the next month / levying penal charges , is legally acceptable / justified and valid? The contractor is bound to pay penal charges and interest payable to the such authorities, eventually! . For inspection by the Inspectorate on the contractor, which is pending before the authorities, can the Principle employer can withhold the contractors wages and service charges bill?
It depends on whether the contract of service provides for such attachment/deduction. Without a specific clause protecting the interests of PE in such eventualities, any such deduction or stoppage would be violative of the service agreement and the consequences would follow. In such an event, where there is a wilful default by the contractor, the PE in discharge of its statutory obligation, can undertake the liability and in consequence PE can deny service charges to the contractor. But the PE has to issue clear notice to the contractor of the breach of contractual obligations and that as PE it has to fulfill the statutory obligations.
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