Contractor payments are recovered on the contract, the certified or submitted bills, joint measurement records and site correspondence. FundRaksha's advocate sends a notice within 24 hours, narrows the measurement or quality dispute to the undisputed amount, and proceeds through the contract's arbitration clause, MSME Samadhaan for Udyam-registered contractors, or a civil suit. 60% of cases settle before filing.
Where contractor money gets stuck
- Certified but unpaid RA bills. The engineer has certified, the accounts department has not paid. There is no dispute, only cash management at your expense.
- Uncertified bills. The principal delays certification indefinitely, so the bill is never "due".
- Variations and extra items. Work instructed on site, executed, and then disputed because the written variation order was never issued.
- Final bill. Delayed for reconciliation, then subjected to deductions for liquidated damages, defects and back-charges never raised during the work.
- Retention and security deposit. Held long past the defect liability period; see retention money recovery.
- Back-to-back payment. Main contractors telling sub-contractors they will be paid when the owner pays.
The contractor's legal position
Payment follows performance, not certification at the principal's pleasure. Where the contract requires certification within a period, failure to certify in time is itself a breach, and arbitrators and courts assess the amount on the evidence. Variations instructed by the principal's representatives on site, recorded in site instructions, emails, drawings or minutes, are payable even without a formal variation order where the contract's formality was waived by conduct. Liquidated damages require proof that the delay was the contractor's and that the principal followed the contract procedure. Back-to-back clauses do not excuse non-payment unless they expressly make payment conditional, and even then they are read narrowly.
If the contractor is a Udyam-registered micro or small enterprise, the MSMED Act adds 45-day payment, statutory interest at three times the RBI bank rate and the Facilitation Council as a forum.
How FundRaksha recovers contractor dues
- Free consultation: contract, bills, certifications, measurement books, site instructions, correspondence and the deduction statement reviewed; the recoverable amount computed.
- Legal notice within 24 hours separating the undisputed amount (certified bills, retention past DLP) from the disputed (variations, deductions) and demanding payment of the first immediately.
- Negotiation and reconciliation meeting attended by the advocate; most principals pay the undisputed amount and settle the rest.
- Filing: arbitration under the contract, MSME Samadhaan, or a civil suit; interim measures to secure the amount where the principal is at risk.
- Execution of the award or decree.
Fee: 30% of the amount recovered, nothing upfront. Arbitrator and court fees are quoted in advance.
Evidence that wins contractor claims
| Claim | Best evidence |
|---|---|
| Certified RA bill | The certificate and the payment terms; nothing more is needed |
| Uncertified work | Joint measurement records, signed measurement book, progress photos with dates, hindrance register |
| Variation | Site instruction, email or WhatsApp from the principal's engineer, revised drawings, minutes of meeting |
| Extension of time (to defeat LD) | Hindrance register, delay notices, correspondence on drawings and fronts |
| Retention | Completion certificate, DLP expiry, absence of defect notices |
Keep sending written delay and hindrance notices during the project even when relations are good. They cost nothing and decide disputes later.
Who we work with
Civil, MEP, interior, fabrication, road and infrastructure contractors, and sub-contractors to EPC companies across India. See construction, engineering, steel and metals and government supply. For the arbitration route, read arbitration recovery. Book a free consultation with the contract and bill summary.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.