Penalty for Delay in Supply

    Clause 14 of the conditions of the contract (Annexure II of Stores Purchase Rules) provides that in case the supplies are not made by the contractor within stipulated delivery period the belated supplies- have to be accepted subject to . the levy of penalty at the rate of 2 % per month recoverable on the value of stores supplied late. In working out the period of delay the following points may be borne in mind

    • The “delivery period” includes extended delivery period also
    • The delivery period is computed from the date of amendment in the supply order only when it is so stipulated therein, otherwise the delivery period mentioned in. the supply order shall be adhered to
    • In case of phased delivery, the period of delay is worked out in respect of each consignment which is supplied after the expiry of the due date
    • If the request for inspection is made by a contractor within the deli-livery period and on inspection the stores are accepted, no penalty is imposed even if the inspection is carried out after the expiry of the delivery period. The advice of LR on this point is reproduced in annexure IX to this chapter
    • If the first call for inspection of stores made within delivery period is found to be fake or the stores are found to be substandard on inspection and hence rejected but subsequent call is made after the expiry of the delivery period and the stores are found acceptable on ‘ inspection, the consignment is treated as belated supply
    • The delivery period is to be counted from the date of placement of the supply order in each case and not from the date of expiry of rate contract (vide LR’s advice reproduced in Annexure X to this Chapter)
    • In computing the period for imposition of penalty the crucial date is the date of expiry of delivery period and the date on which an offer has been made by the contractor for inspection of stores which have been found to be acceptable . As such the date of inspection and issuance of inspection note are immaterial for the purpose of computing the period of delay
    • Ordinarily the contractor is required to dispatch the stores within 14 days of the receipt of inspection note evincing acceptance of stores. In case the time taken in dispatching the stores exceeds 14 days the excess period is counted towards delay for the purpose of levy of penalty unless condoned by I.O. for just and sufficient cause shown in this behalf by the contractor
    • For working out the quantum of penalty for a fraction of one month in excess of complete calendar month, the month will be taken as comprising 30 days and the value of stores shall exclude sales tax but include statutory duties


    The delivery period expires on 15-6-83 and letter dated 14-6-83 is sent by the contractor to the Indenting Officer requesting for inspection of stores. The inspection is carried out on 30-6-83 and the inspection note is issued on 10-7-83. On inspection the stores were found to be acceptable and stores were actually received at destination on 25-7-83. There is no delay in supplies and hence no penalty can be imposed on the contractor because the offer for inspection has been made within the delivery period and the stores have been found acceptable on inspection.

    The delivery period expires on 15-6-83. The contractor makes the first call on 15-5-83 and inspection is carried out on 30-5-83 when either the stores are not found on the premises or they are found to be sub standard and hence rejected. The subsequent offer is made on 19-6-83 i.e. 4 days after the expiry of the delivery period and on inspection which is carried out on 1st July, 1983,the stores are accepted. This is a case of delayed supplies because the genuine offer for inspection of stores was made after the expiry of the delivery period and the period of delay is only 4 days i.e. from 15-6-83 to 19-6-83 and the penalty is, there­ fore, liveable at the rate of 2% for this period on the value of delayed supplies.