Case Note & Summary
The appellant, M/s. Madhoor Buildwell Pvt. Ltd., a contractor, filed a writ petition in the Bombay High Court seeking directions to the Government of India and Government of Maharashtra to disburse approved funds under the Urban Infrastructure Development Scheme for Small and Medium Towns (the Scheme) for a sewer project in Yeola city. The Yeola Municipal Council had issued a public notice and awarded the contract to the appellant after a tender process. The appellant completed about 35% of the work but was not paid because the Central Government had not released funds. The High Court dismissed the petition, noting that the Scheme was discontinued after March 31, 2015, and there was no privity of contract between the appellant and the Central Government. The Supreme Court upheld the dismissal, finding that the Ministry of Urban Development's inter-departmental communication dated December 24, 2013, seeking fund release from the Ministry of Finance, did not constitute a binding approval. The Ministry of Finance had released funds for other municipalities but not for Yeola. The Court held that the appellant could not claim payment based on an inter-departmental communication. However, recognizing the necessity of sewage systems, the Court directed the State Government to consider approving the sewer scheme under a state scheme or seek funds under the AMRUT scheme within three months, and if the State recommends, the Central Government to consider it within three months thereafter. The appeal was disposed of with these directions.
Headnote
A) Administrative Law - Government Contracts - No Privity of Contract - The appellant contractor had no contractual relationship with the Central Government; the contract was with the Municipal Council. The Central Government's inter-departmental communication approving the project did not create a financial obligation to pay the contractor. (Paras 4-8) B) Constitutional Law - Directive Principles - Right to Sanitation - Sewage system is a necessity in urban areas. The Court directed the State Government to consider approving the sewer scheme under a state scheme or seek funds under the AMRUT scheme, given the earlier approvals by the State Level Committee and Ministry of Urban Development. (Paras 9-10)
Issue of Consideration
Whether the appellant contractor is entitled to payment from the Central Government for work done under a centrally sponsored scheme where funds were not released before the scheme's discontinuation.
Final Decision
The appeal is dismissed. However, the State Government is directed to consider and approve the sewer scheme for Yeola Municipal Council within three months under a state scheme or seek funds under the AMRUT scheme. If the State recommends, the Central Government shall consider it within three months thereafter.
Law Points
- No privity of contract between contractor and Central Government
- Inter-departmental communication does not create financial obligation
- State Level Sanctioning Committee approval does not guarantee fund release
- Court can direct consideration of funding under state scheme or AMRUT
