Budgetary Constraints Cannot Justify Withholding Contractor Dues: Madhya Pradesh High Court

" Administrative or budgetary difficulties cannot, by themselves, justify indefinite withholding of an amount which has otherwise been found payable by the competent authority . "

In a significant ruling reinforcing the rights of contractors dealing with government departments, the Madhya Pradesh High Court has directed the State to release ₹5 lakh to a contractor for work completed on a pontoon bridge, holding that budgetary constraints cannot be used as a shield to indefinitely delay legitimate payments.

Background: A Bridge Built, Payment Pending

The petitioner, Jitendra Singh Tomar, had executed work relating to assembling, dismantling, erection, installation, and maintenance of a Pontoon Bridge at Atar Ghat, Sabalgarh, District Morena, pursuant to a work order issued by the State authorities. Despite completing the work and the competent authorities taking steps for payment, the admitted amount of ₹5 lakh remained unpaid.

Tomar approached the High Court under Article 226/227 of the Constitution, seeking a writ of mandamus directing the respondents—the State of Madhya Pradesh and its departments—to release the amount along with interest at 8% per annum from the date of the competent authority's order.

State's Defense: Budgetary Hurdles

The Government Advocate, appearing for the State, did not dispute the fact that Tomar had submitted his claim and that the department had acknowledged it. The reply filed by the respondents revealed that the Chief Engineer, Public Works Department, Gwalior, had directed payment of ₹5 lakh, and the Sub-Engineer had preferred a bill for ₹4,99,905 before the Executive Engineer, P.W.D. Division, Morena.

The State's stand was that the authorities had repeatedly requested allotment of funds, and vide letter dated 11.12.2024, the Executive Engineer had again demanded payment in the prescribed form, but the requisite allotment was awaited.

Court's Ruling: Administrative Convenience Cannot Trump Entitlement

Justice Milind Ramesh Phadke, after hearing both sides, observed that from the reply, particularly paragraph 9, it was evident that the respondents themselves had demanded the requisite amount on 11.12.2024 towards payment of the petitioner's claim. The court categorically held that the respondents cannot indefinitely defer payment on the ground of non-availability of budgetary allocation, especially when the liability to make payment had already been acted upon by competent departmental authorities.

"It is well settled that a person who has completed the work entrusted to him cannot be deprived of the legitimate payment due to him merely because the department has not made necessary budgetary provision ," the court stated.

Key Observations

The court emphasized that while the respondents stated that as soon as the amount is received under the relevant budget head, action would be taken, the petitioner had already been awaiting payment for a considerable period. The stand taken by the respondents, the court said, "does not furnish sufficient justification for keeping the admitted amount unpaid any further."

The Decision: Payment Within Four Weeks with Interest

Disposing of the petition, the court directed the competent authority/respondents to release and pay the amount of ₹5 lakh to the petitioner within four weeks from the date of production of a certified copy of the order, without insisting upon any further representation from the petitioner.

Recognizing that the payment had remained outstanding for a considerable period, the court ordered that the amount shall carry simple interest at the rate of 6% per annum from 11.12.2024—the date on which the respondents themselves demanded the amount—till the date of actual payment.

The court made it clear that the concerned authority shall not defer compliance merely on the ground of non-availability of budgetary allocation and shall take all necessary steps for arranging the requisite funds in accordance with law.