The government or its agencies cannot withhold Earnest Money Deposits (EMD) and Further Security Deposits (FSD) after the completion of the defect liability period by pleading paucity of funds.

(Special Original Jurisdiction)

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased topleased to issue a writ of mandamus or any other appropriate writ or direction declaring the action of the Respondents not releasing the EMD and FSD withheld amounts as Rs. 1,32,369/- vide M Book No. 1085/2014/El, even after completion of defect liability period, refund payable to the petitioner in relation to the works i.e., Providing CC road Veenas Enterprisers Godown to M. Venkata reddy (D.No. 12-468/2) in 2nd ward in Tadepalli Municipality is questioned, as the same is illegal, arbitrary and consequently direct the respondents to release the EMD and FSD withheld amounts as Rs. 1,32,369/- vide M Book No. 1085/2014/El, to the petitioner in respect of above-mentioned work forthwith

IA NO: 1 OF 2026

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased please to direct the respondents to release the EMD and FSD withheld amounts as Rs. 1,32,369/- vide M Book No. 1085/2014/El, to the petitioner in respect of works i.e., Providing CC road Veenas Enterprisers Godown to M. Venkata reddy (D.No. 12-468/2) in 2nd ward in Tadepalli Municipality, forthwith, pending disposal of the Writ Petition

The Court made the following ORAL ORDER:

Heard Ms. Naseem Sultana, learned Counsel appearing on behalf of Ms. M. Sumalatha, Ld. Counsel for the Writ Petitioner, Sri M. Srinu Babu, learned Assistant Government Pleader for Municipal Administration & Urban Development, Ms. D. Naga Chandrika, learned Assistant Government Pleader for Finance & Planning and S. Vijay Kumar, learned Counsel appearing on behalf of Sri A.S.C. Bose, learned Standing Counsel for Mangalagiri Tadepalli Municipal Corporation.

2. From the record, it appears that the works have commenced in the month of June, 2018 and the husband of the Writ Petitioner, who had undertaken contract works, had completed the same long time ago. Since he is no more, wife of the Contractor has filed the present Writ Petitions seeking release of EMD & FSD. Since the amounts deposited by the husband of the Writ Petitioner had been withheld by the Respondents since long time, there shall be a direction to the Respondent Nos.3 & 4 to release the EMD and FSD within a period of one week from the date of uploading of this Order on the website of this Court. It is a settled law that the Respondents cannot plead paucity of funds when it comes to return of the EMD and FSD deposits. (Please see

(1) Surya Constructions vs. State of Uttar Pradesh and Others : (2019) 16 SCC 794 - Para Nos.2, 3 & 4,

(2) Mr. S.C. Meena, EE (Project Narela) vs. Amit Tanwar : 2018 SCC OnLine Del 8035 - Para No.48,

(3) Kashmir Wood Products vs Verinag Development Authority and Others : 2021 SCC OnLine J&K 814 - Para No.8,

(4) Kattam Reddy Venkateswarlu Reddy Vs. State of Andhra Pradesh , Rep. by its Principal Secretary, Municipalities and Urban Development Department and three others : Order dated 23.01.2026 in W.P.No.34418 of 2025 of High Court of Andhra Pradesh)

3. Since the amount deposited by the Writ Petitioner had been withheld by the Corporation for a long time, any further delay on the part of the Respondent Nos.3 & 4 would be viewed seriously by this Court.

4. With these observations and directions, this Writ Petition stands allowed. No order as to costs.

5. Interlocutory Applications, if any, stand closed in terms of this order.