A State instrumentality cannot withhold admitted payments for undisputed works executed by a contractor by citing financial incapacity or paucity of funds as a valid defense.

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 to issue a writ of mandamus or any other appropriate writ or direction declaring the action of the Respondents in withholding the EMD and FSD amounts In total of Rs. 2,82,535/- (details given in para 3 of the affidavit) as illegal, arbitrary and consequently direct the respondents to Refund the EMD and FSD amounts in total of Rs. 2,82,535/ with interest for the delayed payment and pass

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 to direct the respondents to Refund the EMD and FSD amounts in total of Rs. 2,82,535/- with interest for the delayed payment pending disposal of the Writ Petition and pass

The Court made the following:

ORDER:-

The instant writ petition has been filed by the petitioner under Article 226 of Constitution of India seeking the following main prayer:

“….to issue a writ of mandamus or any other appropriate writ or direction declaring the action of the Respondents in withholding the EMD and FSD amounts In total of Rs. 2,82,535/- (details given in para 3 of the affidavit) as illegal, arbitrary and consequently direct the respondents to Refund the EMD and FSD amounts in total of Rs. 2,82,535/ with interest for the delayed payment and pass….”

The sum and substance of the writ petition is that the petitioner challenged the inaction of the respondents in not releasing the amounts even after completion of the entire works entrusted to him.

Heard learned counsel for the petitioner and learned Standing Counsel for respondents.

Learned counsel for the petitioner, while reiterating the averments made in the writ affidavit, submits that the respondent authorities not releasing the EMD (Earnest Money Deposit) and FSD (Future Security Deposit) amounts totalling Rs.2,82,535/- in spite of specific requests made by the petitioner. In view of the non-release of the admitted amounts, the petitioner is facing multifarious problems, physically and fiscally. Hence, he submits that the release of the amounts is just and essential.

On the other hand, Sri. M. Dhana Raju, learned Standing counsel for respondents, basing upon the counter affidavit averments filed on behalf of respondent No.5, states that the required amounts towards EMD and FSD amounts are uploaded in Nidhi portal and the same is in process and it will be released very soon. He further submits that in view of the administrative exigencies there is delay on the part of the respondent authorities in releasing the same and submits that three months’ time may be granted for paying the admitted amount of Rs.2,82,535/- to the petitioner.

Since it is not in dispute that the petitioner completed the works and has yet to receive payment, this Court finds the respondents’ failure to pay is unjustified. However, taking into consideration of the ground realities to settle the admitted amounts, the respondents are granted rational time to settle the dues.

Recently the Hon’ble Supreme Court of India held in Utkal Highways Engineers and Contractor Vs Chief General Manager and Others , (2025) SCC Online SC 1400, in vivid terms categorically in the following manner.

“8. Be that as it may, the High Court has not dealt with the merits of the writ petition. Moreover, it is not an inviolable rule that no money claim can be adjudicated upon in exercise of writ jurisdiction…..”

It is apt to note that a mere financial incapacity/poor financial conditions, as stated by the respondent Corporation, for non-releasing of amounts after utilising the services of the petitioner, cannot be a ground.

In view of the above stated legal position, the respondent Corporation, being the instrumentality of the ‘State’ within the meaning of Article 12 of the Constituti