IMPORTANT POINT
Sewage system is a necessity in any urban area and necessary funds must be provided to Contractor for smooth completion of work contract.

JUDGMENT :

HEMANT GUPTA, J.

1. The order dated November 16, 2017 passed by the High Court of Judicature at Bombay is the subject matter of challenge in the present appeal. Vide the aforesaid order, the writ petition filed by the appellant to seek direction to Government of India and Government of Maharashtra to disburse the alleged approved funds under Urban Infrastructure Development Scheme for Small and Medium Towns, [for short, ‘Scheme’] was dismissed.

2. The respondent No. 1 – Yeola Municipal Council issued a public notice for providing underground sewer Scheme in Yeola city under the aforementioned centrally sponsored Scheme. The appellant is a contractor who was assigned the work of laying of sewer system after being successful in the tender process.

3. The grievance of the appellant is that it has completed almost 35% of the work of laying sewer pipelines but the Municipal Council is not making the payment for the reason that the Central Government has not released the funds.

4. The High Court found that under the Scheme, 80% of the funding comes from the Central Government, 10% from the State Government and remaining 10% from the concerned Municipal Council. The said Scheme was discontinued after March 31, 2015. It is the stand of the Central Government that there is no privity of contract between the appellant and the Central Government. In these facts, the writ petition was dismissed.

5. Mr. Shyam Divan, learned senior counsel for the appellant refers to communication dated December 24, 2013 by the Ministry of Urban Development to contend that proposal of Yeola Municipal Council was approved by the Central Government. Earlier, the State Level Sanctioning Committee in its meeting held on July 20, 2013 has approved the Project of laying sewer in the area of Municipal Council. Therefore, the respondents are bound to release the funds in respect of Project which was approved by the State and the Union.

6. Mr. Divan points out that the appellant had carried out the work after being successful in the tender process. Since sewer is necessary for any urban area, therefore, the funds for laying sewer should be sanctioned by the State of Maharashtra under Nagarothhan Yojana or by the Central Government under the present Scheme, Atal Mission for Rejuvenation and Urban Transformation [for short, ‘AMRUT’]. Mr. Divan argued that sewage and sanitation process serve the public interest as is necessary for any urban local area.

7. During the course of arguments before this Court, Mr. K.M. Nataraj, learned Additional Solicitor General pointed out that the appellant relies upon inter-office communication dated December 24, 2013 to assert that the Project was approved by the Central Government. It is pointed out that such communication (Annexure P/4) is a letter by the Ministry of Urban Development to the Joint Secretary, Department of Expenditure, Ministry of Finance for approval to seek release of funds in respect of six municipalities in the State of Maharashtra but the Ministry of Finance vide communication dated February 19, 2014 has approved for release of amounts in favour of six municipalities in the State of Maharashtra, three of them were recommended in the communication dated December 24, 2013. It is, thus, contended that there was no commitment of release of funds in respect of remaining three municipalities including the respondent No.1 by the Central Government. The Ministry of Urban Development has sought the sanction of the Finance Department but since sanction for release of the funds has not come before the expiry of the Scheme, therefore, the unilateral act of the Municipal Council to award contract will not create any financial obligation on the Union.

8. We have heard learned counsel for the parties and find that the Municipal Council has published public tender for giving contract of laying sewer without sanction of the funds by the Central Government. We find that the State Level Sanctioning Committee under the Scheme appr