Non-Payment for Completed Public Works Due to Lack of Budget is Arbitrary; Payment Must Be Made Within 6 Months: Andhra Pradesh High Court - 2025-09-03

Andhra Pradesh High Court Orders State to Clear Dues of ₹49.8 Lakh for Public Works Within Six Months

Amaravati: The Andhra Pradesh High Court has directed state authorities to release pending payments totaling ₹49,89,566 to a Village Level Committee (VLC) President for completed civil works, ruling that non-payment due to a lack of budget is arbitrary. Justice Venkateswarlu Nimmagadda ordered the amount to be paid within six months, along with interest for the delay.

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Case Background

The petition was filed by Morusu Rajya Lakshmi, the VLC President for Railway Kodur in Annamayya District. She had undertaken and completed numerous civil infrastructure projects, including the construction of concrete roads with underground drainage and pipeline extensions, under schemes funded by the XV Finance Commission and MGNREGS.

Despite the successful execution and finalization of bills amounting to nearly ₹50 lakh, the state authorities, including the Panchayat Raj and Finance departments, failed to release the payment. Aggrieved by this inaction, Ms. Lakshmi filed a Writ of Mandamus under Article 226 of the Constitution, seeking the court's intervention.

Arguments in Court

The petitioner's counsel argued that the state's failure to clear the dues was "illegal, arbitrary, unjust, irrational and contrary to the principles of Natural Justice," and a violation of fundamental rights under Articles 14, 19, and 21 of the Constitution. It was contended that even though the respondents admitted the work was completed and the amount was payable, the payment was being wrongfully withheld.

Representing the state, the Government Pleader submitted written instructions from the Divisional Panchayat Officer. The state's defense was that the bills could not be paid as the government had not yet released the necessary budget. They assured the court that the payment would be made as soon as the funds were allocated.

Court's Judgment and Reasoning

Justice Venkateswarlu Nimmagadda found the state's reasoning for non-payment unsatisfactory. The court observed that withholding payment for executed contract work is an arbitrary action that warrants judicial intervention.

Citing previous judgments from the same court, including the order in W.P.No. 10038 of 2021 , the bench reiterated the established legal position that such non-payment of dues is arbitrary and must be rectified promptly.

The court issued a clear directive in its final order:

"...this Writ Petition is disposed of with a direction to the respondents to release the amount of Rs.49,89,566/- to the petitioner."

On the issue of interest on the delayed payment, the court laid down a two-pronged approach. Referencing a Division Bench judgment in Writ Appeal No.724 of 2021 , the order stated:

* If the work agreement contains a clause regarding interest on delayed payments, that clause will be binding on both parties.

* In the absence of any such contractual clause, the state is directed to pay interest at a rate of 6% per annum on the pending amount.

Final Decision and Implications

The High Court has mandated that the outstanding amount of ₹49,89,566 be paid to the petitioner within six months from the receipt of the court's order. The judgment gives the petitioner the liberty to approach an appropriate forum to agitate for a higher rate of interest if she deems it necessary.

This ruling serves as a significant precedent for contractors and individuals engaged in public works projects, affirming their right to timely payment and reinforcing that administrative delays or budgetary issues cannot be used as indefinite grounds to withhold legitimate dues.