Supreme Court of India
M/S. MADHOOR BUILDWELL PVT. LTD. versus YEOLA MUNICIPAL COUNCIL & ORS. on 4 October 2019
646
SUPREME COURT REPORTS
[2019] 13 S.C.R.
M/S. MADHOOR BUILDWELL PVT. LTD.
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v.
YEOLA MUNICIPAL COUNCIL & ORS.
(Civil Appeal No. 7798 of 2019)
BOCTOBER 04, 2019
[L. NAGESWARA RAO AND HEMANT GUPTA, JJ.]
Contract:
Work contract – For laying down sewer system – AssignedCby Municipal Council under centrally sponsored Scheme – Non-payment to the contractor even after completion of 35% of work– Writ petition seeking direction to Central Government and StateGovernment to disburse the funds under the Scheme – Petitiondismissed by High Court – Appeal to Supreme Court – Held:Contract was awarded by Municipal Council without sanction ofDfunds by Central Government – Thus, there is no illegality in theimpugned order – However, since sewage system is a necessity, itwould be appropriate for the State to consider and approve thesewer scheme and seek funds from the Central Government.
Disposing of the appeal, the CourtE
HELD: Respondent No. 1 Municipal Council haspublished public tender for giving contract of laying sewerwithout sanction of the funds by the Central Government. TheState Level Sanctioning Committee under the Scheme approvedthe Sewage Scheme for the Yeola Municipal Council on July 20,F2013. Such Scheme was approved by the Ministry of UrbanDevelopment on December 24, 2013 but the concurrence of theFinance Ministry was sought. Since there was no approval fromthe Finance Department, the appellant cannot claim such amount on the basis of an inter-departmental communication where theGMinistry of Urban Development has sought release of funds fromthe Ministry of Finance. Thus, there is no illegality in the orderpassed by the High Court. However, there cannot be any disputethat sewage system is a necessity in any urban area. The StateLevel Committee has approved the sewer for the respondentMunicipality so as Ministry of Urban Development. The fundsH
are to be allotted by the Central Government or the StateGovernment according to the availability of funds and bymaintaining balance of the requirement of various other localbodies. Therefore, it would be appropriate for the StateGovernment to consider and approve the sewer Scheme forYeola Municipal Council. If the State Government is unable toprovide funds in terms of its policy, it shall seek funds from theCentral Government under the present Scheme. This course ofaction is appropriate in view of approval of the Scheme earlierby the State Level Committee and by Ministry of UrbanDevelopment. [Paras 8 and 9] [649-C-H; 650-A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7798of 2019.
From the Judgment and Order dated 19.09.2014 of the HighCourt of Judicature at Bombay, Bench at Aurangabad in Writ PetitionNo. 3703 of 2014
Sudhanshu S. Choudhari, Adv. for the Appellant.
K. M. Natraj, ASG, Vinay Navare, Sr. Adv., Ms. Gwen Karthika,Ms. Abha R. Sharma, Nishant Ramakantrao Katneshwarkar, AnoopKandari, Anmol Chandan, Somiran Sharma, Raj Bahadur, Mrs. AnilKatiyar, Advs. for the Respondents.
The Judgment of the Court was delivered by HEMANT GUPTA, J.
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1. The order dated November 16, 2017 passed by the High Courtof Judicature at Bombay is the subject matter of challenge in the presentappeal. Vide the aforesaid order, the writ petition filed by the appellantto seek direction to Government of India and Government ofMaharashtra to disburse the alleged approved funds under UrbanInfrastructure Development Scheme for Small and Medium Towns[1] wasdismissed.
2. The respondent No. 1 – Yeola Municipal Council issued a publicnotice for providing underground sewer Scheme in Yeola city under theaforementioned centrally sponsored Scheme. The appellant is a 1 for short, ‘Scheme’
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Acontractor who was assigned the work of laying of sewer system afterbeing successful in the tender process.
3. The grievance of the appellant is that it has completed almost35% of the work of laying sewer pipelines but the Municipal Councilis not making the payment for the reason that the Central GovernmentBhas not released the funds.
4. The High Court found that under the Scheme, 80% of thefunding comes from the Central Government, 10% from the StateGovernment and remaining 10% from the concerned Municipal Council.The said Scheme was discontinued after March 31, 2015. It is the standCof the Central Government that there is no privity of contract betweenthe appellant and the Central Government. In these facts, the writpetition was dismissed.
5. Mr. Shyam Divan, learned senior counsel for the appellantrefers to communication dated December 24, 2013 by the Ministry ofDUrban Development to contend that proposal of Yeola Municipal Councilwas approved by the Central Government. Earlier, the State LevelSanctioning Committee in its meeting held on July 20, 2013 has approvedthe Project of laying sewer in the area of Municipal Council.Therefore, the respondents are bound to release the funds in respectof Project which was approved by the State and the Union.
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6. Mr. Divan points out that the appellant had carried out thework after being successful in the tender process. Since sewer isnecessary for any urban area, therefore, the funds for laying sewershould be sanctioned by the State of Maharashtra under NagarothhanYojana or by the Central Government under the present Scheme, AtalFMission for Rejuvenation and Urban Transformation[2]. Mr. Divanargued that sewage and sanitation process serve the public interest asis 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 theGappellant relies upon inter-office communication dated December 24,2013 to assert that the Project was approved by the CentralGovernment. It is pointed out that such communication (Annexure P/4) is a letter by the Ministry of Urban Development to the JointSecretary, Department of Expenditure, Ministry of Finance for approval 2 for short, ‘AMRUT’
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to seek release of funds in respect of six municipalities in the State ofMaharashtra but the Ministry of Finance vide communication datedFebruary 19, 2014 has approved for release of amounts in favour ofsix municipalities in the State of Maharashtra, three of them wererecommended in the communication dated December 24, 2013. It is,thus, contended that there was no commitment of release of funds inrespect of remaining three municipalities including the respondent No.1by the Central Government. The Ministry of Urban Development hassought the sanction of the Finance Department but since sanction forrelease of the funds has not come before the expiry of the Scheme,therefore, the unilateral act of the Municipal Council to award contractwill not create any financial obligation on the Union.
8. We have heard learned counsel for the parties and find thatthe Municipal Council has published public tender for giving contractof laying sewer without sanction of the funds by the CentralGovernment. We find that the State Level Sanctioning Committee underthe Scheme approved the Sewage Scheme for the Yeola MunicipalCouncil on July 20, 2013. Such Scheme was approved by the Ministryof Urban Development on December 24, 2013 but the concurrence ofthe Finance Ministry was sought. The said communication is inter-departmental communication. The Ministry of Urban Development hassought release of funds from the Department of Expenditure, Ministryof Finance but, the funds amounting to Rs. 116961.81 lakhs werereleased including sum of Rs.46556.36 lakhs for the State ofMaharashtra but no funds were released for Yeola Municipal Council.Since there was no approval from the Finance Department, therefore,the appellant cannot claim such amount on the basis of an inter-departmental communication where the Ministry of Urban Developmenthas sought release of funds from the Ministry of Finance. Thus, wefind that there is no illegality in the order passed by the High Court.
9. However, there cannot be any dispute that sewage system isa necessity in any urban area. The State Level Committee has approvedthe sewer for the respondent Municipality so as Ministry of UrbanDevelopment. We are conscious of the fact that the funds are to beallotted by the Central Government or the State Government accordingto the availability of funds and by maintaining balance of the requirementof various other local bodies. Therefore, we deem it appropriate forthe State Government to consider and approve the sewer Scheme for A
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AYeola Municipal Council. The State Government shall take necessaryaction within three months for approval of the sewer system under theState Scheme but if the State Government is unable to provide fundsin terms of its policy, it shall seek funds from the Central Governmentunder the present AMRUT Scheme. We hope that the CentralGovernment will be able to consider and take an appropriate decisionBwithin three months thereafter in view of the recommendation of theState Government, if any. This course of action is consideredappropriate in view of approval of the Scheme earlier by the State LevelCommittee and by Ministry of Urban Development.
10. With the said direction, the appeal stands disposed of.C
Kalpana K. Tripathy
Appeal disposed of.
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