Case Note & Summary
The High Court of Andhra Pradesh dealt with a writ petition filed under Article 226 of the Constitution of India by a contractor seeking payment for work executed for Naidupeta Municipality. The petitioner had undertaken work using his own services and financial resources, and the Municipality admitted liability but failed to pay. During the hearing on 23.01.2026, the Commissioner of Naidupeta Municipality submitted written instructions stating that the financial condition of the Municipality was critical and it was unable to pay monthly wages. The Court expressed dismay that the Municipality had executed work through third-party resources and then pleaded financial crunch. The legal issue was whether a public authority could avoid payment of admitted dues by citing lack of funds, and whether a writ court could intervene in contractual matters when the amount was undisputed. The petitioner contended that the liability was admitted and payment should be directed. The respondents relied on financial constraints. The Court referred to Surya Constructions v. State of U.P., (2019) 16 SCC 794, where the Supreme Court held that even in contractual matters, if the State acts arbitrarily and the amount is undisputed, the High Court could interfere under Article 226. It also relied on S.C. Meena v. Amit Tanwar, 2018 SCC OnLine Del 8035, where the Delhi High Court held that the contractor cannot bear the brunt of non-payment due to Corporation's fund mismanagement, and Kashmir Wood Products v. Verinag Development Authority, 2021 SCC OnLine J&K 814, which held that if funds were not available, the authority had no business to allot work and was bound to reimburse. The Court rejected the written instructions, directed Respondents 1 to 4 to complete inter-departmental and intra-departmental administrative processes within four weeks and transfer the amount to the petitioner's account within three weeks thereafter. The petitioner was directed to submit bank account details within four weeks. The writ petition was allowed with no order as to costs, and interlocutory applications were closed.
Headnote
A) Constitutional Law - Writ Jurisdiction - Maintainability of Writ in Contractual Matters - Constitution of India, 1950, Article 226 - The court relied on Surya Constructions v. State of U.P. (2019) 16 SCC 794, holding that even in contractual matters, if the State acts arbitrarily and the amount is undisputed, the High Court can interfere under Article 226; the previous dismissal by High Court stating disputed questions of fact was incorrect. Held that writ petition was maintainable and payment directed (Paras 4-5). B) Government Contracts - Payment for Executed Work - Financial Constraints Not a Defense for Refusing Undisputed Dues - Constitution of India, 1950, Article 226 - The Commissioner's written instruction admitted liability but claimed critical financial condition; court held it was unconscionable for authority to avail third-party services and then refuse payment citing lack of funds. Relied on S.C. Meena v. Amit Tanwar and Kashmir Wood Products v. Verinag Development Authority. Held that contractor cannot bear brunt of non-payment; respondents' defense rejected (Paras 3, 5-7). C) Administrative Law - Enforcement of Payment Obligations - Directions for Inter-departmental Coordination and Timely Payment - Constitution of India, 1950, Article 226 - Court directed Respondent Nos.3 & 4 and Respondent Nos.1 & 2 to complete entire administrative process within four weeks and transfer amount to petitioner's account within three weeks thereafter; petitioner directed to furnish bank account details within four weeks. Held that admitted dues must be paid expeditiously (Paras 7-8).
Issue of Consideration
Whether respondent Municipality and State authorities can withhold admitted/undisputed payment for executed work on the ground of financial constraints, and whether a writ court under Article 226 of the Constitution can direct payment in contractual matters when there is no dispute as to amount.
Final Decision
Writ Petition allowed. Respondents directed to complete entire administrative process inter-departmentally and intra-departmentally within four weeks and transfer amount to petitioner's account within three weeks thereafter; petitioner directed to submit bank account details within four weeks. No order as to costs. Interlocutory applications closed.
Law Points
- State cannot refuse payment for completed work citing financial constraints
- writ under Article 226 maintainable in contractual matters where amount undisputed and action arbitrary
- public contractor cannot bear brunt of authority's financial mismanagement
- admitted liability must be discharged expeditiously
- inter-departmental cooperation directed to release dues
