Madhoor Buildwell (P) Ltd. vs Yeola Municipal Council

M/S. MADHOOR BUILDWELL PVT. LTD. .....APPELLANT(S)

VERSUS

YEOLA MUNICIPAL COUNCIL & ORS. .....RESPONDENT(S)

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 Towns1 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%

1 for short, ‘Scheme’

1 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

2 Transformation2. 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

2 for short, ‘AMRUT’

3 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 approved the Sewage Scheme for the Yeola

Municipal Council on July 20, 2013. Such Scheme was approved by

the Ministry of Urban Development on December 24, 2013 but the

concurrence of the Finance Ministry was sought. The said

communication is inter-departmental communication. The Ministry

of Urban Development has sought release of funds from the

Department of Expenditure, Ministry of Finance but, the funds

amounting to Rs. 116961.81 lakhs were released including sum of

Rs.46556.36 lakhs for the State of Maharashtra 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 Development has

sought release of funds from the Ministry of Finance. Thus, we find

that there is no illegality in the order passed by the High Court.

9) However, there cannot be any dispute that sewage system is a

necessity in any urban area. The State Level Committee has

approved the sewer for the respondent Municipality so as Ministry

of Urban Development. We are conscious of the fact that the funds

are to be allotted by the Central Government or the State

Government according to the availability of funds and by

maintaining balance of the requirement of various other local

4 bodies. Therefore, we deem it appropriate for the State

Government to consider and approve the sewer Scheme for Yeola

Municipal Council. The State Government shall take necessary

action within three months for approval of the sewer system under

the State Scheme but if the State Government is unable to provide

funds in terms of its policy, it shall seek funds from the Central

Government under the present AMRUT Scheme. We hope that the

Central Government will be able to consider and take an

appropriate decision within three months thereafter in view of the

recommendation of the State Government, if any. This course of

action is considered appropriate in view of approval of the Scheme

earlier by the State Level Committee and by Ministry of Urban

Development.

10) With the said direction, the appeal stands disposed of.

.............................................J. (L. NAGESWARA RAO)

.............................................J. (HEMANT GUPTA)

NEW DELHI;

OCTOBER 04, 2019.

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