REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7798 OF 2019 (ARISING OUT OF SLP (CIVIL) NO. 13626 OF 2018)

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

VERSUS

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

J U D G M E N T

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’

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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

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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’

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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

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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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