The High Court emphasizes accountability in municipal contracts, mandating payments to contractors for completed works.
In a significant ruling, the Andhra Pradesh High Court has directed the Naidupeta Municipality to fulfill its financial obligations to contractors despite citing critical financial constraints. The judgment, delivered by Justice Gannamaneni Ramakrishna Prasad, stems from a writ petition filed by contractor Kattam Reddy Venkateswarlu Reddy against the State of Andhra Pradesh and others, challenging the non-payment for services rendered.
During the proceedings, the municipality admitted its liability but attempted to defer payment citing a dire financial situation. The court, however, dismissed these claims, underscoring that financial constraints cannot absolve the municipality from its contractual obligations, especially when the liability is acknowledged.
Justice Prasad referenced several precedents, including the Supreme Court's decision in Surya Constructions v. State of Uttar Pradesh, where it was established that financial hardship is not a valid defense against fulfilling contractual duties. The court held that such arbitrary actions are subject to interference under Article 226 of the Constitution of India.
The judgment highlights that the municipality should not have undertaken the works if it lacked the financial resources to honor its commitments. The court expressed dismay over the municipality's handling of the situation, questioning the rationale behind initiating projects without securing necessary funds.
Furthermore, Justice Prasad directed the respondents to complete all administrative processes within four weeks and transfer the owed amount to the petitioner’s account within three weeks thereafter. The petitioner has been instructed to provide necessary bank details to facilitate the payment.
This ruling reinforces the principle that government entities must maintain integrity and accountability in contractual dealings, ensuring that contractors are compensated for their work without undue delay.
Bottom Line:
Municipality cannot avoid payment to contractors for executed work on grounds of financial constraints, especially when the liability is admitted.
Statutory provision(s): Article 226, Constitution of India
