The Andhra Pradesh High Court sternly reprimanded municipal authorities for refusing to pay legitimate dues owed to a contractor on the ground of financial constraints, observing that a public authority cannot engage services and then evade its payment obligations by citing its own financial crunch. The case arose when the petitioner, a contractor who had completed public works for the Naidupeta Municipality, was not paid bills totalling nearly eight lakh rupees despite having performed the contracted work. Aggrieved by the withholding of these amounts, he approached the High Court, asserting that the failure to release the payments was illegal, malafide and contravened his constitutional rights to equality and to carry on a profession.
In response, the State and the municipality authorities argued that they were unable to make the payment due to critical financial difficulties and budgetary stress. The High Court, however, expressed clear dismay at this defence. The single-judge bench, presided over by Justice Gannamaneni Ramakrishna Prasad, observed that if the municipality was genuinely in a precarious financial situation, it ought not to have undertaken the work in the first place by engaging the petitioner and utilising third-party resources without ensuring funds were available for payment. The court rejected the notion that an authority could legally or morally defer payment on account of financial hardship where it had already accepted the benefits of the contractor’s services. The judge emphasised that financial constraints do not constitute a valid defence for non-payment of amounts lawfully due for work already executed.
In support of its reasoning, the High Court referred to precedents from other high courts which have held that financial difficulties or budgetary shortfalls cannot absolve corporations or government entities from their duty to pay contractors for work undertaken. Those decisions underline a basic principle: payment obligations arising from lawful contracts and executed work must be honoured by public authorities irrespective of internal fiscal conditions.
On the facts of the case, the High Court allowed the writ petition, holding that the municipality must complete all necessary inter-departmental procedural or administrative processes without delay and transfer the pending amount to the contractor. This directive reinforces that obligations arising from executed contracts cannot be deferred indefinitely on administrative or financial pretexts, and that contractors are entitled to prompt and fair payment for the work they have successfully performed. The court’s order underscores the responsibility of government bodies to meet contractual liabilities and affirms that citing a financial crunch does not justify the denial of dues legitimately payable to service providers.
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