Budget Constraints Can't Justify Indefinite Withholding Of Admitted Dues: MP High Court Orders ₹5 Lakh Payment

The Madhya Pradesh High Court has held that administrative or budgetary difficulties cannot justify withholding payment of completed work to a contractor. [2026 LiveLaw (MP) 394]

Directing the State to release ₹5 lakhs to the contractor along with 6% annual interest, the bench of Justice Milind Ramesh Phadke observed,

"It is well settled that a person who has completed the work entrusted to him cannot be deprived of the legitimate payment due to him merely because the department has not made necessary budgetary provision. Administrative or budgetary difficulties cannot, by themselves, justify indefinite withholding of an amount which has otherwise been found payable by the competent authority". 

A petition was filed by the contractor seeking directions for payment of ₹5 Lakhs along with 8% interest. The counsel for the petitioner argued that he had completed the work relating to assembling, dismantling, erection, installation and maintenance of Pontoon Bridge at Morena District. However, despite completion of the work, the competent authorities had not paid the admitted amount of ₹5 Lakh to him.

The Government Advocate for the State argued that the competent authorities had repeatedly requested allotment of funds, but the same was not yet allotted. 

The bench noted that the respondents had demanded the required amount on December 11, 2024. However, the bench noted that the State cannot indefinitely defer payment of the amount on the ground of budgetary allocation, particularly when the liability to make payment had already been acted upon by competent departmental authorities. 

The court further emphasized,

"In the present case, the respondents have themselves stated that as soon as the amount is received under the relevant budget head, appropriate action would be taken for payment to the petitioner. However, the petitioner has already been awaiting payment for a considerable period. The stand taken by the respondents, therefore, does not furnish sufficient justification for keeping the admitted amount unpaid any further". 

Thus, the bench directed the competent authority to release and pay the amount of ₹5 lakh within 4 weeks. The petition was accordingly disposed of.