It is reiterated that the brunt of shortage/non-availability of funds with the Corporation shall not be borne by a contractor who has duly executed tendered works and whose bills have been approved: Delhi High Court



The Current batch of petitions were filed under Article 226 of the Constitution of India, the petitioners have sought release of payments due and payable to them under the bills prepared and approved by respective Assistant Engineer(s) and counter-signed by Junior Engineer(s) of the erstwhile North Delhi Municipal Corporation, East Delhi Municipal Corporation and South Delhi Municipal Corporation against the works executed by the petitioners. The petitioners have also claimed interest @ 24% per annum from the date of approval of the bills.

Same issue was raised in all the petitions, they have been taken up for consideration together and are being disposed of accordingly through a common judgment with the consent of the parties. W.P.(C)116/2021 was being treated as the lead case. The petitions were before the HON’BLE MR. JUSTICE MANOJ KUMAR OHRI.


The petitioners claim themselves to be registered contractors engaged with the Corporation for carrying out development work in various municipal wards. They have been aggrieved by the failure of the Corporation in making payments due for execution of tender works, and in some cases, the bills have remained pending for reimbursement by the Corporation since the year 2014-15.

The learned counsels for the petitioners submitted that the Corporation had not released the due payments, apparently relying on Clauses 7 and 9 of the General Conditions of Contract.

The counsels submitted that despite repeated reminders, the Corporation had failed to take action and the same has resulted the petitioners have been forced to take loan from the market, on interest, for executing others’ tenders.

The petitioners submitted a summary of the outstanding dues/arrears to the Court. This included the dues/arrears of 97 petitioners ranging from tens of lakhs to Rs.6,11,70,792.

The Corporation had filed a Counter-Affidavit contesting the petitions. Ms. Shilpa Shinde, Additional Commissioner (Engineering), MCD appeared before the Court on 09.09.2022 and stated that the Corporation has taken a decision to release the payments towards the principal amounts. A copy of this policy approved by the Commissioner, MCD had been placed on record with an affidavit of the above officer regarding mode and manner of disbursement on 13.10.2022.

Learned Counsel for the Corporation, submitted that the above decision to release funds for payment of dues was to be made in a phased manner in terms of the policy dated 13.10.2022.

The Counsel stated that a sum of Rs.30 crores has been allocated to be released to the contractors on a monthly basis in the ratio of 38:38:24 i.e. on the basis of geographical spread and staff strength of the erstwhile North Delhi Municipal Corporation, South Delhi Municipal Corporation and East Delhi Municipal Corporation.

Learned counsels for the petitioners were of the contention that the Corporation, by way of the above policy has in-principle agreed to release payments towards the principal amounts, but its decision to release the payments as per seniority of the bills, that too in the manner stipulated in policy of 13.10.2022, would result in further delay of about four to five years.

Therefore the policy was challenged on various other grounds, like the policy being an administrative decision was ultra vires to the DMC Act.


The Court stated that in the current case, most of the bills date back to the year 2015 and reasonable time for making payment had passed long ago.

The Court further stated that the policy of 13.10.2022 had aggravated the agony of the petitioners. The Court believed that the amount allocated for disbursement was miniscule, but also the ratio specified with regard to manner of disbursement had no rationale. The Court was of the belief that the ratio specified by the Corporation was arbitrary and unreasonable.

The Court expressed that the brunt of shortage/non-availability of funds with the Corporation shall not be borne by a contractor who has duly executed tendered works and whose bills have been approved.

The High Court accordingly allowed the present petitions and the Corporation was directed to release payments due towards principal amounts to the petitioners, against verified and approved bills, within a period of eight weeks from the date of passing of this judgment (Date of judgement- January 25, 2023).

The Court with respect to the delayed interest payment stated that the petitioners may pursue their remedy by initiating appropriate proceedings in accordance with law.

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