In Brief
A contractor was awarded a contract to lay underground sewers in Yeola under a centrally-sponsored urban infrastructure scheme. Though the Municipal Council and Ministry of Urban Development approved the project, the Ministry of Finance never formally sanctioned fund release. When the Municipal Council failed to pay for 35% completed work citing lack of central funds, the contractor sued seeking directions to disburse funds. The Supreme Court held that an inter-departmental communication alone cannot create financial obligation without Finance Ministry approval. The appeal was disposed with directions to the State Government to approve the scheme under state funds or seek central assistance under the AMRUT Scheme within three months.
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