AMRUT Scheme Dispute: State Government vs. Yeola Municipal Council

The dispute over the AMRUT Scheme between the State Government and Yeola Municipal Council reached a significant turning point with the recent Supreme Court judgment. The case involved the funding and approval for the sewer system project, causing a contention between the State Government and the local council. Learn more about how the court resolved this complex issue in favor of one of the parties, shedding light on important aspects of urban development and financial responsibilities.


  • The Respondent sought a declaration of his title over the disputed land in a civil suit.
  • The trial court dismissed the suit, which was challenged in the High Court.
  • The High Court reversed the trial court’s decision and granted the declaration of title in favor of the Respondent.
  • The Appellant is aggrieved by this decision and has filed the present appeal.
  • The appellant, a contractor, filed a writ petition seeking direction from the Government of India and Maharashtra to disburse approved funds for laying sewer pipelines.
  • The appellant completed 35% of the work but the Municipal Council is withholding payment due to non-release of funds by the Central Government.
  • Under the Urban Infrastructure Development Scheme for Small and Medium Towns, funding was to be 80% from Central Government, 10% from State Government, and 10% from Municipal Council.
  • The Scheme was discontinued after March 31, 2015.
  • Central Government argued no privity of contract with the appellant.
  • The High Court dismissed the writ petition due to lack of funds release and absence of contract between the Central Government and the appellant.

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  • Mr. Divan argued that sewage and sanitation process serve the public interest as is necessary for any urban local area.
  • The State Level Sanctioning Committee approved the Project of laying sewer in the area of Municipal Council on July 20, 2013.
  • The respondents are bound to release the funds for the Project approved by both the State and Union.
  • The appellant had carried out the work successfully in the tender process sanctioned by the State of Maharashtra or the Central Government.
  • Mr. Divan pointed out that the proposal of laying sewer in Yeola Municipal Council was approved by the Central Government in December 24, 2013.
  • The Ministry of Urban Development sent a letter to the Department of Expenditure, Ministry of Finance requesting approval for the release of funds for six municipalities in Maharashtra.
  • The Ministry of Finance approved the release of funds for six municipalities in Maharashtra, including three recommended in a previous communication.
  • This indicates that there was no commitment from the Central Government to release funds for the remaining three municipalities, including the respondent.
  • The appellant relies on an inter-office communication from December 24, 2013, to claim approval of the project by the Central Government.
  • Though the Ministry of Urban Development sought sanction from the Finance Department, funds were not released before the Scheme expired.
  • Therefore, the unilateral decision of the Municipal Council to award the contract does not create any financial obligation on the Union.

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  • The Ministry of Urban Development sought funds from the Ministry of Finance for the sewage system project.
  • No approval was obtained from the Finance Department for releasing funds to Yeola Municipal Council.
  • State Level Committee and Ministry of Urban Development approved the sewage scheme for Yeola Municipal Council.
  • Funds were released for the State of Maharashtra but not for Yeola Municipal Council.
  • Yeola Municipal Council published public tenders for the sewer project without central government funding sanction.
  • The Scheme for Yeola Municipal Council was approved by the Ministry of Urban Development on December 24, 2013.
  • Funds for the sewer scheme are to be allotted by the Central or State Government based on availability and balancing requirements of local bodies.
  • It is deemed appropriate for the State Government to consider and approve the sewer scheme for Yeola Municipal Council.

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  • The appeal has been disposed of with the direction for the State Government to take necessary action within three months for the approval of the sewer system under the State Scheme.
  • If the State Government is unable to provide funds as per its policy, it should seek funds from the Central Government under the current AMRUT Scheme.
  • The Central Government is expected to consider and decide appropriately within three months based on the recommendation of the State Government and previous approvals of the Scheme.


Case Number: C.A. No.-007798-007798 / 2019

Click here to read/download original judgement

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