Public Bodies Cannot Hold Decree-Holder to Ransom: Madras High Court Directs Puducherry Government to Pay ₹15 Crores Amid Long Delay

“12 Years, No Payment — Public Body Cannot Hold Decree-Holder to Ransom”, In a powerful affirmation of constitutional responsibility and judicial discipline, the Madras High Court directed the Government of Puducherry to pay ₹15 crores by July 31, 2025, towards a final and unchallenged arbitral award issued in 2022. Justice D. Bharatha Chakravarthy held that continued delay by the State in settling decreed dues—even amid ongoing execution proceedings—was an abuse of process and a breach of the State’s obligations as a model litigant.

The matter concerned an Integrated Solid Waste Management Project implemented in Puducherry between 2010 and 2013 by M/s. Reha Environ Pvt. Ltd. and Puducherry Municipal Services Pvt. Ltd., following a public tender and concession agreement. Disputes arising from early termination of the project led to arbitration. The Arbitral Tribunal, by awards dated February 10 and March 31, 2022, granted the petitioners a total of ₹61.54 crores plus interest.

Despite no appeal being filed by the Government, no payments were made. The petitioners resorted to execution petitions and eventually filed a writ and contempt petition seeking enforcement. Meanwhile, the Puducherry Government repeatedly claimed to be exploring settlement, even before the Division Bench of the Madras High Court, but failed to act substantively.

The core question before the Court was whether a writ petition seeking payment of an arbitral award could be entertained when an execution petition was already pending. Addressing this, Justice Chakravarthy held:

“A litigant with a decree in his favour should not be made to run from pillar to post without realizing at least a portion of the decreed amount.”

The Court rejected the argument that writ jurisdiction was barred due to the availability of alternative remedies, pointing out:

“The State is taking a capricious and whimsical stand by refusing to comply with the decree, being the judgment debtor.”

Citing M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (2023) 2 SCC 703, the Court reiterated that a writ is maintainable in contractual matters when state action is unreasonable or arbitrary.

The Court also referenced the Supreme Court's imprimatur in Marvel Sigma Homes v. Rustam Phiroze Mehta, observing:

“The High Court cannot completely disregard violations of decrees issued by subordinate tribunals.”

Rejecting the state’s position that it was engaged in negotiations, the Court declared:

“Even when the State claims it is negotiating to settle the matter... this Court believes that this is not a case where the petitioner can be left to pursue the alternative remedies without any relief whatsoever.”

Justice Chakravarthy found the facts extraordinary: the project completed over a decade ago, a final award granted and unchallenged, but not a single rupee paid. He observed:

“More than 12 years have passed... Various proceedings, in the form of Execution Petitions, have yielded no results.”

Accordingly, the Court disposed of the writ petition with a landmark directive:

1. The Government of Puducherry is to pay ₹15 crores to the petitioners on or before July 31, 2025.

2. For the balance claim and interest, the petitioners are to pursue available legal remedies, including pending execution and appellate proceedings.

3. No costs were awarded.

4. The contempt petition was closed as infructuous in light of the substantive direction.

The Court concluded with a warning:

“Public bodies cannot use technicalities to delay settled dues indefinitely. The State must act as a model litigant.”

This ruling by the Madras High Court strongly reinforces the constitutional imperative that the State must not act as an ordinary litigant, especially when it has failed to challenge an award that has attained finality. The judgment stands as a reminder that inordinate delay in paying public contractors can no longer hide behind the veil of pending procedural formalities. It sends a clear message that equity, not evasiveness, must govern the conduct of public authorities.

Date of Decision: May 22, 2025