An employer cannot withhold legitimate salary for services rendered due to internal funding or grant disputes.

The petitioner was regularly selected and appointed as an Assistant Professor at the respondent University via an appointment order dated 24.12.2013

While she served the university for several years, she was not paid her regular salary and allowances from April 2015 onwards

The University contended that the petitioner was appointed under a scheme floated by the University Grants Commission (UGC) (Respondent No. 3), and since the UGC had not released the necessary grants or had recovered amounts previously paid due to alleged breaches of the scheme, the University was unable to pay the petitioner

The petitioner originally sought to continue her service, but restricted her prayer during the proceedings to the recovery of unpaid salary for the period she actually served

Whether a university, acting as an instrumentality of the State under Article 12, can deny the payment of salary to a regularly appointed employee on the grounds of non-receipt of grants from a third party (UGC).

The court primarily applied Article 226 and Article 12 of the Constitution of India regarding the obligations of the State and its instrumentalities

It relied on the principle that the internal budgetary disputes or "difference of opinion" between state institutions (the University and the UGC) regarding the continuation of a scheme cannot deprive a duly appointed person of their legitimate salary for services rendered

The court reasoned that the petitioner was a regularly selected teacher whose services were successfully availed of by the University from 2013 to 2016

It held that the University qualifies as "the State" under Article 12, and therefore its actions must not be arbitrary

The court emphasized that any inter se dispute between the University and the UGC regarding the reimbursement of expenditures is an internal administrative matter and does not absolve the University of its legal obligation as an employer

Since the respondent University could not justify withholding pay for work already performed, the court found the denial of salary to be legally unsustainable

The petition was partly allowed, and the court directed Respondent No. 1 (University) to pay the petitioner arrears of salary amounting to ₹12,45,377/- for the period between 27.12.2013 and 06.11.2016

This payment must be made on or before 15.06.2026; failing this, the amount will carry an interest rate of 6% p.a. until realization

Rule was made absolute to this extent