Internal government funding disputes cannot defeat an NGO’s audited, admissible dues.

The petitioner-organisation was selected by the District Project Society, National Child Labour Project (NCLP), Bhagalpur, to operate seven Special Training Centres under the NCLP Scheme and entered into an agreement requiring it to provide educational, nutritional and administrative facilities, appoint staff, maintain records and submit accounts and utilisation certificates.

The petitioner claimed that it complied with its obligations and operated the schools until their closure in November 2010.

It alleged that the respondents failed to release the full amount due and claimed ₹26,69,787, together with 18% interest.

The State authorities relied on audit material showing an amount of approximately ₹26,12,105/₹26,12,205 as payable, but contended that payment required verification of bills and vouchers and allotment of funds by the Union Government.

The Union of India denied liability, asserting that grants had already been released to the District Project Society, that unspent balances existed, and that responsibility for payment lay with the District Project Society and State authorities.

The State subsequently produced audit reports and utilisation certificates and asserted that the unspent balance had been refunded to the Union Government, which acknowledged receipt.

Whether the petitioner was entitled to payment of the admissible amount found payable after audit for operating the seven NCLP Special Training Centres.

Whether the Union of India could withhold or deny release of funds on the basis of disputes concerning unspent balances, utilisation certificates, accounting reconciliation and the respective responsibility of the Union and State authorities.

Whether the petitioner was entitled to interest at 18% on the alleged outstanding amount.

The Court applied the principles governing judicial review and mandamus in cases involving admitted or duly verified government dues.

It held that a person who has performed work entrusted under a government-sponsored scheme cannot be deprived of legitimate payment because of inter-departmental disputes concerning accounting, utilisation certificates or reconciliation of funds.

The Court further applied the principle that internal disputes between government authorities cannot defeat an otherwise admissible claim of a private implementing agency, and that responsibility for resolving such disputes lies between the Union and State authorities independently.

The NCLP Scheme and the agreement between the petitioner and the District Project Society governed the petitioner’s entitlement and the administrative responsibility for implementation and payment.

No specific statutory provision or judicial precedent was cited in the judgment.

The Court found that the petitioner’s selection, operation of the seven centres and performance of its contractual obligations were not genuinely disputed; the controversy principally concerned the amount payable and the governmental authority responsible for releasing funds.

The State authorities’ audit reports and utilisation certificates showed an admissible liability, and the State asserted that the unspent balance had been refunded to the Union Government, a fact supported by the Ministry’s acknowledgment.

Although the Union relied on alleged unspent and unaccounted balances and the absence of a timely liability claim, the Court treated those matters as inter se disputes between the Union and State authorities rather than grounds to defeat the petitioner’s claim.

Since the State maintained that no Central funds remained with it and that fresh funds were required from the Ministry, the Union could not indefinitely withhold funds on the basis of unresolved internal accounting disputes.

The Court, however, limited relief to the amount found admissible upon audit, rather than automatically awarding the entire ₹26,69,787 claimed by the petitioner.

The judgment did not separately award the claimed 18% interest.

The Court held that the petitioner was entitled to receive the admissible dues determined after audit.

The Union of India was directed to release the requisite funds to the concerned authorities, who were directed to ensure payment to the petitioner within six months from the date of receipt or production of a copy of the order.

The relief was confined to the audited/admissible amount, and no specific order granting 18% interest was made.

Any accounting or fund-reconciliation dispute between the Union and State authorities was left to be resolved independently and could not be used to deny the petitioner’s legitimate dues.