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By Tanisha Heiberg

JOHANNESBURG (Reuters) - South Africa's top court on Wednesday blamed Social Development Minister Bathabile Dlamini for a "crisis" that could jeopardise the payment of welfare benefits to 17 million people, saying she had failed to resolve a service-provider dispute.

The Constitutional Court in 2014 ruled that the tender won by Cash Paymaster Services (CPS), a unit of technology company Net1 unit, was unlawful. The government had until April 1 of this year to take responsibility for social service payments or find a new provider, but failed to do so.

Hearing a case brought by applicants urging the court to take oversight of a new contract, which must be settled before Thursday to ensure April's welfare payments are made on time, the court said her inaction was hard to comprehend.

Dlamini told parliament on Tuesday she would not resign as demanded by opposition parties. She said there was no crisis and the welfare benefits would be paid on April 1.

But Chief Justice Mogoeng Mogoeng disagreed, saying: "this is a crisis, we must do whatever is necessary to intervene."

"It is embarrassing enough to have an order that something within your department was done that is unconstitutional," he said during the hearing. "But for you not to follow up now, to spend sleepless nights ensuring that does not repeat itself, is something that is very difficult for any of us to understand."

The court did not say when it would issue a ruling.

Dlamini was not immediately available to comment.

Dominated by more than 11 million child support grants, the welfare system is a lifeline for South Africa's most vulnerable. Each month long queues form at pay points across the country as people wait for the money that is often the difference between going to bed hungry or not.

CPS chief executive Serge Belamant reiterated that for logistical reasons, a new contract needed to be signed 12 days before the payments are due, raising the stakes in the saga.

"I am expecting the judgment by tomorrow at the very latest," Belamant told reporters after the court hearing.

Officials at the South African Social Security Agency (SASSA) have said privately that the agency has opted to negotiate a new deal with Cash Paymaster Services despite the court order. There has been no has public confirmation.

(Additional reporting by Ed Stoddard; Writing by James Macharia; Editing by Richard Lough)

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