Word “actual” in the note under sub-clause 703(xi) relates to the percentage and not to the cost.

JUDGMENT :

A.K. Sikri, J.

All these appeals involve the lis of an identical nature. National Highway Authority of India (NHAI) is the appellant in these appeals. Respondents in different appeals are the contractors who were awarded the contracts by the appellant/NHAI for construction of roads etc. The terms and conditions on which the contracts were to be executed are identical in all these cases, as the standard form contract was signed by the parties. Dispute had arisen about the interpretation that is to be given to sub-clause 70.3 of Conditions of Particular Application (COPA) of the contract which contains ‘Price Adjustment Formula’. The tender document of the NHAI, modeled upon generic FIDIC construction contracts, envisage that since the estimation of work including the rates, prices and costs of various items of work is done on the basis of prices/costs of materials, labour and other inputs prevailing on and around the date of the submission of bid, ‘Price Adjustment’ (also generally known as Price Escalation/Variation) is needed so as to protect both the parties in cases of rise or fall of prices/costs of various components of work during the period when the work is being executed. In the NHAI contracts, as opposed to one lump financial quote, the entire work to be executed under the Contract is divided into various estimated quantities of work unit wise in the BOQ (Bills of Quantities) document which is part of tender document. Each bidder is required to quote rates/prices for each estimated quantities or items of work. These rates are also referred to as ‘Base Unit Rates and Prices’ or ‘BOQ Rates/Prices’.

Sub clause 70.3 provides for the ‘adjustment formulae’ for calculating the price adjustment amount. In this sub clause, the work is divided into seven components of work and price adjustment, in each interim payment made month-wise, is given for these components only, which is made clear in sub-clause 70.2 which provides that price adjustment on any account other than the seven components enumerated in 70.3, is deemed to have been included in the price bid amount. These seven components of works are Labour, Plant & Machinery and Spares, Petrol, Oil and Lubricants (POL), Bitumen, Cement, Steel and Other Components/materials. Since the BOQ rate or base unit rate/prices are the composite rate for a particular item of work in the Bills of Quantity (BOQ) submitted by the claimants and does not specifically give the base rates/prices of the seven components of works given in sub-clause 70.3 (xi).

2. The dispute concerns interpretation of sub-clause 70.3 (xi) which is quoted hereinbelow :

“(a)	Labour-Pi	20%
(b)	Plant and Machinery and Spares - Pp	20%
(c)	POL-Pf	10%
(d)	Bitumen-Pb	x%
(e)	Cement-Pc	y%
(f)	Steel-Ps	z%
(g)	Other materials-Pm	50 – (x+y+z)%
	Total :	100%

(Note: x, y, z are the actual percentage of cost of material of bitumen, cement and steel respectively used for execution of work as per the Interim Payment Certificate for the month)”

3. The entire controversy is with regard to the ‘Note’ after sub-para (xi) of sub-clause 70.3 of the conditions, which has been extracted above. This note mentions that x, y, z are the actual percentage of the cost of material of bitumen, cement and steel respectively which are used for execution of the work as per the Interim Payment Certificate (IPC). The issue is, while calculating the actual percentage of cost of material of bitumen, cement and steel respectively, it is the base rate (i.e. the rate prevailing 28 days prior to the submission of the bid) of these materials which is to be taken into consideration while working out the price adjustment as per the formula provided or it is the current cost of the ma