IMPORTANT POINT
The court emphasized the importance of honoring contractual agreements and the need for parties to adhere to the terms of the contract. It also highlighted the significance of approaching the competent Civil Court for redressal of contractual grievances.

JUDGMENT

Dhiraj Singh Thakur, C.J. - The present appeal under Clause 15 of the Letters Patent has been preferred against the judgment and order dated 01.03.2023 passed in W.P.No.41906 of 2018 whereby the petition filed by the petitioner has been dismissed.

2. It is pertinent to mention briefly the material facts in the light of which the present controversy has arisen:

The petitioner was allotted the contract for construction of a court complex at Kurnool on 05.05.2012 and an agreement came to be executed between the petitioner and the Superintending Engineer, R & B Circle, Kurnool, on 23.11.2012. According to Clause 46 of the contract so entered between the parties, price adjustment was envisaged for both increase and decrease in the prices for the works completed within the original agreement period. Clause 46.2 & 46.4 are relevant and are reproduced hereunder:

'46.2 - Price adjustment shall be both for increase and decrease in the prices for the works completed within the original agreement period.

46.4 - The variation clause will be when the variation in rates is more or less than 5% of the rate provided in the technical sanctioned estimate based on which bids are invited or all India wholesale price Index of the respect item.'

3. The agreement among others also envisaged resolution of disputes through arbitration in terms of Clause 23 of the said contract only if the amount in dispute was less than Rs.50,000/-. For facility of reference, Clause 23 of the said contract is reproduced hereunder:

23. Settlement of disputes:

....

Settlement of Claims for Rs.50,000/- and below by Arbitration:

All disputes or difference arising of or relating to the Contract shall be referred to the adjudication as follows:

a) Claims up to a value of Rs.10,000/- -

Superintending Engineer, (R&B), Kadapa.

b) Claims above Rs.10,000/- and up to

Rs.50,000/- - Engineer-in-Chief, (R&B), Admn & N.H, Hyderabad

The arbitration shall be conducted in accordance with the provisions of Indian Arbitration and Conciliation Act, 1996, or any statutory modification thereof.'

4. According to the stand taken by the petitioner, the Government of Andhra Pradesh issued a G.O.Ms.No.23, dated 11.02.2014 with regard to the treatment of price adjustment in contracts pertaining to Transport, Roads and Buildings. According to which, the price variation over and above 5% was to be applied whether there was an increase or decrease in the price. According to the said G.O., recovery was to be made from the contract beyond 5%. In other words, if there was a variation in the rate to an extent of 9%, the amount that would be payable to the contractor would be 4% i.e. 9% - 5% since the contractor would have factors into his original bid, such an increase up to 5%. Similarly if the price is decreased by 9%, the contractor would be permitted to retain 5% and what would be deducted is 4%.

5. Subsequently, another G.O.Ms.No.67, dated 27.11.2015 was issued reiterating that the price variation clause would apply to both increase and decrease wherever the variation was more than 5%. It is stated that a supplemental agreement was executed on 27.06.2016, which in effect took away the benefit of price adjustment in the event of decrease in the cost as was otherwise envisaged under G.O.Ms.Nos.23 & 67. It is stated that the supplemental agreement was executed by the petitioner on account of 'financial problems and due to the urgency in settling payments to the workers and the suppliers'. Additionally, it is stated that the supplemental agreement was executed by the petitioner, as it was always under the impression that the benefit of price adjustment as reflected in the G.O.'s would be implemented.

6. After the execution of the supplemental agreement, the petitioner addressed two communications, one, dated 20.07.2016, to the Superintending Engineer, R&B Circle, Kurnool, and the other dated 17.08.2016 to the Engineer-in-Chief (R&B), Buildings, Hyderabad (A.P.), seeking the benefit of price adjustment in the case