Chief Executive Officer vs South Indian Constructions Pvt. Ltd.

Headnote Court Copy Facts Arguments Court observation Judicial Analysis Case Map Category Hierarchy Table of Content

2026 Supreme(Ker) 967

IN THE HIGH COURT OF KERALA AT ERNAKULAM
SOUMEN SEN, CJ., SYAM KUMAR V.M., J.
The Chief Executive Officer – Appellant
Versus
South Indian Constructions Pvt. Ltd. – Respondent
W.A. No.1166 of 2026
Decided On : 13-07-2026

Important Points

Appellate courts may admit additional evidence if necessary for just adjudication. When parties execute supplementary agreements during a contract that incorporate government guidelines regarding rate calculations for excess work, those terms are binding and enforceable upon all involved parties.

Subject

Contract Law - Construction Contract Disputes

Act Referred

CIVIL PROCEDURE CODE : O.41 R.27

Headnote

(A) Code of Civil Procedure, 1908 - Order XLI Rule 27 - Appellate stage - Power of court to admit additional evidence - Documentary evidence in form of supplementary agreements found vital for resolution of dispute and just adjudication. (Paras 22, 23)

(B) Contract Law - Interpretation of agreements - Applicability of government directives - When parties enter into supplementary agreements acknowledging state circulars regarding payment for excess quantities and extra items, they are bound by such terms - Subsequent conduct evidenced by agreements indicates voluntary acceptance of conditions - Appellate courts must consider all disclosed agreements to ensure equitable resolution. (Paras 25, 27)

Facts of the case:
Disputes arose between a funding entity, an implementing agency, and a contractor regarding payments for balance project work. A conflict emerged whether a government directive regulating item rate contracts for excess works was applicable to these contracts post-initial agreement. While the original agreements were silent, several supplementary agreements addressing these conditions were produced for the first time during the appellate stage.

Findings of Court:
Upon examining the supplementary agreements, it became evident that the parties had mutually acknowledged the applicability of the government financial directives for payments concerning extra work items. The court determined that these agreements were executed voluntarily by the parties involved and the terms therein govern the payment process.

Issues: The main issues were whether a government order concerning technical and financial conditions for project works applies to contracts for balance works and whether the court should admit additional supplementary documents at the appellate stage.

Ratio Decidendi: The court established that appellate bodies are empowered to admit relevant additional evidence which is crucial for just adjudication. Where parties proceed to execute supplementary agreements that expressly incorporate government guidelines on payment rates during the project tenure, they are legally bound by such terms, and the judiciary will enforce payment based on the totality of the contractual arrangement rather than isolated segments.

Result: Appeal disposed of with a direction to the funding agency to release pending payments in accordance with the conditions stipulated in the supplementary agreements and the relevant government order within eight weeks.

Advocates appeared:
For the Appellant : SRI.S.CHANDRASEKHARAN NAIR, SC, KIIFB SRI.CHETHAN KRISHNA R. SRI.S.JAYANT SMT.ABHIREMYA RAJ R. B. SRI.GOVIND V.P. SMT.GAYATHRI R.
For the Respondent: SRI.C.UNNIKRISHNAN (KOLLAM) SRI. SUNIL KUMAR KURIAKOSE SMT.V.A.HARITHA

Table of Content
1. applicability of go(p) no.54/2019/fin to re-tendered works and contractor payments. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. conflict between contract clauses, existing general conditions of contract (gcc), and subsequent government orders. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18)
3. impact of undisclosed supplementary agreements on statutory and contractual obligations. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27)
4. court's directive to prioritize equity and payment for executed works over bureaucratic delays. (Para 28 , 29 , 30)

JUDGMENT

Soumen Sen, C.J.

1. This appeal is arising out of a judgment and order passed by the learned Single Judge on 18^th February, 2006, in a writ petition filed by the 1^st respondent/writ petitioner, inter alia praying for an order directing the 2^nd respondent herein to disburse the entire amount to the writ petitioner for the works already executed, overruling the objection raised by the Chief Executive Officer, Kerala Infrastructure Investment Fund Board (in short, ‘KIIFB’).

2. The factual circumstances leading to the filing of the writ petition are summarized below:-

3. The writ petitioner is engaged in contract works and was executing various projects in Government and other institutions. The writ petitioner has successfully completed the works for “Modernization of Schools to International standards as Centres of Excellence and Betterment of Infrastructure Facilities” in 19 Schools. All the works of such schools were completed to the satisfaction of the respondents. In the year 2018, works of similar nature were entrusted to different contractors in respect of 11 schools, which consists of 5 schools in Pathanamthitta, 2 schools in Malappuram and 4 schools in Thrissur District. The said contractors, however, left the work incomplete midway during the year 2020 and thereafter the respondents re- entrusted the balance work of those 11 schools to the writ petitioner. After completion of the works, the writ petitioner could not submit the final bill for the works entrusted because supplementary agreement was not executed by the 1^st respondent, Kerala Infrastructure and Technology for Education (KITE, for short), despite the approval of revised estimate. The 2^nd respondent, funding agency, is of the view that GO(P).No.54/2019/Fin. dated 4, September, 2021 (Exhibit P6) informed the writ petitioner May, 2019 (Exhibit P5) is to be applied while preparing the Revised Estimate. The 1^st respondent in its communication dated 29th that it had decided not to implement the said Government Order for ‘risk and cost’ for the rearranged works, of which, agreement for the original works were prior to the date of the said Government Order. The petitioner alleged that it was due to the interference of the 2^nd respondent, (the appellant herein), the payments could not be released as the 2^nd respondent objected to the 1^st respondent ignoring Exhibit P5 Government Order. The appellant was of the view that since the work was re-allotted to the writ petitioner after the issuance of Government Order (Exhibit P5), the said Government Order has to be applied while approving the Revised Estimate.

4. The 1^st respondent, KITE, in response to the issue raised by the KIIFB regarding the decision of KITE, not to make the same Exhibit P5 Government Order applicable to the present contract, by communication dated 24^th August, 2022 has stated as follows:-

"1. In the case of re-tendered works referred herein which was terminated under risk and cost to the Contractor, we have received Technical, Financial & Legal advice. The advises received are very clear and decision was taken in the matter accordingly. Remarks were obtained from PMC-M/s.WAPCOS Ltd. and Chairman Government Constituted Technical Committee in 2021 itself with regard to the applicability of the GO(P) 54/2019/Fin. dated 04.05.2019 for the work re-tendered in 2020 with the same conditions of 2018. They have intimated KITE that the original ten