M. Dhandapani, J.

1. The writ appeal is filed against the order dated 07.11.2012 in W.P. No. 29671 of 2011, wherein, the learned Single Judge allowed the writ petition filed by the respondent herein.

2. The facts of the case are as follows:

The respondent is one of the leading civil engineering contractors and they entered into an agreement with the appellant for construction of a road over-bridge in Pallavaram Thoraipakkam radial road connecting NH-45 near Vaishnava College.

3. The respondent submitted its price bid by furnishing a tender dated 16.07.2008 to the appellant. Accordingly, the tender was accepted and an agreement was entered into with the first appellant setting out the terms and conditions of the contract. After completion of the contract, the respondent raised bills at various stages and the payments were also made by the appellant. However, a sum of Rs. 1,83,01,136/- has been illegally recovered from the bills of the respondent by the second appellant. The said recovery was made by relying on the G.O.Ms. No. 101 PW (G2) dated 10.06.2009. However, the respondent claimed that the recovery is wrong since only G.O.Ms. No. 60 dated 14.03.2008 is applicable. The claim of the respondent was rejected. Aggrieved by the same, the respondent filed the writ petition.

4. The main contention raised by the respondent is that for escalation of price, G.O.Ms. No. 101 PW-(G2) dated 10.06.2009 is not applicable at all and G.O.Ms.No. 60 dated 14.03.2008 alone is applicable. However the second appellant without examining the issues raised by the appellant in true perspective of the contract conditions, rejected the claim for refund of the amounts recovered on the following stand:

"(i) The Full Price adjustment is for all the components other than cement, steel, bitumen and POL means "including cement, steel, bitumen, POL, General materials and Labor etc. which applies for works contract for 12 months and above. Price adjustment is for special materials only viz. Cement, Steel, Bitumen for the works contract for 12 months and below. The difference between full price adjustment and price adjustment is only for General materials, Labor etc.

(ii) The Period of contract is for 12 months and below, price adjustment only for special materials, (i.e.) Cement, Steel, Bitumen and POL including General materials, Labor etc are allowed. The above have been confirmed by the Government in G.O.Ms. No. 101 PWD (G2) dated 10.06.2009.

(iii) As per the agreement, Section III, Commercial condition clause 7.3 Price variation clause states that the price variation clause will be applicable as per the G.O.Ms. No. 60 PW-(G2) department dated 14.03.2008 para 3(1)(a), (d) and (e). Further as per the agreement, Section III, clause 7.4.2, 7.4.3, 7.4.4 and 7.4.5 price variation formula for special materials viz. Cement, Steel, Bitumen and POL have been incorporated in the agreement. Further, as per the agreement condition 13.4.8, it is clearly stated that the above clause is operative both ways, (i.e.) if the price variation as calculated above is on the plus side, payment on account of the price variation shall be allowed to the contractor and if it is on the negative side, the employer shall be entitled to recover the same from the contractor and the amount shall be deductible from any amount due and payable under the contract."

5. The appellants filed counter affidavit in the writ petition stating that the contractor has executed the work and got the final payment for an amount of Rs. 24,07,62,942/-. The adjustment of contract price were done under price variation clause of the agreement vide clause No. 7.3, 7.4. to the contractors in the interim monthly work bills. During execution of work, the rates for special materials viz. cement, steel, bitumen etc., have come down constantly every month from their price during the submission of the tender proposals. With the result, the escalation claims are on the munus side of the contract price and deduction of