The government cannot retrospectively apply policies to deny contractual benefits promised in existing agreements; contracts must be honored as written, without unilateral modifications.

JUDGMENT :

S.K. Panigrahi, J.

1. In this Writ Petition, the Petitioner seeks a direction from this Court to issue a writ of mandamus directing the opposite parties to release 7.5% of the entire work executed by the petitioner, as per Clause 120, Sub- Clause 2.4 of the contract. Additionally, the petitioner prays for a declaration that the retrospective application of the 2015 circular is illegal and that the petitioner’s claim should be considered based on the agreement executed in 2014.

I. FACTUAL MATRIX OF THE CASE

2. The brief facts of the case are as follows:

(i) The petitioner, a contractor, was awarded a government contract for constructing a Railway Over Bridge along with a bridge over Kanchi Nallah at CH.0/350 on the proposed road from NH-203 at Malatipatapur to Puri Konark Road NH-203A (Puri Bypass) in Puri District, Odisha.

(ii) The contract was awarded at 3% excess over the amount put to tender, and the agreement was executed on 03.03.2014 under Agreement No. 48 P1 of 2013-14. The original cost of the contract was Rs. 63,87,82,051, with a stipulated completion date 02.06.2015.

(iii) The contract contained a specific incentive clause under Clause 120, Sub-Clause 2.4.1, which entitled the contractor to an incentive payment for early completion of the work before the stipulated date. The incentive was structured on a graduated scale from 1% to 10% of the contract value, depending on how much earlier the work was completed.

(iv) The petitioner completed the entire project, including additional work, on 30.04.2015, well ahead of the stipulated deadline of 02.06.2015. Hence, he is claiming an incentive of 2.5% of the contract value as per the agreed terms.

(v) The petitioner received all payments due for the executed work, and the opposite parties claim that the payments were made in full and final settlement. The incentive claim for early completion was initially considered but was ultimately rejected due to the petitioner allegedly not fulfilling the stipulated conditions required to claim an incentive.

(vi) The opposite parties argue that the claim sidelines the Government Order under Note-I of Para 3.5.5. of OPWD Code Vol. I, which does not include bridge works for incentive eligibility.

(vii) The OPWD Code Vol. I, as amended in 2004 and 2006, states that only buildings, PH works (Rs. 40 Lakh Minimum), Road Works (Rs. 3 crore Minimum), and irrigation works (Rs. 10 Crore Minimum) qualify for incentives.

(viii) Since the petitioner’s contract involves bridge work, the government contends that no incentive was applicable as per the codal provisions.

(ix) A government office memorandum (No. 1046/W) dated 28.01.2015 amended Para 3.5.5 Note-III of OPWD Code Vol. I, making both road and bridge works eligible for incentives. However, this amendment was effective only from 28.01.2015, meaning any project executed under earlier agreements (before this date) would not qualify for an incentive. Since the petitioner’s contract was signed on 03.03.2014, the opposite parties argue that his claim cannot be entertained under the revised policy.

(x) The petitioner’s incentive claim was officially rejected by the Executive Engineer, Puri (R&B) Division, through an order dated 19.01.2021, followed by the Government in Works Department’s order dated 06.05.2021, and finally by the Commissioner-cum-Secretary to Government, Works Department, through an order dated 10.05.2021. The rejection was based on the reasoning that "Brid