The court affirmed the entitlement to interest for delayed payment under Article 226, emphasizing procedural adherence in contract law while mandating adherence to dispute resolution mechanisms as per the agreement.

ORDER :

B. Vijaysen Reddy, J.

This writ petition is filed aggrieved by the action of the respondents in not releasing the admitted and approved amount of Rs.80,26,24,011/- (Rupees eighty crores twenty six lakhs twenty four thousand and eleven only) to the petitioner (Joint Venture) for price adjustment towards labour and other materials as per the conditions of the Agreement No.LS 1/2005-2006 dated 03.04.2005 and orders of this Court in W.P. No.40000 of 2012 dated 23.03.2022 as illegal, arbitrary, unconstitutional and for a consequential direction to the respondents to release the amount along with interest.

2.1. In the tender process floated by the respondents for execution of Stage II, Phase I of Sripada Sagar Project - Investigation, soil exploration, Design, Supply, Installation, Testing and Commissioning of Pumping Machinery, Transformers, Substations, Rising Mains, including construction of Pump Houses, all Civil Structures, CM & CD works, Delivery Cisterns etc., to develop about 2.00 lakh acres of ayacut under Sripada Sagar Project near Yellampalli Village, Ramagundam Mandal in the up-land area of erstwhile Karimnagar District (Sripada Sagar Project), the petitioner was declared as successful bidder.

2.2. Project Agreement No.LS 1/2005-2006 dated 03.04.2005 was entered into between the petitioner and respondents. General Conditions of Contract (GCC) were incorporated into the Agreement between the petitioner and the respondents.

2.3. It is the case of the petitioner that as per Clause 13.8 of the GCC, the petitioner is entitled to price adjustment from the respondents in the event of increase in rates and prices of labour, cement, steel, fuel, lubricants and other materials. Accordingly, the petitioner, right from October 2005, was submitting running account bills with price adjustment for the aforesaid items in terms of GCC and agreement conditions. There was exchange of correspondence between the petitioner and the respondents regarding price adjustment. As there was dispute regarding price adjustment, the petitioner filed W.P. No.40000 of 2012 before this Court against the respondents to declare the letter dated 03.02.2012 and the internal proceedings dated 16.11.2009 whereby the petitioner’s price adjustment claim was rejected as illegal, arbitrary and unconstitutional. W.P. No.40000 of2012 was allowed by this Court by the order dated 23.03.2022 directing the respondents to verify the claim of the petitioner for price adjustment towards labour and other materials and pay the amount as expeditiously as possible preferably within a period of eight (8) weeks from the date of receipt of a copy of that order.

2.4. Thereafter, the petitioner made several representations for payment of price adjustment towards labour and other materials as directed by this Court in W.P. No.40000 of 2012. Upon receipt of the petitioner’s request vide letter dated 15.10.2022, the Government vide Memo dated 27.10.2022 requested respondent No.3 - Engineer-in- Chief (General), Irrigation and CAD Department, Secretariat Buildings, Hyderabad, to take necessary action for release of pending payment of price adjustment towards labour and other materials. Respondent No.7 - Superintending Engineer, Irrigation Circle, Dharoor Camp, Jagitial, vide Letter No.SE/IC/JGL/DSE/ DEE-1/AEE-2/338/H dated 19.06.2023 to respondent No.5 - the Chief Engineer, I&CADD, Dharoor Camp, Jagitial, informed that the verified amount of Rs.80.26 crores (Rs.80,26,24,011/-) is the amount towards price adjustment payable to the petitioner and requested for taking further necessary action. In turn, respondent No.5 vide Letter No.CE(Irrigation)/TS/T2/SYP Price escalation/2023/621 dated 28.06.2023 verified and requested respondent No.3 to address the Government for taking further necessary action.

2.5. It is submitted that subsequently respondent No.3 vide Letter