Suresh Chandra Dash vs. State Of Odisha
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The Petitioner, Suresh Chandra Dash, entered into an agreement on December 21, 2020, with the Opposite Parties for the construction of an academic building for AES College at Tarva, Subarnapur district, for ₹2,20,63,745 (excluding GST). The work was to be completed by September 20, 2021, and the Petitioner claims to have finished it within the stipulated period, obtaining a completion certificate. The Petitioner's grievance is the non-disbursement of the amount towards price adjustment/price escalation, computed and approved by the Superintending Engineer, R&B Division, Sonepur (Opposite Party No.4) on February 10, 2022, amounting to ₹20,36,627.97. The Petitioner contends this claim arises directly from Clause 31 of the agreement and is not a fresh or disputed contractual claim.
Held
The Court held that while writ courts ordinarily refrain from interfering in contractual matters and tender awards, as reiterated by the Supreme Court in Tata Motors Limited vs. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, this restraint does not preclude the Court from directing the competent authority to examine a claim that has already been processed and acknowledged by departmental authorities under the terms of the contract. The Court noted that the Petitioner asserted completion of work and that price adjustment/escalation had been computed and approved by Opposite Party No.4. Therefore, the Court directed Opposite Party No.4, the Superintending Engineer (R&B) Division, Sonepur, to consider the Petitioner's claim for price adjustment/price escalation under Clause 31 of the agreement, including the calculation already made and approved. The authority is to examine whether any further requirements remain for disbursement and, if payable, take consequential steps. This exercise is to be completed within four weeks from the order's communication, with a reasoned decision to be communicated to the Petitioner forthwith. The Court explicitly stated it was not expressing any opinion on the entitlement or quantum of the claim.
Key Issues
1. Whether the High Court, in its writ jurisdiction, should entertain a dispute arising from a contractual transaction concerning the release of price adjustment/escalation amounts already computed and approved by a departmental authority under Clause 31 of the agreement? Petitioner's Argument: The Petitioner argued that the claim arises directly from Clause 31 of the agreement and that they are not seeking adjudication of any fresh or disputed contractual claim, but rather the release of an amount that has already been computed and approved by the departmental authority. They are seeking enforcement of a contractual obligation that has been acknowledged by the respondent. Revenue/State's Argument: The judgment does not record any specific arguments made by the Opposite Parties (State of Odisha & others) regarding the Petitioner's claim. However, the Court's reliance on Supreme Court judgments concerning writ jurisdiction in contractual matters suggests an implicit argument that such matters are generally outside the purview of writ petitions.
Sections Cited
Clause 31
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Cause title — parties, addresses and appearances
2026
1. Heard learned counsel for both the Parties.
The Petitioner had entered into an agreement dated 21.12.2020 with the Opposite Parties for the work of “Construction of Academic Building for AES College at Tarva in the District of Subarnapur under World Bank Assistance OPHEE Phase-I for the year 2020-21”. The agreement value was ₹2,20,63,745/-, excluding GST, with the stipulated date of completion being 20.09.2021. The Petitioner claims to have completed the work within the stipulated period and a completion certificate was thereafter issued.
The grievance of the Petitioner is confined to non- disbursement of the amount towards price adjustment/price escalation payable under Clause 31 of the agreement. According to the Petitioner, the Superintending Engineer, R&B Division, Sonepur, Opposite Party No.4, computed and approved the price adjustment/price escalation payable to the Petitioner on 10.02.2022. However, despite such computation, the amount has not been released. The price-escalation statement placed on record reflects a total amount of ₹20,36,627.97. 4. Learned counsel for the Petitioner submits that the claim arises directly from Clause 31 of the agreement and that the Petitioner is not seeking adjudication of any fresh or disputed contractual claim, but release of the price adjustment/price escalation amount stated to have already been computed and approved by the departmental authority.
At the outset, it needs to be noticed that the present dispute arises out of a contractual transaction and concerns the Petitioner’s claim for payment under the terms of the agreement. In Tata Motors Limited vs. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, reported in 2023 SCC OnLine SC 671, the Hon’ble Supreme Court has reiterated the restraint to be exercised by a writ Court while examining a decision relating to tender or award of contract, as follows:
“52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three- Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Others, reported in (2005) 1 SCC 679. 53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere.
As observed by this Court in Jagdish Mandal v. State of Orissa and Others, reported in (2007) 14 SCC 517, that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.”
The aforesaid principle, however, would not preclude this Court from requiring the competent authority to examine a claim which has been raised by the Petitioner and upon which the departmental authorities are stated to have already undertaken an exercise under the terms of the contract. In the present case, the Petitioner asserts that the work has already been completed and that the price adjustment/price escalation has been computed and approved by Opposite Party No.
The question as to whether the amount so computed is presently payable and whether any further contractual or statutory requirement remains to be complied with, is required to be examined by the competent authority.
In view of the aforesaid, without expressing any opinion on the entitlement or quantum of the Petitioner’s claim, we deem it appropriate to dispose of the writ petition with a direction to Opposite Party No.4 i.e. Superintending Engineer (R&B) Division, Sonepur to consider the Petitioner’s claim for price adjustment/price escalation under Clause 31 of the agreement, including the calculation stated to have already been made and approved by the said authority, with reference to the relevant records and the terms and conditions of the contract.
While undertaking the aforesaid exercise, Opposite Party No.4 shall examine whether any further requirement remains to be complied with before the amount can be released and, if the amount is found payable, take consequential steps for its disbursement in accordance with the contractual provisions and applicable rules.
The aforesaid exercise shall be completed within a period of four (04) weeks from the date of communication of this order with a reasoned and speaking decision and shall be communicated to the Petitioner within one (01) forthwith thereafter.
With the aforesaid observations and directions, the Writ Petition stands disposed of.
(Harish Tandon) Chief Justice
(Chittaranjan Dash) Judge
Bijay/Sarbani
Reproduced from the public record of the Orissa High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.