Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 6634 of 2023 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). M/s Pratistha Engineering Ltd.,, Bhubaneswar …. Petitioner(s) -versus- State of Odisha and Ors. …. Opposite Party (s) Advocates appeared in the case throughHybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. Merusagar Samantray, Adv. Along with Ms. J.J. Jyoti, Adv. Ms. Jyotsnamayee Sahoo, ASC CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-15.05.2025 DATE OF JUDGMENT:-20.06.2025 Dr. S.K. Panigrahi, J. 1. In this Writ Petition, the Petitioner seeks a direction from this Court to compel the Opposite Parties to pay interest on a delayed escalation payment of ₹2.79 crore, alleging arbitrary denial despite admitted liability, invoking principles of equity, Article 14, and settled judicial precedents. Page 1 of 20 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the caseare asfollows: (i) A tender bearing Bid ID No. CE-DPI&R-16/2010-11 was floated for the construction of a Road Over Bridge near Lingaraj Road PH Level Crossing No.190. The agreement for the work was executed on 28.05.2012 with M/s. Panda Infra Projects Ltd. The estimated value of the contract was approximately ₹21.73 crore (₹21,73,61,511/- as per the petitioner; ₹21,10,30,593/- as per opposite parties). (ii) The work commenced shortly after agreement execution and was completed on 27.06.2018, as acknowledged by both parties. The project timeline was extended through official approval without levy of penalty. (iii) The final bill was submitted by the contractor on 29.06.2018 and accepted by the Executive Engineer on 14.11.2018, though it excluded the labour wage escalation component. The petitioner submitted a separate escalation claim amounting to ₹2,87,63,236/- relating to enhanced minimum wages. (iv) The petitioner made multiple representations for the release of escalation dues between January 2020 and August 2020, submitting supporting documentation. Government authorities approved excess deviation work on 25.08.2020, enhancing the contract value by 20.80%. The Chief Engineer (World Bank Projects) acknowledged the escalation claim on 16.10.2020. (v) Due to administrative inaction, the petitioner approached this Court in W.P.(C) No. 7545 of 2021. Pursuant to the Court’s direction dated Page 2 of 20 Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 29.07.2021, an amount of ₹2,79,92,792/- was paid towards the escalation claim. (vi) The petitioner filed a representation on 22.10.2022 seeking interest of ₹2,64,26,120.74 at 18% per annum for the period 29.06.2018 to 30.07.2021. The representation was rejected on 06.01.2023, prompting the present writ petition. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) Despite admitting and paying principal escalation dues, the interest was arbitrarily denied, violating the Petitioner’s rights. The Petitioner suffered financial losses and interest on borrowed capital during the delay period. (ii) Clause 31 of the Agreement entitles Petitioner to refund/escalation in labour, material, diesel costs. Once escalation is admitted and paid, interest is an implied contractual obligation when payment is delayed. (iii) Once the government admitted and processed escalation dues, denial of interest on grounds of absence of guidelines is unsustainable and barred by estoppel. Government cannot take advantage of its own delay and administrative inertia. (iv) It is submitted that as per the case of S.K. Dua v. State of Haryana1, the interest can be awarded even in absence of statutory rule, based on constitutional rights or equity. 1(2008) 3 SCC 44. Page 3 of 20 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 (v) Administrative laches cannot deprive the contractor of rightful compensation. Other contractors have been paid with interest; discrimination here violates principles of equity and fair play. (vi) The petitioners rely on the decisions in ABL International Ltd. v. Export Credit Guarantee Corporation2 and Unitech Ltd. v. TSIIC Ltd3.to contend that even contractual matters may be examined under Article 226 of the Constitution where the conduct of the State or its instrumentalities is arbitrary, unreasonable, or involves elements of public law. It is further submitted that a monetary claim arising out of such arbitrariness is maintainable in writ jurisdiction when directed against the State or entities discharging public functions. (vii) State’s refusal to pay interest despite full admission and prolonged delay is disproportionate, mala fide, and biased. Petitioner is being treated differently from similarly situated contractors. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES:
Legal Reasoning
4. Learned counsel for the Opposite Parties earnestly made the following submissions in support of her contentions (i) The petition is not maintainable under Article 226 as it pertains to a purely contractual money claim (interest on delayed escalation payment). The opposite parties argue that such disputes must be adjudicated in a civil or commercial court, especially since the claim does not involve any violation of a statutory or constitutional right. Reliance is placed on Union of India v. PunaHinda4.