A Bitumen Price Neutralization Policy Applies Despite a Pre-Policy Contract Where Authorities Recognize the Claim.

The petitioner, a registered contractor, was awarded the work of strengthening and widening the Beldaur–Sakrohar Road under the NABARD Scheme pursuant to Agreement No. 26-F2/2006-07. The agreement was executed in March 2007, with completion stipulated by 28 February 2008. The work was completed on 24 May 2011 after an extension of time granted by the respondents, and the contractual dues were otherwise paid.

The petitioner claimed reimbursement of the increased cost of bitumen under the departmental Bitumen Price Neutralization Policy dated 24 September 2009. His claim, quantified at Rs.14,58,297/-, was verified and recorded in the Measurement Book in 2015.

The Executive Engineer thereafter requested allotment of the said amount for payment to the petitioner by letter dated 15 July 2017, but payment was not made despite representations and legal notices.

The respondents resisted the claim on the grounds that the policy was introduced after execution of the agreement and that the extension of time had been granted subject to a condition barring additional claims.

Whether the petitioner was entitled to payment of Rs.14,58,297/- under the Bitumen Price Neutralization Policy dated 24 September 2009, notwithstanding that the contract had been executed before the policy was introduced.

Whether the condition attached to the extension of time, barring additional claims, defeated the petitioner’s otherwise substantiated claim for bitumen price escalation.

Whether the respondents could withhold the amount despite departmental verification and a specific request for allocation of funds.

The Court applied the terms of the parties’ contract together with the departmental Bitumen Price Neutralization Policy dated 24 September 2009.

The governing principle was that a contractual claim otherwise payable under an applicable departmental policy could not be rejected merely because the original agreement preceded the policy, particularly where the department had subsequently examined, verified, and acted upon the claim.

The Court further held that an extension-of-time condition could not, by itself, defeat a claim found payable under the departmental policy.

No statutory provision or judicial precedent was expressly relied upon in the judgment.

The Court found that the petitioner’s work had been completed after a departmental extension granted upon consideration of the relevant circumstances, and that the extension did not automatically extinguish an otherwise valid claim under the departmental policy.

Although the respondents argued that the 2009 policy could not apply to a 2007 agreement, the Court placed substantial reliance on the subsequent departmental conduct: the petitioner’s claim had been recorded in the Measurement Book, and the Executive Engineer had specifically sought allotment of Rs.14,58,297/- for payment in accordance with the policy.

In the absence of any satisfactory justification for withholding the verified amount for several years, the Court concluded that the respondents’ objections were insufficient and that the petitioner had established his entitlement.

The judgment did not expressly grant the separate claim for interest or prescribe a specific time limit for payment.

Any interlocutory applications were disposed of.