Odisha HC Orders Fresh Price-Escalation Calculation for Road Contractor After Officials Apply Quashed Retrospective Rule

The petitioner was awarded a road-upgradation contract commencing on 9 March 2015 and completed the work under the agreed terms

After an earlier Office Memorandum dated 24 December 2012 concerning price variation was quashed, the High Court, in the petitioner’s prior writ petition, directed the authorities to issue a fresh circular and to refund or adjust deductions made under that memorandum

The Works Department issued an Office Memorandum on 19 November 2019 prescribing a price-adjustment clause prospectively, followed by a memorandum dated 7 June 2021 purporting to apply the 2019 procedure retrospectively

In 2023, the High Court quashed the 2021 memorandum because an administrative authority could not give the 2019 memorandum retrospective effect

Nevertheless, the authorities issued letters dated 10 March 2023 and 18 March 2024 applying the codal procedure to the petitioner’s price-escalation calculation; the petitioner challenged those letters

An administrative authority cannot give an administrative order retrospective or retroactive effect; an order purporting to do so is invalid on that ground

The 19 November 2019 Office Memorandum prescribing a price-adjustment clause was to operate prospectively, while the 7 June 2021 memorandum purporting to extend that procedure retrospectively was quashed in W.P.(C) No. 30191 of 2021

The Court also relied on its order dated 18 June 2018 in the petitioner’s earlier writ petition, which directed action concerning price escalation in accordance with the law and the directions in All Odisha Contractors’ Association v. State of Odisha, 2012 (II) OLR 586

The petitioner’s work and the relevant contractual arrangements predated the 2019 memorandum, which operated only prospectively

The 2021 memorandum—the instrument that purported to extend the procedure retrospectively—had been quashed before the authorities made their final calculation

The Executive Engineer nevertheless applied that procedure to the petitioner’s case.

The Court held that the authorities were bound to follow the law declared in the 2023 judgment and could not rely on the earlier direction of 10 March 2023 to disregard the subsequent ruling

It quashed the letters dated 10 March 2023 and 18 March 2024 and directed the authorities to recalculate the price escalation in accordance with the order dated 18 June 2018, within four weeks of communication of the judgment.