R.F. Nariman, J. - (1.) Leave granted.
(2.) The respondent, National Highways Authority of India ["NHAI"], invited bids for construction of a four-lane bypass on National Highway 26 in the State of Madhya Pradesh. The appellant's bid was accepted vide its letter of acceptance dated 30.12.2005, for a total contract value of INR 219,01,16,805/-. The appellant before us is a company registered under the laws of the Republic of Korea, whereas the respondent is a Government of India undertaking, responsible for construction of National Highways throughout the territory of India. The components used in execution of work for which price adjustment was payable to the appellant are labour, plant and machinery, petroleum, oil and lubricant (POL), cement, steel, bitumen, and other local materials. Price adjustment for four of these components, i.e., cement, steel, plant and machinery, and other local materials was agreed to be calculated as per a formula given in sub-clause 70.3 of the contract. The relevant portion of sub-clause 70.3 states as under: "ii. Adjustment for Cement Component Price adjustment for increase or decrease in the cost of cement procured by the contractor shall be paid in accordance with the following formula: JUDGEMENT_50_LAWS(SC)5_2019_1.html JUDGEMENT_50_LAWS(SC)5_2019_1.html Where, Vc = increase or decrease in the cost of work during the month under consideration due to change in rates of component. C0 = the all India average wholesale price index for cement on the day 28 days prior to the closing date of submission of bids, as published by Ministry of Industrial Development, Government of India, New Delhi. C1 = the all India average wholesale price index for cement on the day 28 days prior to the last day of the period to which a particular interim payment certificate is related, as published by Ministry of Industrial Development, Government of India, New Delhi. Pc = percentage of Cement component." Insofar as the component C0 is concerned, the date which is 28 days prior to the last submission of bids is 29.09.2005, which is the base date for calculation of price adjustment, since it is common ground that the date of submission of the bid is 27.10.2005.
(3.) The price adjustment was being paid to the appellant every month in terms of the agreed formula under sub-clause 70.3 by using the Wholesale Price Index ["WPI"] published by the Ministry of Industrial Development, which followed the years 1993-94 = 100 ["Old Series"]. However, with effect from 14.09.2010, the Ministry of Industrial Development stopped publishing the WPI for the Old Series and started publishing indices under the WPI series 2004-05 = 100 ["New Series"]. It is important to note that even under this New Series, the WPIs for the previous years beginning from April, 2005 were also being published by the Ministry. This being so, as both the indices C1 and Co were available to the appellant under the New Series for calculating price adjustment, the appellant raised its bills accordingly. It is undisputed that payments of 90% of the monthly bills on this basis were made for the period September, 2010 to February, 2013. On 15.02.2013, the respondent issued a Policy Circular ["Circular"], in which a new formula for determining indices was used by applying a "linking factor" based on the year 2009-10. However, this Circular expressly stated: "Thus, payment on account of price adjustment may be made by adopting the above process subject to the condition that the contractors furnish undertaking / affidavit that this price adjustment is acceptable to them and they will not make any claim, whatsoever, on this account in future after this payment.";