Tender contract rates, escalation, and interest were limited by written terms, proven entitlement, and non-commercial transaction principles.

Written tender terms governed payment for extra work, and implied consent could not be inferred from silence or non-response to correspondence. Where the contractor had withdrawn a reservation for extra rates and no competent authority positively accepted a higher rate, enhanced payment for additional excavation, dewatering and rubble trap masonry was not available, though the contractor was entitled to the rate applicable to hard-strata excavation to the extent supported by the record. The escalation claim was upheld on the basis of the governing resolution and notifications. Interest was modified because pre-suit interest had to be confined to the proved current rate, and pendente lite interest under Section 34 CPC was limited to 6% per annum since public bridge construction was not a commercial transaction.

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Issues: (i) Whether the contractor was entitled to extra payment for additional excavation, dewatering and additional rubble trap masonry over and above the tender rates on the footing of implied consent or a concluded agreement; (ii) whether the claim for escalation was payable; and (iii) whether the award of interest required modification under the Code of Civil Procedure, 1908 and the Interest Act, 1978.

Issue (i): Whether the contractor was entitled to extra payment for additional excavation, dewatering and additional rubble trap masonry over and above the tender rates on the footing of implied consent or a concluded agreement.

Analysis: The contract and its specifications governed the parties' rights. The tender conditions required the contractor to acquaint himself with the site and contemplated the possibility of additional excavation and dewatering. Clause 14 provided that additional work directed in writing would be carried out on the same conditions and at the tender rates, and the correspondence showed that the contractor had withdrawn his reservation for extra rates. Mere silence or non-reply to letters did not amount to acceptance of enhanced rates, and there was no positive act by the competent authority settling a higher rate. At the same time, the record did not support the view that all excavation was soft strata; the contractor was entitled to the rate applicable to hard strata, but not the higher rate claimed by him.

Conclusion: The claim for extra payment on the footing of implied consent or a concluded agreement failed, except to the limited extent that the contractor was entitled to a higher amount than what had been paid for the additional hard-strata excavation.

Issue (ii): Whether the claim for escalation was payable.

Analysis: The project expenditure had increased beyond the original estimate, and the relevant governmental resolution and notifications covered escalation for such work. The appellate record showed that the Department itself had accepted the relevance of escalation and the amount awarded by the trial court was consistent with the materials on record.

Conclusion: The claim for escalation was upheld and remained payable in favour of the contractor.

Issue (iii): Whether the award of interest required modification under the Code of Civil Procedure, 1908 and the Interest Act, 1978.

Analysis: Interest could not be awarded on interest prior to suit as part of the principal sum. For the pre-suit period, the claim was governed by the Interest Act, 1978 and the rate had to be confined to the current rate of interest proved on record. For pendente lite and future interest under Section 34 of the Code of Civil Procedure, 1908, the transaction was not a commercial transaction, as construction of a bridge for public benefit was not trade, business or industry in the relevant sense. The trial court's award therefore required reduction.

Conclusion: The interest award was modified; pre-suit interest was confined to the proved current rate and pendente lite interest was restricted to 6% per annum.

Final Conclusion: The appeal succeeded only in part: the contractor's larger claims for extra rates were substantially reduced, the escalation claim was sustained, and the interest component was modified to the extent indicated.

Ratio Decidendi: In a written tender contract, extra work does not carry enhanced rates unless the competent authority positively agrees to them; silence or correspondence alone does not create an implied agreement, and public bridge construction is not a commercial transaction for the purpose of awarding enhanced interest under Section 34 of the Code of Civil Procedure, 1908.

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