Kurien E.Kalathil v. State of Kerala, Kerala State Electricity Board & Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN WEDNESDAY, THE 28TH JANUARY 2009 / 8TH MAGHA 1930 WP(C).No. 31108 of 2007(C) -------------------------- PETITIONER: -------------------- KURIEN E.KALATHIL, CONTRACTOR, T.C.NO.14/1004, VAZHUTHACAUD, TRIVANDRUM. BY SR. ADV. SRI. ARAVIND DATTAR, & ADV. SRI.M.RAMESH CHANDER RESPONDENT(S): --------------------------- 1. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, GOVERNMENT SECRETARIAT, TRIVANDRUM - 695 004. 2. KERALA STATE ELECTRICITY BOARD, REPRESENTED BY ITS SECRETARY, VYDYUTHI BHAVANAM, PATTOM, TRIVANDRUM - 695 001. 3. THE CHIEF ENGINEER (CONSTRUCTION CIVIL) NORTH, KERALA STATEELECTRICITY BOARD, GANDHI ROAD, KOZHIKODE. R2 & R3 ADV. SRI.P.P.THAJUDEEN, STANDING COUNSEL & ADV. SRI. ASOK M.CHERIYAN, STANDING COUNSEL. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/01/2009, AND SPOKEN TO ON 28.01.2009 , THE COURT ON THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **WP(C).No. 31108 of 2007(C)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - Ext.P1: True copy of judgment dated 2.4.1998 of this Honourable Court in O.P.Nos.283/1995-H and 10759/1997. - Ext.P2: True copy of judgment dated 19.7.2000 of the Honourable Supreme Court in CA No.4092/2000 (amended as per Order dt.13.2.2008 in IA No.2190/08). - Ext.P3: True copy of Review Petition No.1095/2000 dt.7.9.2000 on the file of the Honourable Supreme Court(amended as per Order dt.13.2.2008 in IA No.2190/08).. - Ext.P4: True copy of order dt. 07.12.2000 of Supreme Court in Review Petition (C) No.1095//2000 in CA No.4092/.2000. - Ext.P5: True copy of clarification petition dt.28.10.2000 in CA No.4092/2000 filed by the respondent Board before the Supreme Court. - Ext.P6: True copy of order dt. 19.2.2001 of Honourable SupremeCourt in IANos.4 and 5 in CA No.4092/2000 ((amended as per Order dt.13.2.2008 in IA No.2190/08). - Ext.P7: True copy of IA NBo.6/2006 in CA No.4092/2000 filed by petitioner before Supreme Court ((amended as per Order dt.13.2.2008 in IA No.2190/08). - Ext.P8: Counter Affidavit dt. 07.3.2007 filed by KSEB before Supreme Court in IA No.6 of 2006 in CA No.4092/2000 (amended as per Order dt.13.2.2008 in IA No.2190/08). - Ext.P9: True copy of order dt.24.09.2007 of Supreme Court in IA No.6/2006 in CA No.4092/2000. - Ext.P10: True copies of letters dated 28.5.2002, 10.3.2002 and 26.7.2004 submitted by the petitioner. - Ext.P11: True copy of letter dated 25.11.1994 along with statement showing amount payable under labour escalation and interest. - Ext.P12: True copy of CC Bill No.85 dated 27.2.1997 raised by the petitioner for the works done. - Ext.P13: True copy of statement of claims under Labour Escalation and bills raised together with interest @ 9% after adjusting part payments as on 30.9.2007. (amended as per Order dt.13.2.2008 in IA No.2190/08). ## **J.B. Koshy, Ag. C.J. & K.P. Balachandran, J.** ------------------------------- **WPC No.31108 of 2007** ------------------------------- **Dated, this the 28[th] day of January, 2009** ## **JUDGMENT** ## **Koshy, Ag. C.J.** The writ petition is filed based on the direction of the Honourable Supreme Court for granting amounts due to the petitioner in implementation of the common judgment of the Division Bench (Ext.P1) passed in O.P.Nos. 283 of 1995 and 10759 of 1997, which was affirmed by the Hon'ble Supreme Court in Civil Appeal No.4092 of 2000. The exhibits mentioned in the above judgment are referred in that order in this judgment. 2. Petitioner was the contractor for construction of a Composite Dam across Karamanthodu at Padinjarethara in connection in Banasura Sagar Scheme (Kuttiyadi Augmentation Scheme). The contract was awarded to the petitioner (hereinafter referred to as,”the contractor”) by the Kerala State Electricity Board (in short, “the Board”) on 1.7.1981 under Ext.P1 agreement. Ext.P3 agreement was entered between the parties on 16.9.1989, which contained a formula regarding labour escalation rate depending upon revision of wages. The minimum wages were increased in the Kerala State by Ext.P5 notification. The Industrial Tribunal also awarded that the above wages are applicable to the workmen employed by the contractor by Ext.P15 **WPC No.31108/07** **- 2-** award. In implementation of the award of the Industrial Tribunal, Ext.P18 bipartite settlement was also entered into between the Unions and the Management. Thereafter, Ext. P20 demands were placed before the Board for granting escalation as per the clause in Ext.P3 agreement. For getting the escalation benefit with interest, the contractor filed W.P. (C) No.283 of 1995. Meanwhile, the contract with the petitioner was terminated. The petitioner-contractor approached this court by filing O.P. No.10759 of 1997 against termination of the contract and for paying the bills (Ext.P59) raised for the work already done. The main contention of the Board was that it was a contractual matter and it cannot be looked into by the High Court in writ proceedings. A Division Bench of this Court considered the matter extensively and finally by Ext.P1 judgment in O.P.Nos.283 of 1995 and 10759 of 1997, while allowing the claim for escalation as raised in Ext.P20 escalation claim, the Division Bench at para 6 of Ext.P1 judgment, has noticed as follows: (Page 52 of paper book) _“The dispute centres round the interpretation and implementation of labour escalation formula incorporated in Ext.P3. The labour escalation clause has been finally accepted by the parties as extracted in para No.8 of this judgment.”._ The court also noticed that labour escalation claim was paid for some period and all on a sudden it was stopped. Thereafter at para 7, it was **WPC No.31108/07** **- 3-** held as follows: (page 64 of paper book) _“Therefore, as rightly pointed out by the learned counsel for the petitioner, the Board is bound to reimburse the amounts to the petitioner which had been claimed by him. The Board cannot escape its liability inspite of its several promises made to the petitioner to fulfill the terms of the contract before and after entering into the contract in question.”._ Thereafter, at para 8 of the judgment, (page 75), it was further held as follows: _“In our opinion, the obligation of the Board to compensate the petitioner as per the labour escalation formula is unconditional and absolute and the Board cannot go behind the same.”_ . It was further held by the court as follows: (Page 76 - 77) _“We have already seen that the petitioner has submitted on 25th November, 1994 a detailed statement of amounts payable to him by way of labour escalation, adjustment of advance paid to the petitioner, net labour escalation amount payable as on 31-10-1994 and the interest due thereon, etc., which is produced and marked as Ext.P20. The authorities were requested to settle the claim at an early date. However, the Board has not done so. We are of the view that the Government's sanction is not necessary for effecting payment, since the Board is a_ **WPC No.31108/07** **- 4-** _party to the dispute covered by the award; since it is a statutory autonomous body empowered to take decisions and also bound by the provisions of the agreement Ext.P3.”_ . Thereafter, the following relief was granted at para 10 of the judgment: (Page 85 - 86) “Thus, it is seen that the legitimate claim of the petitioner has not been settled by the Board inspite of several representations made and inspite of several recommendations made by the top officials of the Board and also of the award passed by the Industrial Tribunal, the Board has unlawfully and illegally withheld the payment lawfully due to the contractor from the year 1985 onwards.”. The following relief was also granted in the writ petition No.283/95 filed by the petitioner for enforcing Ext.P20 in that writ petition, claiming the amount paid to the workers based on the escalation clause in Ext.P3 agreement. (at page 87) “ _We therefore, grant prayer (b) as prayed for and issue a writ of mandamus directing the second respondent to pay the petitioner interest at 18% on the amount shown in the statement, Ext.P20.”._ With regard to the termination of the contract, in O.P.No.10759 of 1997 the Division Bench at paragraph 25 observed as follows: (page 123- **WPC No.31108/07** **- 5-** ## 124) “The Board has not performed its obligation under the contract in paying the escalation charges legally and lawfully due to the petitioner. But has taken steps to cancel the contract without taking into account public interest and public money involved. If only the Board has paid the escalation charges, which has already been paid by the contractors to the contractors as per the provisions of the Minimum Wages Act, the contractor would not have stopped the work. The Board, in spite of the legal advice from the then standing counsel, the award of the Industrial Tribunal and of the settlement reached between the contractor and the workers and inspite of the positive direction given by the Government by constituting a committee of experts for implementation of the award and in spite of the advice of the officers of the Board who were at the helm of affairs, have miserably failed to discharge their statutory obligation for extraneous considerations which compelled us to allow O.P.No.283 of 1995.” At paragraph 26, the following directions were issued: (page 125) “The Board shall also pay to the petitioner the bills raised by him for the work done till date including labour escalation payment etc. etc. as ordered in O.P.No.283 of 1995.” This court has after setting aside the termination of the contract also directed to pay the bills for the works completed (Ext.P59) and O.P.No.10759 of 1997 was also allowed. The contract was completed thereafter. **WPC No.31108/07** **- 6-** 3. The Board approached the Honourable Supreme Court against the above judgment mainly contending that being a contractual matter, the writ should not have been entertained by the court. They contended on merits also. Those contentions were repelled by Ext.P2 judgment of the Supreme Court which was reported in **Kerala State Electricity Board v. Kurien E.Kalathil,** AIR 2000 SC 2573. At paragraphs 14 and 15, the Honourable Supreme Court has ordered as follows: _“14. In view of the aforesaid facts, the High Court directed the Board to discharge its obligation under the contractual provisions. It was noticed that earlier the Board had made payment to the contractor for enhanced wages from 1[st] April, 1983 to 31[st] December, 1984. Under the circumstances, declining to accept the second contention, we refrain from interfering with the direction for payment given in the impugned judgment except in respect of the rate of interest awarded by the High Court._ _15. The High Court has directed the Board to pay to the contractor the amount shown in the statement, Ext.P20, along with interest @ 18% per annum. Having considered the totality of circumstances, we feel that it would be just and proper to award interest @ 9% per annum instead of 18%. In the statement Ex.P20, the contractor has calculated interest @ 18% per annum. The interest_ **WPC No.31108/07** **- 7-** _amount would now be calculated at 9% instead of 18% per annum. The impugned judgment of the High Court is modified accordingly.”_ . ## (emphasis supplied) 4. In effect, the direction of the Division Bench to pay Ext.P20 and escalation charges and Ext.P59 was accepted, but instead of interest at 18% per annum, only 9% per annum was allowed. Then a review petition was filed and the review petition was also dismissed by the Supreme Court by Ext.P4 judgment. Thereafter, two clarification petitions (I.A.Nos.4 and 5) were filed by the Board and both petitions were dismissed by Ext.P6 order dated 19.2.2001. When another clarification petition (I.A.No.6 of 2006) was filed, the Honourable Apex Court has passed the following order (Ext.P9 dt.24.3.2007): [Pg.233] _“By virtue of the impugned judgment of the High Court, the Kerala State Electricity Board is liable to pay certain amount to the Petitioner-Contractor. There is a dispute regarding the quantum of the amount payable. This court, judgment dated 19.7.2000, had confirmed the finding of the High Court. The Petitioner-Contractor would be at liberty to move the High Court of Kerala seeking further steps for recovery of the amount_ **WPC No.31108/07** **- 8-** _and if there is any dispute between the Petitioner-Contractor and the Electricity Board, the High Court would consider the same and issue appropriate directions within a reasonable time.”._ So, Ext.P1 judgment has become final in all respects. Therefore, this petition was filed by the contractor compelling the Board to make payment as confirmed by the Supreme Court. The amount payable under labour escalation as per Ext.P20, according to the contractor, was Rs.6,32,84,050/- upto CC bill 78 and CC Nos.79 to 85 was Rs.90,96,582/- as can be seen from Exts.P6 and P7. On a reading of the counter affidavit (Ext.P8) filed before the Supreme Court by the Board in I.A. No.6 of 2006, the amounts worked out and admitted by the Board as labour escalation charges are mentioned, as per the two bills the total amount payable after adjusting advances paid like ways and means advance, adhoc advance etc. was Rs.7,23,80,632/- (see para 44 of Ext.P8). Therefore the total principal amount due after adjusting advances as on 5.1.1995 in respect of the two bills, there is no difference or dispute. But interest calculated was only Rs.5,57,39,710/-. The total amount with interest, after adjusting the advance, according to the Board, was Rs.12,81,20,342/- [Rs.7,23,80,632/- (principal) + Rs.5,57,39,710/- (interest)], and the above amount was paid on various dates and the last payment was made on 17.08.2003. It is the **WPC No.31108/07** **- 9-** contention of the petitioner that the interest calculated by the Board is wrong. According to the contractor, the principal amount payable after adjusting the advances was calculated as Rs.7,66,35,927/- as on 31.10.1994. The above interest was calculated by taking 18% interest. It is also submitted that only simple interest was calculated. Therefore, if it is 9% interest, the interest payable as on 31.10.1994 would be Rs.3,83,17,963.50. The net amount payable as on 30.6.2006 on the two bills as per the statement filed before the Supreme Court for labour escalation charges taking 9% simple interest on principal amount on diminishing balance of Rs.3,60,93,738/-, the Board did not file any specific objection regarding calculation. As on 30.9.2007, the amount due from the Board to the contractor against Ext.P20 (labour escalation) calculated at 9% simple interest on diminishing balance for the bills CC 14 to 78 is Rs.57,73,143/- and the principal amount is Rs.1,38,37,977/-. With regard to the second bill (CC bill 79 to 85), the admitted balance outstanding as against the principal amount was Rs.9,09,582/- and the interest due at 9% simple interest was Rs.99,67,143/-. Thus, the total of the balance amount inclusive of principal and interest as on 30.9.2007 will be Rs.3,86,73,845/-. The details of the calculation is as follows: **WPC No.31108/07** **- 10-** |||**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**|**Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment**||| |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |||<br> **against Ext.P20 (labour escalation) calculated at 9% simple interest on diminishing balance**|||||||||||| ||**Opening due**<br>**from CC 14**<br>**to 78 less**<br>**advance of**<br>**Rs.3.65 crores**|**Amount**<br>**received**|<br>Amount received<br>adjusted against||**Balance amount**<br>||Interest due date<br>||<br>No.<br>of<br>days|<br>Interest<br>due<br>for<br>the<br>period|Balance<br>interest<br>after<br>adjustment<br>of<br>interest<br>received|Remarks|| ||||||||||||||| ||||||||||||||| ||||||||||||||| ||||||||||||||| ||**received**||**Principal**|**Interest**|**Principal**|**Interest (B)**|From|To||(A)|||| ||||||||||||||| ||-Rs.|-Rs.|-Rs.|-Rs.|-Rs.|<br>-Rs.||||-Rs.|-Rs.||| ||6,23,84,050|-|-|-|6,23,84,050|-|15.01.1985|20.06.1995|2577|4,02,18,107|4,02,18,107|Interest has<br>been worked<br>out on the<br>basis of dates<br>with respect to<br>the passing of<br>each bills from<br>15.1.1985 to<br>20.6.1995|| ||6,23,84,050|1,00,00,000|-|1,00,00,000|6,23,84,050|3,02,218,107|20.6.1995|13.02.1996|238|37,13,820|3,39,31,927|Payment<br>received are<br>adjusted<br>against<br>interest first<br>and balance<br>against<br>principal|| ||6,23,84,050|1,00,00,000|-|1,00,00,000|6,23,84,050|2,39,31,927|13.02.1996|23.02.1996|10|1,56,043|2,40,87,970||| ||6,23,84,050|2,00,00,000|-|2,00,00,000|6,23,84,050|40,87,970|23.02.1996|20.03.2001|1850|2,88,67,930|3,29,55,900||| ||6,23,84,050|4,00,00,000|70,44,100|3,29,55,900|5,62,39,950|-|20.03.2001|05.09.2001|169|23,43,588|23,43,588||| ||5,62,39,950|1,00,00,000|76,56,412|23,43,588|4,85,83,538|-|05.09.2001|12.10.2001|37|4,43,242|4,43,242||| ||4,85,83,538|2,00,00,000|1,95,56,758|4,43,242|2,90,26,780|-|12.10.2001|01.06.2002|232|16,60.491|16,60.491||| ||2,90,26,780|67,31,995|50,71,504|16,60,491|2,39,55,276|-|01.06.2002|17.08.2002|77|4,54,822|4,54,822||| ||2,39,55,276|16,75,78|12,21,156|4,54,822|2,27,34,120|-|17.08.2002|10.02.2003|177|9,92,204|9,92,204||| ||2,27,34,120|98,88,347|88,96,143|9,92,204|1,38,37,977|-|10.02.2003|30.09.2007|1692|57,72,143|57,72,143||| ||**Balance amount due as on 30.09.2007 for CC 14 to 78**||||1,38,37,977<br>|||||8,46,22,390|57,72,143||| ||||||||||||||| ||||||||||||||| **WPC No.31108/07** **- 11-** |Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment|Amount due from KSEB to Sri.Kurien E.Kalathil, Contractor, as on 30.9.2007 as per judgment| |---|---|---|---|---|---|---|---|---|---| |<br>against Ext.P20 (labour escalation) calculated at 9% simple interest on diminishing balance|||||||||| |<br> CC 79 TO 85<br>FROM 05.1.1995||<br>**Bills**<br>**Outstanding**|<br>**Interest(Date)**||<br>**No. of**<br>**days**|<br>Interest<br>(in Rs.)|<br>Balance Amount||Remarks| ||||From|To|||Principal|Interest|| |C C 79|17,31,126|17,31,126|15.1.1995|14.03.1995|59|25154|17,31,126|25154|**No payment**<br>**has been**<br>**received**<br>**and hence**<br>**the question**<br>**of**<br>**adjustment**<br>**whether**<br>**against**<br>**interest**<br>**or**<br>**principal**<br>**does not**<br>**arise**| |C C 80|16,76.548|34,07,674|15.03.1995|14.04.1995|31|26048|34,07,674|51202|| |C C 81|28,04,782|62,12,456|15.04.1995|14.05.1995|30|45955|62,12,456|97157|| |C C 82|4,97,461|67,09,917|15.05.1995|14.06.1995|31|51290|67,09,917|1,48,447|| |C C 83|7,68,964|74,78,881|15.06.1995|14.06.1996|365|6,73,099|74,78,881|8,21,546|| |C C 84|4,48,345|79,27,226|15.06.1996|14.06.1997|365|7,13,450|79,27,226|15,34,996|| |C C 85|11,69,356|90,96,582|15.06.1997|31.05.2005|2908|65,21,865|90,96,582|80,56,861|| |||90,96,582|01.06.2005|30.06.2006|395|8,86,917|90,96,582|89,43,778|| |||90,96,582|01.07.2006|30.09.2007|457|10,23,365|90,96,582|99,67,143|| ||||||||||| |**Balance amount due as on 30.09.2007 for CC 79 to 85 **||||||99,67,143|90,96,582|99,67,143|| |Bills upto 14 to 78 (previous page)|||||||1,38, 37,977|57,72,142|| |GrandTotal forCC14to 85 as on30.09. 2007|||||||2,29,34,559|1,57,39,286|| |Grand Total of Principal Plus Interest as on 30.09.2007||||||||3,86,73,845|| **WPC No.31108/07** **- 12-** 5. The claim of the contractor that compound interest is to be calculated cannot be accepted. In the absence of specific directions from the court in Ext.P1 judgment or in the agreement, compound interest cannot be claimed, though concept of payment of compound interest is not illegal and there is no law that interest on interest cannot be granted. Fortunately in this case, in Exts.P20 and P59 bills, the contractor has claimed only simple interest. The claim of the Board that part payments should be adjusted first from the principal amount only or interest is payable only till the date of judgment as there is no direction to pay interest till the date of payment also cannot be accepted. The Honourable Supreme Court in **Meghraj v. Bayabai** , AIR 1970 SC 161, has held as follows:- _“...But the normal rule is that in the case of a debt due with interest any payment made by the debtor is in the first instance to be applied towards satisfaction of interest and thereafter to the principal.”._ After considering Order 21, Rule 1(2) of C.P.C. and Sections 59 to 61 of the Indian Contract Act, in **M/s. I.C.D.S. Ltd. v. Smithaben H.Patel** , AIR 1999 SC 1036, at para 9, the Apex Court held as follows: “..... _We do not agree with the learned counsel of the respondents that Section 60 of the Contract Act has to be read independently excluding the provisions of Section 59. Accepting such an argument would amount to doing violence_ **WPC No.31108/07** **- 13-** _to the language employed in the Section and the purpose sought to be achieved by it. Besides, it would also be contradictory in terms. Section 60 if applied independently, cannot be held to be conferring any right upon the judgment debtor as it confers a discretion in favour of the creditor to apply such deposited amount to any lawful debt actually due and payable by the debtor when such debtor omits to intimate the discharge of the debt in the manner envisaged under Section 59. We are of the opinion that Sections 59 and 60, Contract Act, would be applicable only in pre decretal stage and not thereafter. Post-decretal payments have to be made either in terms of the decree or in accordance with the agreement arrived at between the parties though on the general principles as mentioned in Sections 59 and 60 of the Contract Act. As and when such an agreement either express or implied is relied upon, the burden of proving it would always be upon its propounder. The judgment debtors, in the instant case, are proved to have failed in discharging such an onus. There does not appear to be any obligation on the decree holder to intimate the judgment debtor that the amount paid to him had not been accepted in the manner specified by him in the letter accompanying the payment. Insisting upon such a course would result in unnecessary burden upon the financial institutions and conferment of unwanted unilateral discretion in favour of the defaulters. Acceptance of the plea that the amount paid first should be adjusted in the principal amount would not only be against the provisions of law but against the public policy as well. To provide security, continuity and_ **WPC No.31108/07** **- 14-** _certainty in business transaction, the Legislature has been making specific provisions in that regard which may be found in various provisions of the Negotiable Instruments Act or Order 37, Code of Civil Procedure and other statutory provisions.”._ ## It was further held, at para 12, as follows: “..... _In view of what we have held hereinabove, we are of the opinion that the learned Judge was not justified to hold 'where a debtor makes payment without making any indication as to how the payment is to be adjusted, it is the option of the creditor to make adjustment first of the interest and then of the principal, but if the debtor has indicated the manner in which the appropriation is to be made, then the creditor has no choice to apply the payment in a different manner. But however he may not agree to the mode of the payment, in which case he must not accept the payment and refund the amount to the debtor'._ ## It was further held, at para 14, as follows: “..... _In view of what has been noticed hereinabove, we hold that the general rule of appropriation of payments towards a decretal amount is that such an amount is to be adjusted firstly strictly in accordance with the directions contained in the decree and in the absence of such direction, adjustments, be made firstly in payment of interest and costs and thereafter in payment of the principal amount. Such a principle is, however, subject to one exception, i.e. that the parties may agree to the adjustment of the payment in any_ **WPC No.31108/07** **- 15-** _other manner despite the decree. As and when such an agreement is pleaded, the onus of proving is always upon the person pleading the agreement contrary to the general rule or the terms of the decree schedule. The provisions of Sections 59 to 61 of the Contract Act are applicable in cases where a debtor owes several distinct debts to one person and do not deal with cases in which the principal and interest are due on a single debt.”._ In this case, there is no agreement or understanding that part payments made will be adjusted from the principal. There was no indication that part payments were made only after demand was made. In the reply affidavit to I.A. No.6 of 2006 filed before the Supreme Court, such a claim was put forward by the Board. The directions in Ext.P1 judgment which was affirmed by the Supreme Court was to pay interest at 18% per annum till the date of payment and not to the date of the judgment. The Honourable Supreme Court only reduced the interest from 18% to 9% per annum. Here, there is no dispute regarding the amount due on the basis of Ext.P20 claim . After adjusting the advances, the difference in the amount due occurred only because the Board adjusted the part payments made first from the principal, but the contractor first adjusted the amount from the interest and balance from the principal and simple interest was calculated on the diminishing balance of principal amount. The details of the calculation are mentioned in Exts. P7 - P13 also. **WPC No.31108/07** **- 16-** Therefore, we are of the view that as per Ext.P20 for the two sets of bills, the total amount payable by the K.S.E.B. as on 30.9.2007 is Rs.3,86,73,875/- and as on 31.12.2008 adding 9% simple interest on the balance principal amount, the amount will be Rs.4,12,58,224/-. Simple interest at 9% is also payable on the principal amount for the balance period also till the date of payment. 6. The next question is the amount payable for the works completed (Ext.P59 bills). In I.A.No.6 of 2006 filed before the Honourable Supreme Court with regard to the claim of Ext.P9 (Annexure H), the amount claimed is as follows:- Bill amount (CC 85) - Rs.5,55,62,597.00 Tender excess - 11,11,252.00 Material Escalation - 5,55,40,372.00 Labour Escalation - 9,83,85,802.00 ----------------------------Total Rs.21,06,00,023.00 Interest at 9% upto 30.6.2006 Rs.16,76,47,436.00 -----------------------------Total Rs.37,82,47,459.00 Less: Amount received 2,95,61,845.00 -------------------------------Balance Rs.34,86,85,614.00 ================== **WPC No.31108/07** **- 17-** If simple interest is calculated on the principal amount, as on 30.09.2007, the amount due is Rs.37,23,01,847/- and as on 31.12.2008 it will be Rs.39,60,33,296/-. The details of the work done are detailed in Ext.P12 produced in this writ petition, which was also produced before the Supreme Court in I.A.No.6 of 2006. The details of the above calculation is as follows: |Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance| |---|---|---|---| |Details|**Principal**|**Interest**|**Total**| ||Rs.|Rs.|Rs.| |CC bill No.85 dt. 27.2.1997 and<br>86 dt. 27.8.1997|||| |Amount claimed in Bill CC 85|5,55,62,597||| |Tender excess @ 2%|11,11,252||| |Material Escalation 98%|5,55,40,372||| |Labour Escalation 173,6%|9,83,85,802||| |**Total**|21,06,00,023||| |Interest from 27.8.1997 to 10.2.2003<br>(1990 days)<br>21,06,00,023 x 9/100 x 1990/365||10,33,38,258|| |Amount due as on 10.2.2003|21,06,00,023|10,33,38,258|31,39,38,281| |Amount received on 10.2.2003<br>(Rs.2,71,48,988)||2,71,48,988|| |Balance due|21,06,00,023|7,61,89,270|28,67,89,293| |Interest from 11.2.2003 to<br>24.12.2003 (317 days)<br>21,06,00,023 x 9/100 x 317/365||1,64,61,420|| |Amount due as on 24.12.2003|21,06,00,023|9,26,60,690|30,32,50,713| |Amount received on 24.12.2003<br>(Rs.22 lakhs)||22,00,000|| |Balance due|21,06,00,023|9,04,60,690|30,10,50,713| **WPC No.31108/07** **- 18-** |Details|**Principal**|**Interest**|**Total**| |---|---|---|---| |Interest from 25.12.2003 to 3.4.2004<br>(101 days)<br>21,06,00,023 x 9/100 x 101/365||52,44,806|| |Balance due as on 03.4.2004|21,06,00,023|9,57,05,496|30,63,05,519| |Amount received on 3.4.2004<br>(Rs.2,12,857/-)||2,12,857|| |Balance due as on 3.4.2004|21,06,00,023|9,54,92,639|30,60,92,662| |Interest from 4.4.2004 to 30.9.2007<br>(1275 days)<br>21,06,00,023 x 9/100 x 1275/365||6,62,09,185|| |Amount due as on 30.9.2007|21,06,00,023|16,17,01,824|**37,23,01,847**| |Interest from 01.10.2007 to<br>31.12.2008 (457 days)<br>21,06,00,023 x 9/100 x 457/365||2,37,31,449|| |Amount due as on 31.12.2008|21,06,00,023|18,54,33,273|**39,60,33,296**| In the counter affidavit (Para 56 of Ext.P8) filed before the Honourable Supreme Court by the Board, it is stated as follows: _“As per Ext.P59, the contractor had demanded an amount of Rs.5,55,62,597/- including departmental materials and excluding tender excess, material escalation and labour escalation. Out of this, 23 items were wrongly claimed in Ext.P59 by the contractor and the same was withdrawn by the contractor in the next bill, ie. CC 86 bill submitted to the Board. The amount for the 23 items wrongly claimed would come to Rs.49,40,251/-. So the net amount claimed by the contractor would come to Rs.5,06,22,346/-”._ If the amount is only Rs.5,06,22,346/- as contended by the Board and **WPC No.31108/07** **- 19-** simple interest is calculated at 9% per annum on diminishing balance (interest on principal amount alone and amount adjusted first from interest, as the amount paid is not sufficient for setting off the interest portion), the amount due is as follows: |Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bill raised for works completed) calculated at 9%<br>simple interest on diminishing balance| |---|---|---|---| |Details|**Principal**|**Interest**|**Total**| ||Rs.|Rs.|Rs.| |CC bill No.85 dt. 27.2.1997 and<br>86 dt. 27.8.1997|||| |Amount claimed in Bill CC 85|5,06,22,346||| |Tender excess @ 2%|10,12,447||| |Material Escalation|5,06,02,097||| |Labour Escalation|8,96,38,001||| |**Total**|19,18,74,891||| |Interest from 27.8.1997 to 10.2.2003<br>(1990 days)<br>19,18,74,891 x 9/100 x 1990/365||9,41,50,118|| |Amount due as on 10.2.2003|19,18,74,891|9,41,50,118|28,60,25,009| |Amount received on 10.2.2003<br>(Rs.2,71,48,988)||2,71,48,988|| |Balance due|19,18,74,891|6,70,01,130|25,88,76,021| |Interest from 11.2.2003 to<br>24.12.2003 (317 days)<br>19,18,74,891 x 9/100 x 317/365||1,49,97,783|| |Amount due as on 24.12.2003|19,18,74,891|8,19,98,913|27,38,73,804| |Amount received on 24.12.2003<br>(Rs.22 lakhs)||22,00,000|| |Balance due|19,18,74,891|7,97,98,913|27,16,73,804| |Interest from 25.12.2003 to 3.4.2004<br>(101 days)||47,78,473|| **WPC No.31108/07** **- 20-** |Details|**Principal**|**Interest**|**Total**| |---|---|---|---| |19,18,74,891 x 9/100 x 101/365|||| |Balance due as on 03.4.2004|19,18,74,891|8,45,77,386|27,64,52,277| |Amount received on 3.4.2004<br>(Rs.2,12,857/-)||2,12,857|| |Balance due as on 3.4.2004|19,18,74,891|8,43,64,529|7,62,39,430| |Interest from 4.4.2004 to 30.9.2007<br>(1275 days)<br>19,18,74,891 x 9/100 x 1275/365||6,03,22,312|| |Amount due as on 30.9.2007|19,18,74,891|14,46,86,841|**33,65,61,672**| |Interest from 01.10.2007 to<br>31.12.2008 (457 days)<br>19,18,74,891 x 9/100 x 457/365||2,16,21,409|| |Amount due as on 31.12.2008|19,18,74,891|16,63,08,250|**35,81,83,141**| 7. It is further contended by the Board that the amount payable for the additional work done by the contractor was only Rs.1,55,65,817/- excluding tender excess, material escalation and labour escalation. There is no dispute after Ext.P1 judgment that the amount have to be adjusted as per the contract conditions. The calculation made by the Board is mentioned as follows: |**_Sl.No._**|**_Items_**|**_Contractors claim_**<br>**_asper Ext.P59_**|**Claim admitted by the**<br>**Board**| |---|---|---|---| |1|Stripping<br>the<br>surface of various<br>earth quarries|**Item II E.29**<br>Quantity 5,70,986 m3<br>@ 37.20/m3<br>= Rs.2,12,40,679|1,59,500 m3 @ 25.95/m3<br>= Rs.82,01,478.| **WPC No.31108/07** **- 21-** |2|Formation<br>of<br>additional approach<br>road to various earth<br>quarries|**Item II E.30**<br>Quantity 23060 m @<br>Rs.271.53/m<br>= Rs.62,61,481/-|On actual measurement of<br>the road Rs.1,42,856/- was<br>seen admissible| |---|---|---|---| |3|Extra lead for<br>conveyance of earth<br>from additional earth<br>quarries|**Item II E.21**<br>Rs.1,66,33,616.74 out<br>of this, Rs,14,63,350<br>paid vide B.O. dt.<br>25.2.95. Balance due<br>Rs.1,51,70,266.74<br>without material &<br>labour escalations.|Out of the contractors claim<br>for<br>Rs.3,01,18,548/-<br>Rs.2,16,98,703 was admitted<br>including tender excess,<br>material<br>and<br>labour<br>escalation. Out of this<br>Rs.28,11,565/- paid earlier<br>vide B.O. dt.25.2.1995 and<br>balance Rs.1,88,87,138 paid<br>on 10.2.03 vide B.O. dated<br>17.1.03.| |4|Hand packing and<br>forming<br>plain<br>surface of rock toe|**Item E.14**<br>Quantity 2495 m3<br>@ Rs.87,84/m3 =<br>Rs.2,19,160.80<br>without escalations|Rs.1,40,121 including labour<br>and material escalations.<br>Quantity 5369.39 m2 (2416m3<br>at average depth of 45 cm) @<br>Rs.131.70/10 m2<br>(Equivalent to Rs.29.26/m3)| |5|Dismantling,<br>stacking<br>and<br>conveying to new<br>site,<br>repairing,<br>re-erecting<br>and<br>commissioning of<br>crushing plant|Item E.15 of Ext.P59<br>Rs.25,20,00,000/-<br>plus tender excess<br>plus material and<br>labour escalation|The Board admitted<br>Rs.15,68,317 vide B.O. dt.<br>13-11-2003 and the amount<br>was paid on 24.12.03| |6|Dismantling,<br>stacking<br>and<br>conveying to new<br>site,<br>repairing,<br>re-erecting<br>and<br>commissioning of<br>batching plant.|In the covering<br>letter of CC 85<br>(Ext.P59)<br>Rs.25,56,605|The Board admitted<br>Rs.5,86,082/- vide B.O. dt.<br>13.11.03 and the amount<br>was paid on 24.12.03.| |7|Escavation in slushy<br>soil from already<br>escavated pits|Item E3 of Ext.P59<br>Quantity 25928 m3<br>@ Rs.299/10 m3<br>= Rs.7,75,247<br>without escalation|In the discussion held by the<br>Chief Engineer (North) with<br>the contractor, on 15.9.1993,<br>the contractor agreed to<br>withdraw the claim.| It is contended by the contractor that even if the amount payable is Rs.1,55,65,817/-, it is the amount admitted by the Board, without tender **WPC No.31108/07** **- 22-** excess, material escalation and labour escalation the amount payable will be more as if labour escalation etc. are to be added. As per the contract conditions as well as as per the directions in Ext.P1 judgment, tender excess, material escalation and labour escalation has to be calculated. Therefore, the amount due adding the above charges to the admitted amount will be Rs.5,81,53,892/- and if simple interest at 9% is added, after adjusting the part payments first from the interest, the total balance amount payable is Rs.8,14,18,087/- as on 30.09.2007 and as on 31.12.2008, it will be Rs.8,79,71,154/-. The details of the calculation are as follows: |Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bills raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bills raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bills raised for works completed) calculated at 9%<br>simple interest on diminishing balance|Amount due from K.S.E.B. to Sri.Kurien E.Kalathil, Contractor as on 31.12.08 as<br>per judgment against Ext.P59 (bills raised for works completed) calculated at 9%<br>simple interest on diminishing balance| |---|---|---|---| |Details|**Principal**|**Interest**|**Total**| ||Rs.|Rs.|Rs.| |CC bill No.85 dt. 27.2.1997<br>and 86 dt. 27.8.1997|||| |Amount claimed in Bill CC 85|1,55,65,817||| |Tender excess @ 2%|3,11,316||| |Material Escalation 98%|1,52,54,501||| |Labour Escalation 173.6%|2,70,22,258||| |**Total**|5,81,53,892||| |Interest from 27.8.1997 to<br>10.2.2003 (1990 days)<br>5,81,53,892 x 9/100 x 1990/365||2,85,35,239|| |Amount due as on 10.2.2003|5,81,53,892|2,85,35,239|| |Amount received on 10.2.2003<br>(Rs.2,71,48,988)||2,71,48,988|| |Balance due|5,81,53,892|13,86,251|| **WPC No.31108/07** **- 23-** |Details|**Principal**|**Interest**|**Total**| |---|---|---|---| |Interest from 11.2.2003 to<br>24.12.2003 (317 days)<br>5,81,53,892 x 9/100 x 317/365||45,45,563|| |Amount due as on 24.12.2003|5,81,53,892|59,31,814|| |Amount<br>received<br>on<br>24.12.2003 (Rs.22 lakhs)||22,00,000|| |Balance due|5,81,53,892|37,31,814|| |Interest from 25.12.2003 to<br>3.4.2004 (101 days)<br>5,81,53,892 x 9/100 x 101/365||14,48,271|| |Balance due as on 03.4.2004|5,81,53,892|51,80,085|| |Amount received on 3.4.2004<br>(Rs.2,12,857/-)||2,12,857|| |Balance due as on 3.4.2004|5,81,53,892|49,67,228|| |Interest from 4.4.2004 to 30.9.2007<br>(1275 days)<br>5,81,53,892 x 9/100 x 1275/365||1,82,96,967|| |Amount due as on 30.9.2007|5,81,53,892|2,32,64,195|**8,14,18,087**| |Interest from 01.10.2007 to<br>31.12.2008 (457 days)<br>5,81,53,892 x 9/100 x 457/365||65,53,067|| |Amount due as on 31.12.2008|5,81,53,892|2,98,17,262|**8,79,71,154**| 8. It is the contention of the contractor that the calculation made by the Board on the admitted amount of Rs.1,55,65,817/exclusive of tender excess, material escalation and labour escalation was wrong. Over and above the contract rate, tender excess, the labour escalation, material escalation is to be paid on the basis of the contractual agreement and as per Ext.P1 judgment. Rs.1,55,65,817/was calculated without taking into account the interest on delayed payment as on date. With regard to item (i) - No. II.E.29, stripping the **WPC No.31108/07** **- 24-** surface of various earth quarries, it is contended by the contractor that, the claim was for a quantity of 5,70,986 cu.m. at Rs.37.20/ cu.m for an amount of Rs.2,12,40,679/-, but the Board had paid for only 1,59,500 cu.m. at Rs.25.95/cu.m. amounting to Rs.82,01,478/-. This is due to the fact that measurements for stripping were not either recorded or check measured by the Board during the execution of work as observed by this Honourable Court. After the judgment of this Honourable Court, which was upheld by the Honourable Supreme Court, the Board had taken measurements after elapse of 10 years in the changed site conditions and the entire quantity completed is not accounted. Further the Board has reduced the rates unilaterally after the pronouncement of the judgment from that claimed in the bill, when payment is effected. With regard to item (ii) - No.II-E.30, the contention of the contractor is that, the claim was for the formation of 23.06 Km of approach road at Rs.271.53/m for an amount of Rs.62,61,481/-, but the Board has stated in paragraph 64 of the counter affidavit (page 219, paragraph 64 of the paper bok) that on actual measurement of the road for a portion of about 5 Km. an amount of Rs.1,42,856/- was seen admissible. In paragraph 68 of the counter affidavit, it is stated that, the Board had already made payments for roads above water level and only the payments for the roads submerged under water is remaining. Thus, the stand taken by the Board for denying payment is due to the lapses on **WPC No.31108/07** **- 25-** their part to record measurements then and there and for denying genuine payments for the works completed. Similarly with regard to Item - (iii) No.II.E-21, it is contended by the contractor that, the claim is for an amount of Rs.1,51,70,266.74 excluding material and labour escalation for the extra lead over and above 0.61 Km as originally envisaged for C quarry for the new twelve different earth quarries. The Board has accounted lead charges for one way only while the contractor is entitled to get to and fro lead involved as per the standard data. The attempt of the Board is to deliberately reduce the rate and the unilateral reduction in rate after the judgment is illegal. With regard to item - (iv) No.E.14, it is contended by the contractor that the claim is for a quantity of 2495 cubic metre at Rs.89.94/cubic metre, i.e. Rs.2,19,160.80 excluding material and labour escalations, but the Board has admitted only Rs.1,40,121/-. According to the contractor, the rates were reduced unilaterally after Ext.P1 judgment and the judgment of the Honourable Supreme Court. Similar is the contentions with regard to items (v) and (vi). With regard to item No.7, the Board has specifically stated that no claim was withdrawn and no material was produced when the claim was withdrawn by the contractor. Such a contention was not taken up now. 9. On going through the above, we are of the view that the claim of the contractor that the amount payable without tender excess, **WPC No.31108/07** **- 26-** labour escalation and material escalation is Rs.5,55,62,597/- cannot be granted. (The total amount will be Rs.39,60,33,296/- including interest at 9% as on 31.12.2008). If we accept the statement of the Board in paragraph 56 of the counter filed before the Supreme Court, the net amount exclusive of the tender excess, material escalation and labour escalation can only be Rs.5,06,22,346/-. If that be so, the amount payable as on 31.12.2008 will be Rs.35,81,83,141/-, the principal amount being Rs.19,18,74,891 and the interest being Rs.16,63,08,250/-. Further interest is also payable till the date of payment. The contention of the Board that out of the above amount, only Rs.1,55,,65,817/- is payable cannot prima facie be accepted, as the measurement was taken by the Board after ten years of the judgment (Ext.P1) and very much after the judgment of the Honourable Supreme Court and only after the judgment rejecting the review petition was passed by the Honourable Supreme Court. Whereas, the claims were made then and there by the contractor on actual measurements. The rates also should be fixed as per the terms of the contractor and the total amount has to be calculated in terms of Ext.P1 judgment as ordered by the Honourable Supreme Court. However, since there is dispute with regard to the actual measurements of certain additional works as well as with the contractual rates, we are of the view that it has to be factually verified. The measurements have to be checked for **WPC No.31108/07** **- 27-** fixing the rates for the various items as per the contractual terms and various calculations also has to be made. Since the contractor has been fighting this case from 1992 onwards and in view of the directions of this court in Ext.P1 judgment which has become final and also the directions of the Honourable Supreme Court, we cannot, at this point of time, relegate the parties to civil court. With regard to the disputed claims of additional work (Ext.P59 bill), we are of the view that the matter has to be discussed with the parties. For that, we are of the view that, there should be a discussion among the Engineers of the Board and the Contractor along with one Chartered Accountant or an Accountant suggested by them, and they should work out the amount payable on the disputed items, and if they are not able to come out with a settlement in any of the disputed claims, the matter should be referred to Arbitration. Counsel appearing for both sides agreed in open court that if the claim is not settled in the mutual discussion, the disputed items can be sent for the sole arbitration of Justice K.A.Nayar (former Judge of this court). The undisputed amount, after adding escalation charges etc. payable as per Ext.P20 bills as on 31.12.2008 is Rs.4,12,58,224/- [Rs.2,29,34,559/- (principal) and Rs.1,83,23,665 (principal)]. The amount payable for the additional work (if the claim calculated by the Board is accepted), when added with escalation charges for Ext.P59 bill is Rs.8,79,71,154/- [Rs.5,81,53,592/- **WPC No.31108/07** ## **- 28-** (principal) and Rs.2,98,17,262/- (interest)]. Thus the total amount payable under Exts.P20 and P59 bills as on 31.12.2008 is Rs.12,92,29,378/-. That amount should be paid by the Board within three months from today with 9% simple interest from 1.1.2009 till the date of payment. 10. The contention of the contractor that works were over more than ten years ago and even after dismissal of the review petition filed by the Board before the Supreme Court and also the dismissal of the clarification petitions repeatedly filed by the Board, the amounts due were not paid. It is further contended that because of the contract undertaken, he has become penniless. He has taken loan from private banks paying interest at 24% to 36%, but amount was not paid even at 9% simple interest as awarded by the Honourable Supreme Court. Since huge amounts are due and calculation of interest liability itself is less, at least from this date, higher interest may be awarded. We cannot accept that, since we are passing this judgment in implementation of the earlier judgment as affirmed by the Honourable Supreme Court and as directed by the Supreme Court, and therefore, we cannot increase the rate of interest awarded. 11. In the above circumstances, we direct the Board to pay the above amount of Rs.12,92,29,378/-, (calculated on the admitted amount adding escalation charges etc. as directed in Ext.P1 judgment **WPC No.31108/07** **- 29-** and as confirmed by the Honourable Supreme Court), with simple interest at 9% per annum from 1.1.2009 within three months from the date of judgment and the discussion regarding the disputed amount should be conducted immediately and if they are not coming out with a settlement on any of the disputed items within six months from today, the matter should be referred to the sole arbitration of Justice K.A.Nayar, former Judge of this Court. The Writ Petition is disposed of accordingly. All pending interlocutory applications shall stand closed. Sd/- **J.B.Koshy, Acting Chief Justice.** **Sd/K.P.Balachandran, Judge.** **dk.**