The Andhra Pradesh High Court has barred contractors who executed works under the Andhra Pradesh Government-led water-conservation programme, the Neeru-Chettu Scheme, from reopening claims for interest on delayed contractual payments through fresh writ petitions.

The Court noted that, in the earlier writ proceedings, the petitioners were denied interest but were given liberty to pursue the claim before the appropriate forum. They neither challenged those orders nor availed the remedy indicated. Instead, they filed fresh writ petitions before the High Court seeking interest.

Applying constructive res judicata under Explanation IV to Section 11 of the Code of Civil Procedure, 1908, the Court held that the petitioners could not reopen the interest claim already raised earlier.

Separately, it noted that the agreements expressly barred interest and provided specific mechanisms for resolving such disputes.

A Single Judge Bench of Justice Subba Reddy Satti was dealing with a batch of ten writ petitions filed by contractors seeking interest at 6% per annum on the amounts allegedly paid to them after delay.

The Court examined the contractual terms, noting that the agreements incorporated the Andhra Pradesh Standard Specifications (APSS). Clause 69 of the APSS barred contractors from claiming interest on payments in arrears or amounts due upon final settlement. The agreements also provided specific mechanisms for dispute resolution.

Against this backdrop, the Court observed:

“Thus, as seen from the clause extracted supra, form part of the agreement, in case of a dispute, one must approach the Arbitrator or the Civil Court. In this context, let this court examine the true intent of the order dated 06.07.2022 in WP No. 14315 of 2022 (since the orders in other writ petitions are similar in nature). The learned single judges left it open to the petitioner to agitate his/her claim for interest, if any payable, in an appropriate forum, when the writ petitioners also prayed for the grant of interest along with the amount payable. All the writ petitions, as seen from the orders, were disposed of, even before a counter affidavit was filed. The operative portion of the order in each writ petition was extracted in the third column of the tabular form supra. Thus, in the first round of the litigation, the High Court declined to grant interest, though sought, but gave liberty to the petitioners to approach the appropriate authority.

If that direction, properly construed, amounts to a refusal, albeit indirect and qualified, of the relief of interest in the writ jurisdiction, but to approach an appropriate forum. The petitioners neither questioned that order by way of intra-court appeal nor did they avail of the “appropriate forum” so indicated. Instead, after some time, the petitioners have chosen to re-agitate the claim for interest by way of fresh, independent writ petitions, invoking a subsequent Division Bench order to which they were not parties, and more so, that order does not apply to the facts of this case.”

The dispute arose from works executed by the petitioners under the Neeru-Chettu Scheme in different villages. The petitioners stated that the works were completed in accordance with their respective agreements. Quality check certificates and M-Books were issued after completion of the works.

According to the petitioners, the authorities eventually released the principal amounts. However, the payments were made after considerable delay. They therefore claimed interest for the delayed period.

The respondents, however, pointed out that the petitioners had signed discharge certificates while receiving the final bill amounts and had agreed to the total bill amounts. They relied on Clause 69 of the APSS to contend that interest was not payable.

The petitioners had earlier approached the High Court seeking payment of the amounts due. In those proceedings, the Court granted relief concerning the principal amounts in appropriate cases. As regards interest, the petitioners were left at liberty to raise their claims before the appropriate forum.

“This anomaly leads to a question of whether a second writ petition is maintainable seeking relief vis-à-vis interest,” the Court said.

The Court held that the interest claim was a contractual compensation claim triable before a Civil Court or arbitrator, not a matter warranting Article 226 jurisdiction.

The petitioners neither challenged the earlier orders nor pursued the remedy indicated. Instead, they relied on a subsequent Division Bench order to which they were not parties. The Court noted that it was a consent order, passed without independent adjudication of the rival claims, and therefore did not constitute a binding precedent for strangers to that litigation.

The Court applied the principle of constructive res judicata to hold that the petitioners could not raise the interest claim again. The fresh writ petitions seeking interest alone were therefore not maintainable.

The Court concluded that interest could not be awarded “dehors and contrary to” the contractual clauses, which barred such payment and provided mechanisms for dispute resolution.

The Court accordingly dismissed all the writ petitions. No costs were imposed.

Case Title: Yellaboina Mallaiah v. State of Andhra Pradesh and Ors. with connected mattersCase Nos.: W.P. Nos. 5506, 5608, 5712, 5748, 5781, 8818, 8895, 8978, 9279 and 9730 of 2025.

Counsel for Petitioners: Srinivasa Rao Narra

Counsel for Respondents: GP for Irrigation and CAD and GP for Finance Planning

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